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General Electric to buy Converteam for more than $3.5 billion

GE will acquire the French power-conversion specialist to widen its portfolio of high-efficiency automation equipment for the oil and gas, thermal power and renewable energy markets.

March 29, 2011|By Christopher Hinton

Reporting from New York — General Electric Co. said Tuesday that it would purchase power-conversion specialist Converteam Group for more than $3.5 billion to widen its portfolio of high-efficiency automation equipment for the oil and gas, thermal-power and renewable energy markets.

The Fairfield, Conn., conglomerate will shell out about $3.2 billion for a 90% stake in Converteam, buying the French company's remaining shares from senior executives over the next two to five years at an estimated cost of no more than $480 million.

GE said it would acquire Converteam from a controlling shareholder group that includes Barclays Private Equity and LBO France. The initial purchase is scheduled to close in the third quarter.

Financial details of the transaction were not released.

Converteam, which has 5,300 employees, reported earnings of $239 million last year, with sales of about $1.5 billion. Orders for the year jumped about 36% versus 2009.

GE has been acquiring billions of dollars' worth of energy-related assets over the last six months to tap a predicted recovery in equipment and services demand this year. The conglomerate is the world's largest supplier of power-generation equipment, but it faces some strong competition.

On the efficiency side, which includes demand for equipment that requires less maintenance and lowers energy consumption, market growth has been outpacing global gross domestic product and was valued last year at more than $30 billion, GE said.

Massy, France-based Converteam should help GE access more overseas markets such as those in Brazil, Russia, India, China and the Middle East.

"High-efficiency, fully electric solutions represent a megatrend across the global energy landscape," GE Energy Chief Executive John Krenicki Jr. said in a statement. "Converteam's world-class people and energy-efficient products and services connect a lot of pieces in our portfolio, which will enable us to offer integrated solutions to our customers."

Hinton writes for MarketWatch.com/McClatchy.

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