GE (NYSE:GE – News) announced today that its Energy division has entered into an agreement to acquire approximately 90% of Converteam, a provider of electrification and automation equipment and an active player in the development of direct drive permanent magnet generators (PMG) for wind turbines.
GE will purchase the controlling share for approximately $3.2 billion from group that includes management, Barclays Private Equity and LBO France.
The transaction, endorsed by Converteam’s management team and employee representative groups, is expected to close during 3Q11, subject to customary closing conditions.
Converteam’s senior management will retain approximately a 10% 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. 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.
Converteam’s systems enable customers in a variety of industries to replace or improve mechanical processes with high-efficiency electric alternatives. 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:
- Converting electricity into mechanical performance to power and control motion or industrial assets such as natural gas pipelines and gas gathering compressors
- Turning mechanical power into grid quality electricity in wind turbine, thermal power or hydro power installations
- Adjusting electrical frequency to precise user requirements, as in solar power inverters
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.
Converteam operates across six key vertical sectors: offshore and onshore oil and gas, power generation, wind and solar renewables, industrial, marine and services.
Headquartered in Massy, France, Converteam has 5,300 employees, including more than 1,600 engineers, and operates in more than 80 countries. Converteam recently announced 2010 sales of approximately $1.5 billion and EBITDA of approximately $239 million, with approximately 36% growth in orders versus 2009.
Earlier this month Converteam and power generating group Alstom (ALO.PA) announced a collaboration to build two prototype offshore wind turbines using direct drive permanent magnet generators (PMG). The 6MW turbines will be the largest of their kind built to date.
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