GE Nears Deal to Sell Industrial-Engines Unit to Private-Equity Firm Advent -- Sources

By Ben Dummett and Dana Mattioli

General Electric Co. is nearing a deal to sell a unit that makes large industrial engines to private-equity firm Advent International for $3 billion or more, people familiar with the matter said, a move that would bring in needed cash for the struggling conglomerate.

A deal, if completed, could be announced on Monday, the people said. Advent appears to have beaten out Cummins Inc. in an auction for the businesses, according to the people.

The sale is another step in Chief Executive John Flannery's push to simplify the beleaguered company after years of underperformance, by selling $20 billion worth of assets by the end of next year. GE last month agreed to sell its railroad division in a complex deal worth $11 billion.

But investors are waiting for a major portfolio update expected to come soon. Mr. Flannery continues to preach that "everything is on the table, " including a breakup of the 126-year-old company.

GE just learned in recent days that it will be removed from the Dow Jones Industrial Average after more than a century in the blue-chip index. The company's shares closed Friday at $13.05, down by more than half in the past year.

The assets being sold are GE's so-called distributed-power business, which makes Jenbacher and Waukesha gas engines. These truck-sized machines, often painted bright orange or green, are used to generate electricity in remote areas, along with other industrial operations requiring a mechanical drive.

The deal unwinds two acquisitions by former CEO Jeff Immelt, who left last summer after 16 years at the helm. Mr. Immelt exited amid investor pressure to improve profits and revive the stock price, and following his departure GE slashed its dividend and financial targets.

GE acquired Jenbacher, based in Austria, in 2003. Waukesha, which dates back to 1906, came as a part of GE's purchase of oil-and-gas equipment maker Dresser Inc. for $3 billion in 2010.

GE caused a fracas in 2015 when it said it would stop making engines in Waukesha, Wis., and instead move 350 jobs to a new factory in Canada to use that country's export-financing regime to pursue new overseas business. GE made the move to adjust to the U.S. Congress's failure to reauthorize the Export-Import Bank, the export-financing entity in the U.S.

A global buyout firm, Advent manages about $41 billion in assets across a range of sectors from industrial to financial services and telecommunications and media.

The expected deal with Advent is somewhat surprising as buyout firms typically are at a disadvantage in bidding against industry players because they have fewer opportunities to cut overlapping costs. Advent, together with Bain Capital LP, in March lost out to a group led by Carlyle Group LP in the high-profile auction for the specialty-chemicals business of Dutch paints giant Akzo Nobel NV.

Thomas Gryta contributed to this article.

Write to Ben Dummett at ben.dummett@wsj.com and Dana Mattioli at dana.mattioli@wsj.com

(END) Dow Jones Newswires

June 24, 2018 18:42 ET (22:42 GMT)

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