BOSTON: General Electric announced plans Tuesday to spend $3.2 billion for a 90 percent stake in Converteam, a company based in Massy, France that specializes in high-efficiency electric power-conversion components like motors, generators, drives and automation controls. The components are used across a variety of industries at the core of GE's industrial and energy operations, including its oil and gas initiatives, as well as solar and wind power. Under the terms of the agreement, which is expected to close during the third quarter of 2011, executives at Converteam would retain a 10 percent stake in the company and management at both companies would purchase any remaining shares over the next two to five years. In a statement, GE said the price for those shares would vary, but would likely be no more than $480 million. The move represents the latest in a string of energy infrastructure acquisitions for GE, which also picked up the well-support unit of John Wood Group for $2.8 billion last month, as well as Wellstream Holdings, the British oil services company for $1.3 billion last December and Dresser, a manufacturer of and servicer of natural gas engines, fueling systems and other components, for $3 billion last fall. Joseph R. Mastrangelo, a vice president with GE'S oil and gas division, described the acquisition of Converteam as a strategic move, allowing the company and its industrial and offshore oil and gas customers, for example, to readily replace inefficient fixed-speed drive technology with Converteam's more flexible variable-speed drive systems, which respond in a more fine-tuned way to production demands, saving energy and reducing costs. Converteam also produces converters that help smooth out the intermittency bumps that make solar and wind power a challenge to integrate with other sources of electricity. "That's what this technology allows us to do," said Joe Mastrangelo a vice president for GE Energy's oil and gas division. "Converteam has a full technology portfolio that optimizes performance." Roughly a quarter of the world's electricity is used to turn rotating machines in all manner of industrial and power generating applications, according to General Electric, and highly engineered components designed to make those processes as efficient as possible is an increasingly competitive - and lucrative - field. The sector was valued at roughly $30 billion last year, and alongside Converteam, companies like ABB, Siemens, Emerson Electric, Rockwell, Schneider Electric, are seeking to capture a piece of the growing market.
