GE Energy is acquiring 90% of Converteam, a leading provider of electrification and automation equipment and systems, for approximately $3.2 billion from a controlling shareholder group that includes management, Barclays Private Equity, and LBO France. The transaction, which is expected to close during third quarter 2011, will significantly expand GE’s offering in rapid growth sectors that demand high energy efficiency, such as oil and gas, thermal power generation, and renewables.
Converteam’s senior management will retain a 10% stake in the company. However, GE has agreed to purchase the remaining shares in the company over the next two to five years. GE expects that the price should be no greater than about $480 million.
Converteam’s solutions enable customers in a variety of industries to replace or improve mechanical processes with high-efficiency electric alternatives that deliver better reliability, less maintenance, and lower emissions. Converteam’s portfolio includes drives and other power electronics, advanced rotating machines, generators, and controls.
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. Approximately 25% 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.