GE acquires around 90 per cent of France’s Converteam for $3.2 billion

General Electric’s (GE) Energy business has entered into an agreement to acquire around 90 per cent of Converteam, a leading provider of electrification and automation equipment and systems. GE will acquire Converteam from a controlling shareholder group that includes management, Barclays Private Equity and LBO France, for around $3.2 billion.

The transaction is expected to close during the third quarter of 2011, subject to customary closing conditions. Post the acquisition, Converteam’s senior management will retain around a 10 per cent stake in the company. GE and Converteam senior management have entered into agreements pursuant to which GE would purchase the remaining shares in the company over the next two to five years.

John Krenicki, GE vice chairman and president and CEO of GE Energy, said the High-efficiency, fully electric solutions represent a megatrend across the global energy landscape. Krenicki said GE’s customers in key industries increasingly demand more reliable, efficient and flexible solutions in order to improve their competitiveness. Converteam’s world-class team and energy efficient products and services connect a lot of pieces in GE’s portfolio which will enable the firm offer integrated solutions to its customers, said Krenicki.

The price for the shares can vary based on the time of sale, business performance and other factors. GE expects that the price should be no greater than approximately $480 million.

Pierre Bastid, president and CEO, Converteam, separately commented that GE and Converteam complement each other superbly. As a long-standing partner, GE fully understands Converteam’s business model and will add significant value by allowing its technologists to work within GE’s tremendous network of researchers and engineers, said Bastid.

Converteam’s portfolio includes drives and other power electronics, advanced rotating machines, generators and controls that when integrated address three critical customer needs across a range of industries. The multi-sector energy efficiency, electrification and automation industry, in which Converteam participates, was valued at over $30 billion in 2010 and is growing at rates above global GDP growth, said GE.

Around 25 per cent of the world’s electricity is used to power rotating machines in a wide range of industries and applications. Converteam’s high-efficiency solutions are designed to reduce the electricity consumption of rotating machines by nearly one-third, offering significant savings in terms of cost, energy intensity and greenhouse gas emissions. GE’s global reach and local expertise will improve Converteam’s ability to serve customers in high growth regions such as Brazil, Russia, China, India and the Middle East.

30th March 2011

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