GE to Sell Distributed Power Business to Private-Equity Firm

GE will sell its Distributed Power business, which includes the company’s Jenbacher and Waukesha engines, to Advent International, a global private equity investment company, in a deal worth $3.25 billion.

“In Advent, we have a partner that shares our team’s passion for delivering outstanding customer outcomes,” Carlos Lange, president of Distributed Power, said in a press release announcing the agreement. “Our Jenbacher and Waukesha brands and engines are recognized all over the world for their performance and reliability, and Advent’s deep sector expertise will allow us to further strengthen our capabilities for the benefit of our worldwide customers. Advent will help accelerate our growth as we continue to execute on our priorities.”

Distributed Power, a business unit of GE Power, is a provider of reciprocating gas engines, power equipment, and services focused on power generation and gas compression at or near the point of use. Distributed Power offers a product portfolio that includes fuel-flexible industrial gas engines generating 200 kW to 10 MW of power for numerous industries globally. The division has approximately 3,000 employees and three main facilities located in Austria, the U.S. and Canada.

According to GE, the Distributed Power business has delivered more than 48,000 reciprocating gas engines to customers around the world. The unit had sales of $1.317 billion last year. Reuters reported that the deal values the company at about 11.2 times its estimated 2018 earnings before interest, taxes, depreciation, and amortization.

“Distributed Power is a terrific asset with highly regarded engines that are the go-to [original equipment manufacturer] for the efficient generation of electrical power and heat as well as gas compression,” said Ranjan Sen, managing partner at Advent International. “The business has significant growth potential on a global scale and talented employees all over the world. We plan to invest substantially in critical areas such as the product portfolio, service network and digitization to support Distributed Power in sustainably strengthening its market position.”

Advent claims to have completed more than 100 transactions in the industrials, energy, and business services sectors. The company believes its experience in carve-outs of large industrial companies will help the Distributed Power business expand its market position while establishing it as a strong standalone entity.

Rumors circulated last week that GE would make a significant announcement concerning reorganization of the company in the face of economic struggles. GE was kicked out of the prestigious Dow Jones Industrial Average (DJIA) on June 19. The company’s stock has lost about half its value over the past year and had been the worst-performing stock in the DJIA, down about 25% since the start of 2018. News of the Distributed Power sale did nothing to bolster the stock, as it hovered near its lowest price of the year following the announcement.

Aaron Larson, executive editor (@AaronL_Power, @POWERmagazine)