GE Energy Agrees to Acquire Major Stake in French Rival Converteam

American corporate giant GE Energy has announced that it is acquiring about 90 percent of the French company Converteam Group in a $3.2 billion deal expected to close in the third quarter.

Converteam’s senior management will retain approximately a 10 percent stake in the company. GE is however expected to purchase the remaining shares over the next two to five years.

The price for the shares, according to Converteam, can vary based on business performance and other factors. GE said it expects the price should be no greater than approximately $480 million.

Converteam, which has its North American headquarters in Pittsburgh, employs more than 300 people in O'Hara Township, and the acquisition does not seem to have any impact on its employees in America.

Converteam, which sells electrification and automation equipment and systems, is a fourth such unit within the American energy giant.

Analysts say the acquisition is important for GE as it helps the company strengthen its position in Brazil, Russia, China, India and the Middle East. Moreover, Converteam can enable GE’s offering in oil and gas, thermal power and renewable energy. And it broadens GE’s portfolio of solutions for metals, mining and marine customers.

GE is acquiring the stake from a group of existing shareholders that includes Barclays Private Equity and LBO France.

The electrification and automation industry are the important sectors and are valued at over $30 billion.

Converteam’s 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.

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 percent growth in orders versus 2009.

 “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 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,” said Pierre Bastid, president and CEO, Converteam.