GE to sell water unit in €3.2b deal

New Straits Times - - Business -

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.

BLOOMBERG PIC

GE Power chief ex­ec­u­tive of­fi­cer Steve Bolze says the firm has an over­lap in its water busi­ness.

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