GE (NYSE: GE) said it agreed to purchase Denmark-based LM Wind Power, a manufacturer and supplier of rotor blades to the wind industry, from London-based private equity firm Doughty Hanson, for $1.65 billion (€1.5 billion).
Until now, GE was not producing blades in-house, and LM Wind Power was its largest blade supplier. The deal will now bring GE’s wind turbine blade design and manufacturing in-house.
The acquisition is valued at 8.3 times 2016 forecast EBITDA. Doughty Hanson was advised by HSBC. The deal is subject to customary regulatory and governmental approvals and is expected to close in the first half of 2017.
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. The company was originally founded in 1940 as a furniture manufacturer.
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. In June of this year, LM Wind Power unveiled the world’s longest ever blade, 88.4 meters long.
For the first half of 2016, the company reported sales of €491 million and EBITDA of €87 million which represented year-on-year growth of 40% and 81% respectively.
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.
Doughty Hanson originally acquired LM Wind Power from its founder in 2001. Commenting on the transaction, Dick Hanson, chairman of Doughty Hanson and chairman of LM Wind Power, said: “This is a significant transaction in the history of Doughty Hanson. We have owned LM Wind Power for 15 years and under our ownership the business has grown from a business with sales of €260 million employing 2,500 people to one with sales approaching €1 billion and over 9,000 employees.”
GE expects the acquisition to be accretive to earnings in 2018, and GE Renewable Energy is expected to sustain a solid growth rate over the next few years, as well as growth in margins and returns, it says. The integration with Alstom Power is on track and global demand is robust.
”Increasingly, wind turbine innovation is driven by system design, materials science, and analytics — all elements of the GE Store,” said Jérôme Pécresse, president and CEO of GE Renewable Energy. “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.
“This deal will merge the speed and focus of LM Wind Power’s entrepreneurial culture with GE’s world-class engineering and operational capabilities,” said Marc de Jong, CEO of LM Wind Power.
After the closing, 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 expanding these relationships. GE will also retain the ability to source blades from other suppliers. 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.
Paris-based GE Renewable Energy is a $9 billion dollar startup backed by GE, that brings together one of the broadest product and service portfolios of the renewable energy industry. Combining onshore and offshore wind, hydro and innovative technologies such as concentrated solar power, GE Renewable Energy has installed more than 370 gigawatts capacity globally to make the world work better and cleaner. With 13,000 employees present in more than 55 countries,