Industrial conglomerate General Electric Co. (GE) announced that the energy business of the company will acquire an approximately 90% stake in France-based Converteam for about $3.2 billion. General Electric bought this stake from a controlling shareholder group that includes management, Barclays Private Equity of Barclays PLC (BCS) and LBO France.
GE Energy is the foremost global provider of power generation and energy delivery technologies in all areas of the energy industry including coal, oil natural gas and nuclear energy as well as renewable resources such as water, wind, solar and alternative fuels.
The transaction is expected close in the third quarter of 2011. The senior management from Converteam will retain the remaining 10% stake in the company.
In addition, GE Energy has entered into agreements with senior management wherein GE would purchase the remaining shares in the company over the next two to five years. GE expects to pay not more than $480 million for the remaining shares.
Converteam has more than 100 years of expertise in power electronics and automation technologies and operates in six key vertical sectors: offshore and onshore oil and gas, power generation, wind and solar renewables, industrial, marine and services. The company employs 5,300 people and generated sales of approximately $1.5 billion.
The product portfolio for Converteam also includes drives and other power electronics, advanced rotating machines, generators and controls.
GE Energy expects that the acquisition of Converteam will enable the company to bring new integrated product offerings to existing customers and apply its technology to new applications in a broad range of industrial verticals. The acquisition is also expected to provide approximately $250 million in annual operating synergies.
In addition with the Converteam acquisition, GE Energy has announced the acquisition of Dresser, Inc; Wellstream Holdings; Lineage Power Holdings; Well Support (from John Wood Group) in the last six months for a total value of $11 billion.
General Electric continues to strengthen its portfolio by building strong growth platforms and by generating cash from low-return businesses. Its focus remains on accelerating organic growth and achieving technical and service excellence, while building enduring customer relationships around the world.
BARCLAY PLC-ADR (BCS): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
Zacks Investment Research
