GE Adding Converteam to Growing Energy Portfolio

March 30, 2011
Conglomerate will pay $3.2 billion for power-conversion system specialist

General Electric is continuing its aggressive acquisition streak in the energy-supply sector with a $3.2-billion agreement to buy a majority stake in Coverteam, a provider of power-conversion systems and equipment. GE Energy will purchase a 90% stake over a five-year period in a transaction that has the endorsement of Converteam’s management, who will retain their 10% share.

Converteam is a former Alstom business unit, based in France, that supplies drives and other power electronics, advanced rotating machines, generators, and controls that convert electricity to power/control mechanical systems in critical industrial process, such as natural-gas pipelines or compressors. Other applications include converting alternative energy (e.g., wind, thermal, or hydro power) into grid-compatible electricity; and adjusting electrical frequency for specific requirements (e.g., in solar-power inverters.)

The organization has 5,300 workers, including 1,600 engineers, and operates in 80 countries. It posted 2010 revenues of approximately $1.5 billion, and reported an increase in orders of approximately 36%.

"High-efficiency, fully electric solutions represent a megatrend across the global energy landscape,” according to John Krenicki, GE vice chairman and president and CEO of GE Energy. “Our customers in key industries increasingly demand more reliable, efficient, and flexible solutions in order to improve their competitiveness."

GE indicates that the Converteam capabilities will support its global electric solutions sales, notably as natural-gas storage and pipeline projects pursue electrification strategies. It also enhances GE’s solar and “smart grid” strategy, as Converteam products support the effort to turn intermittent and variable power sources (wind, solar, tidal) into quality and reliable power.

Converteam president and CEO Pierre Bastid said, "GE and Converteam complement each other superbly. As a long-standing partner, GE fully understands our business model and will add significant value by allowing our technologists to work within GE's tremendous network of researchers and engineers. In addition, we will expand our global footprint, extend our customer reach, and be able to tap into a world-class supply chain."

Since late 2010, GE has announced $5 billion worth of acquisitions in energy businesses, including a $3-billion acquisition of Dresser Inc., a manufacturer of equipment and components used in oil and gas transport; an agreement to pay $520 million for Lineage Power Holdings Inc., which makes equipment that converts alternating current to direct current, as well as power-module and data-center systems; a $1.25-billion offer to acquire Wellstream Holdings plc, which engineers and manufactures flexible subsea pipeline products; and purchased Calnetix Power Solutions’ industrial waste-heat recovery processes, for electrical generation.

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