GE Energy has entered into an agreement to acquire 90 per cent of Converteam, a provider of electrification and automation equipment and systems, from a controlling shareholder group that includes management, Barclays Private Equity and LBO France, for $3.2bn.
The transaction, endorsed by Converteam’s management team and employee representative groups, is expected to close during third quarter 2011, subject to customary closing conditions.
Converteam’s senior management will retain approximately a 10 per cent 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 $480m.
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 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.
The multi-sector energy efficiency, electrification and automation industry, in which Converteam participates, was valued at over $30bn in 2010 and is growing at rates above global GDP growth.
Approximately 25 per cent 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.
Building on more than 100 years of expertise in power electronics and automation technologies, 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 5300 employees, including more than 1600 engineers, and operates in more than 80 countries. Converteam recently announced 2010 sales of approximately $1.5bn and EBITDA of approximately $239m, with approximately 36 per cent growth in orders versus 2009.
John Krenicki, GE vice chairman and president and CEO of GE Energy, said: “High-efficiency, fully electric solutions represent a megatrend across the global energy landscape. Our customers in key industries increasingly demand more reliable, efficient and flexible solutions in order to improve their competitiveness.
"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.”
Pierre Bastid, president and CEO, Converteam, 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. Within the GE family, Converteam now has the opportunity for further development and growth, benefitting our customers and employees alike.”
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