General Electric And RCA Announce Definitive Merger Agreement

NEW YORK, Dec. 12, 1985 -- PRNewswire -- General Electric Co. (NYSE: GE) and RCA Corp. (NYSE: RCA) today announced a definitive merger agreement whereby GE will pay $6.28 billion in cash, or $66.50 a share of common stock, to merge with RCA.

The boards of directors of both companies have approved the merger agreement.

The announcement was made by John F. Welch Jr., chairman and chief executive officer of GE, and Thornton F. Bradshaw, chairman, and Robert R. Frederick, president and chief executive officer of RCA.

The three executives said the merger is an "excellent strategic opportunity for both companies that will help improve America's competitiveness in world markets. We are creating a company that will successfully compete with anyone, anywhere, in every market we serve."

Said Welch: "RCA is an excellent strategic fit with GE. This merger further accelerates a process that has seen GE grow into a major services and technology business. Indeed, in the last five years, services and technology moved from about 50 percent to about 70 percent of the company's earnings. RCA's services and technology businesses -- the NBC network, the broadcast stations, the aerospace and defense businesses, communications, the RCA Service Co. -- complement our own businesses and will enable GE to dramatically strengthen its position in several major growth industries."

Said Bradshaw and Frederick: "We welcome this opportunity to ally our strengths with one of the world's preeminent corporations. We believe that the combined assets and experience of RCA and General Electric will create a company capable of meeting the challenges all businesses must face in an increasingly competitive world economy. The decision to enter into such an agreement was not easy: under the leadership of our board of directors and management, we have already successfully transformed RCA into a company with important market positions in electronics, communications and entertainment. With this strategic focus on our core businesses, we have been pleased to see the performance of RCA improving steadily.

"However, we recognize that it would take a bold and creative step to generate the critical mass essential to continued market leadership in a rapidly evolving global economy. By uniting our talents with those of General Electric -- a company with an historical commitment to technological and market leadership -- we will continue accelerating our momentum," said Bradshaw and Frederick.

RCA's management will promptly request shareholder approval. The transaction is subject to review by the Federal Communications Commission and other government agencies. It is anticipated that the transaction will be completed in 1986.

In 1980, GE's earnings were about evenly divided between manufacturing -- on one hand -- and technology and services -- on the other. Today, while in absolute terms, manufacturing has grown, GE's strategic shift has been implemented. About 70 percent of 1985 earnings will come from technology and services. Following the RCA merger, GE will be generating about 80 percent of its earnings from technology and services -- and still have a very strong and competitive manufacturing segment.

Under the terms of the agreement, GE has received an option to buy approximately 28 million shares of RCA's stock at $53.125, the market price at the close of business on Dec. 10.

GE and RCA are involved in related, but different, segments of the aerospace industry, said Welch. "RCA has a broad electronic systems capability that will be of great value to us," he said. Welch pointed out that the percentage of GE's total sales related to defense work would not increase as a result of the merger.

Similarly, both companies have video electronics businesses, although RCA's is 2-1/2 times the size of GE's. "RCA has a valuable consumer franchise in video electronics," said Welch.

RCA's broadcast properties include the NBC television network, three radio networks, five owned and operated television stations -- in Chicago, Cleveland, Los Angeles, New York, and Washington -- and three AM and five FM radio broadcasting stations -- in Boston, Chicago, New York, San Francisco, and Washington.

The existing NBC television stations and GE's existing Denver station comply with FCC regulations as to permitted size of market served.

Welch said the network and television stations will be an independent organization and will have the same autonomy they've had at RCA.

Goldman, Sachs & Co. is acting as financial advisor to General Electric, and Lazard Freres & Co. is financial advisor to RCA.

GE had 1984 revenues of $27.9 billion and earnings of $2.3 billion.

RCA had 1984 revenues of $10.1 billion and earnings of $341 million.

/CONTACT: Jack Batty, 203-373-2044 or home, 203-268-1532; Bruce Bunch, 203-373-2039 or home, 203-263-5595; or Ford Slater, 203-373-2413 or home, 203-255-3343, all of General Electric; or Bob Shortal, 212-621-6707 or home, 201-768-9577; Charles Smith, 212-621-6226 or home, 718-739-4616; or Howard Enders, 212-621-6224 or home, 201-568-2594, all of RCA/