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GE Plans to Capture More Wind with $1.65B Acquisition of LM Wind Power

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GE the world’s leading digital industrial company, will  purchase  LM  Wind  Power, a Denmark-based manufacturer and supplier of rotor blades to the wind industry, for $1.65 billion (€1.5 billion). The deal in-sources wind turbine blade design and manufacturing for GE’s Renewable Energy business, improving its ability to increase energy output and create value for onshore and offshore customers. Since 2001, LM Wind Power has been owned by Doughty Hanson, a leading London-based private equity firm.

“LM Wind Power has a terrific team, with a strong passion for their mission to power  a cleaner world. Their values of customer- focus, teamwork, trust, and ownership are harmonious with our own values. I’m very optimistic that together we will help shape the future of energy.”

The acquisition is valued at 8.3 times pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) (2016 estimate). The transaction is subject to customary regulatory and governmen tal approvals and GE expects to close the transaction in the first half of 2017. GE expects the acquisition to be accretive to earnings in 2018.

As the cost of electricity from renewable sources continues to decline and nations pursue low-carbon forms of energy, renew- able sources are gaining share in power generation capacity. In 2015, approximately 50% of all new electricity capacity additions were renewable energy sources, with wind representing 35% of that growth.

Jérôme Pécresse, President and CEO of GE Renewable Energy said, ”Increasingly, wind turbine innovation is driven by system design,   materials   science,  and analytics

-- all elements of the GE Store. We, along with LM Wind Power, have a deep pipeline of technical innovations that can further reduce the cost of electricity. With our combined global footprint, we can build flexible solutions for customers around the world. This combination will help sustain growth in the wind power industry.

“The acquisition of LM Wind Power, a leading supplier to the wind industry, will help us deliver on that goal. Simply stated, we’ll be more local, have more flexibility and knowledge in turbine design and supply, and more ability to innovate and reduce product costs, while improving turbine peformance. We will also develop enhanced digital and services capabilities. All of which will be good for customers, competition in the industry, and the growth of wind power globally.”

Marc de Jong, CEO of LM Wind Power, said “This deal will merge the speed and focus of LM Wind Power’s entrepreneurial culture with GE’s world-class engineering and operational capabilities. Our two organiza- tions are highly complementary and the transaction positions us well to respond faster to customer needs and enhance performance of wind turbines to ultimately reduce the cost of energy. We look forward to working closely with the GE Renewable Energy team to accelerate our growth strategy and continue to deliver greater value to all our customers.”

With over three decades of  experience  and 190 patents, LM Wind Power is a leading supplier of blades for the wind turbine industry, offering blade development, manufacturing, service and logistics. Today, GE is not producing blades and LM Wind Power is its largest blade supplier. Since 1978, LM Wind Power has produced more than 185,000 blades, corresponding to approximately 77 gigawatts (GW) of installed wind power capacity, which can each year effectively replace approximately 147 million tons of CO2. Their success was achieved through a commitment to continuous improvement, quality, cost, research, product development, and excellent customer relationships and service.

LM Wind Power’s global manufacturing footprint includes 13 factories located on four continents in 8 countries including Denmark, Spain, Poland, Canada, USA, India, China and Brazil, in or close to key wind power growth regions to effectively serve its customers.

Pécresse stated, “LM Wind Power has a terrific team, with a strong passion for their mission to power a cleaner world. Their values of customer-focus, teamwork, trust, and ownership are harmonious with our own values. I’m very optimistic that together we will help shape the future of energy.”

GE Renewable Energy is expected to sustain a solid growth rate over the next few years. The integration with Alstom Power is on track and global demand is robust. The business can fully leverage  all  elements  of the GE Store. GE expects sustainable growth in margins and returns.

Following the closing of the deal, GE intends  to  operate  LM  Wind  Power  as  a standalone unit within GE Renewable Energy and will continue to fully support all industry customers with the aim of expand- ing these relationships. GE will also retain the ability to source blades from other sup- pliers. LM Wind Power will continue to be led by its existing management team and be headquartered in Denmark, where it also maintains a global technology center.

Commission clears acquisition of LM Wind Power Holding by General Electric Company

The European Commission has approved unconditionally under the EU Merger Regulation the acquisition of LM Wind Power of Denmark, by General Electric Company of the US. The Commission concluded that the merged entity would continue to face effective competition in Europe.

General Electric produces onshore and offshore  wind  turbines.  LM  Wind  Power designs and manufactures blades that are sold to General Electric and its competitors as a component for the wind turbines. The Commission’s investigation focused on the effect of the transaction both on the upstream market for the manufacture and supply of wind turbine blades, as well on the downstream markets for the manufacture and supply of onshore and offshore wind turbines.

General Electric has a relatively small mar- ket share in both onshore and offshore wind turbines. Although LM Wind Power has a significant market share, its market position has been decreasing in the past few years and in-house blade production also has to be taken into account.

Based on the results of its market investigation, the Commission concluded that competitive concerns would be unlikely to arise after the transaction because:

1. GE would not be in a position to significantly affect the upstream market. In particular since competing blade manufacturers would continue to have access to wind turbine manufacturers other than GE.

2. In relation to the downstream markets, GE would continue to face significant com- petition from other major turbine manufacturers, such as Siemens, (MHI) Vestas, Nordex and Senvion, who either manufac- ture their blades in-house and/or are not dependent on LM Wind Power for supplies.

Therefore, the Commission concluded that the proposed acquisition would not result in a significant reduction in competition in the EU’s Single Market.