GE to sell water unit in €3.2b deal
General Electric Co (GE) agreed to sell its water unit in a €3.2 billion (RM15.16 billion) deal, putting it a step closer to the planned merger of its oil division with Baker Hughes Inc.
The all-cash sale to French utility Suez SA and a Canadian pension fund manager comes about four months after GE put the water unit on the market amid concerns of regulatory pushback against the Baker Hughes combination.
GE is overhauling its portfolio to focus on industries such as energy and aviation while tilting away from finance and consumer operations.
“We had an overlap in our water business,” said Steve Bolze, chief executive officer (CEO) of GE Power. The deal with Suez “works for the water business, it works for Power and it works for GE’s capital allocation”.
Suez said it would gain broader access to industrial clients and build its international presence, notably in the United States and emerging markets.
The utility’s growth has been undermined by low inflation and sluggish industrial demand for its services in Europe. The transaction will help grow earnings per share and cash flow within the first year, it said.
“We’re getting into a strategic area, which is growing fast,” said Suez CEO Jean-Louis Chaussade.
GE’s water unit had about €2.1 billion of revenue last year, half of which came from the US.
Suez, which plans to contribute its existing industrial water unit to the venture, will hold a 70 per cent stake, with Caisse de Depot et Placement du Quebec, Canada’s second-biggest pension fund manager, owning the rest.