GE Nears Deal to Sell Industrial-Engines Unit to Private-Equity Firm Advent -- Sources
25 June 2018 - 8:57AM
Dow Jones News
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)
Copyright (c) 2018 Dow Jones & Company, Inc.
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