GE Agrees to Sell Industrial-Engines Unit to Private-Equity Firm Advent for $3.25 Billion
June 25 2018 - 10:28AM
Dow Jones News
By Ben Dummett and Dana Mattioli
General Electric Co. agreed to sell a unit that makes large
industrial engines to private-equity firm Advent International for
$3.25 billion, a move that would bring in needed cash for the
struggling conglomerate.
The deal, announced Monday, confirms The Wall Street Journal
report Sunday. Advent appears to have beaten out Cummins Inc. in an
auction for the businesses, according to people familiar with the
matter.
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, expected to close by the fourth quarter, 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 cuts. 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 25, 2018 10:13 ET (14:13 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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