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GEC sells Global Exchange Services

General Electric Company will sell its business-to-business e-commerce company, GE Global Exchange Services (GXS), to the technology buyout firm Francisco Partners in a deal announced on Monday worth $800m (£532m).

Francisco Partners announced that the boards of both companies have approved the deal, which will close by October. GEC will retain a 10% ownership stake in GXS.

Gary Reiner, senior vice-president and CIO at GEC, said that while GXS has grown to be a successful company, it "does not fit GEC's core services and growth strategies".

Harvey Seegers, president and chief executive officer of GE GXS, will continue to lead the company, which will become part of the portfolio of technology businesses owned by Francisco Partners.

GE GXS operates one of the largest business-to-business e-commerce networks in the world, with more than 100,000 trading partners.

GEC's decision to sell GXS is likely rooted in the company's reliance on revenue from EDI, which is losing ground to Internet trading technologies, according to analysts.

"If you are an EDI company . . . you face the reality that your customer base is looking at new technologies based on the Internet," said Richard Villars, vice-president of internet research at IDC.

"You're going to have to make adjustments in your own technology . . . build up partnerships with companies such as SAP and IBM that are defining the technologies behind this. There's a lot of opportunity for the company that can put together the installed base and the commitment to the technologies."

David Dobrin, president of B2B Analysts, said GXS struggled to make the company highly profitable or market dominating because of its reliance on ageing technology.

"They were running a value-added network on old technology, and it was very expensive to run and bill and maintain," Dobrin said. "Everybody was locked in, but they couldn't transform it to better technologies."

However, GXS' Seeger maintains that with the backing of Francisco it will be able to take advantage of more Internet technologies to allow it to reach a wider customer base.

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