GE said the move to buy LM Wind Power will be completed in the first half of 2017, and will be accretive earnings beginning in 2018. The acquisition allows “in-sourcing” of turbine blade design and manufacturing to the company’s Renewable Energy unit.
LM Wind Power has been owned by London-based private equity firm Doughty Hanson since 2001. The $1.65 billion price tag values LM at about 8.3x 2016 EBITDA.
From the press release:
Jérôme Pécresse, President and CEO of GE Renewable Energy said, ”Increasingly, wind turbine innovation is driven by system design, materials science, and analytics — all elements of the GE Store. We, along with LM Wind Power, have a deep pipeline of technical innovations that can further reduce the cost of electricity. With our combined global footprint, we can build flexible solutions for customers around the world. This combination will help sustain growth in the wind power industry.
“The acquisition of LM Wind Power, a leading supplier to the wind industry, will help us deliver on that goal. Simply stated, we’ll be more local, have more flexibility and knowledge in turbine design and supply, and more ability to innovate and reduce product costs, while improving turbine performance. We will also develop enhanced digital and services capabilities. All of which will be good for customers, competition in the industry, and the growth of wind power globally.”
GE shares were mostly flat in premarket trading Tuesday at $28.86. Year-to-date, GE has fallen 7.35%, versus a 6.03% rise in the benchmark S&P 500 during the same period.