$3.2b Acquisition Boosts GE’s Position in Power Conversion, Automation Sector

September 06, 2011 / Albert Hamon, Mergers and Acquisitions Reporter

GE (NYSE: GE) has completed its $3.2 billion acquisition of Converteam, a provider of power conversion and automation systems and high-efficiency power electronics, motors and generators.

$3.2b Acquisition Boosts GE’s Position in Power Conversion, Automation Sector

With Converteam’s solutions, customers in a variety of industries can replace or improve mechanical processes with high-efficiency electric alternatives that promote less maintenance and lower emissions.

GE said the acquisition furthers its “commitment to create a center of excellence for power conversion technology, which is designed to fuel strong growth opportunities for many of its businesses.” It made the announcement after Energy Conversion Devices reported its June quarter results, which showed the company’s inability to mitigate the stress on its balance sheet.

ECD’s fiscal fourth quarter was the ninth consecutive quarter of losses amounting to $23 million, leaving the company with $131 million in cash.

On the other hand, GE said Converteam’s addition complements its existing capabilities in energy conversion, industrial automation and process efficiency.

Converteam’s portfolio includes variable frequency drives and other power electronics, advanced motors and generators, as well as industrial automation and controls. Converteam’s products are widely used in the renewable energy sector, turning intermittent and variable power from solar, wind and tidal sources into the high quality and reliable power required by grid operators throughout the world.

As part of the growing trend of electrification in the oil and gas industry, its technologies are used to drive mission critical customer equipment in the production and transportation of hydrocarbons. Converteam also offers a broad range of automation and control systems that allow customers to optimize their production processes in the metals, mining and other industries.

The Converteam purchase completes $11 billion in recent acquisitions by GE Energy that have significantly broadened the company’s reach across the energy landscape. GE’s acquisition strategy targets deals in infrastructure segments which are complementary to the company’s core technologies and where there are clear operating synergies. In the last nine months, GE Energy has completed the acquisition of Dresser, Inc; Wellstream Holdings plc; Lineage Power; Well Support (from John Wood Group plc); and Converteam.

Further, the Converteam acquisition is said to expand GE’s position in the multi-sector energy efficiency, electrification and automation industry, which was valued at more than $30 billion last year.

Nearly 25 percent of the world’s electricity is used to power motors in a wide range of industries and applications. Converteam’s products reduce the electricity consumption of industrial motors, saving energy use by one-third and bringing customers significant savings in terms of cost, energy intensity and greenhouse gas emissions.

The company’s expertise and geographical reach also will enhance GE’s ability to bring localized solutions to fast growth regions, including Brazil, Russia, China, India and the Middle East.

“GE is thrilled by the growth opportunities that this acquisition brings. GE will heavily invest in new product developments to further expand our offerings in core segments such as metals and marine, while addressing increasing demand for high energy efficiency in oil and gas, thermal power generation and renewables,” said John Krenicki, GE vice chairman and president and CEO of GE Energy.

“The complementary capabilities of GE and Converteam will create a winning platform for success,” said Pierre Bastid, president and CEO, Converteam.

“Converteam brings a team of experts with deep domain knowledge in power conversion, equipped with a strong entrepreneurial mindset and unique technological expertise aligned to customers’ needs.”

Headquartered in Massy, France, Converteam’s 5,500 employees operate across 80 countries with expertise in six key vertical sectors: renewables, power generation, oil and gas and offshore, marine, industry and services.

GE, an advanced technology, services and finance companyinnovates in energy, health, transportation and infrastructure in more than 100 countries with about 300,000 employees worldwide.

Articles other readers have found interesting...

Top News Stories:

Leave a Reply