French water treatment and waste management company Suez announced that it has reached an agreement to acquire GE Water & Process Technologies for €3.2bn in cash.
For the acquisition, Suez has formed a 70/30 joint venture with Caisse de dépôt et placement du Québec (CDPQ), a Canadian pension fund manager. The transaction is subject to regulatory approvals in the US and the European Union and is expected to close by the end of mid-2017.
In October last year, GE announced the sale of its water division, as part of its proposed merger deal with Baker Hughes. Following the announcement, several companies were rumoured to be in the race for the acquisition.
GE Water has a presence in 130 countries, with a workforce of 7,500 employees, providing equipment and services for treating water and wastewater. It generated a revenue of about $2.1bn in 2016 from its services to industrial clients.
By integrating GE Water into its industrial business, Suez plans to broaden its access to industrial clients and expand its international presence in key locations such as the US and other emerging markets.
The acquisition is expected to enable Suez to strengthen its position in global industrial water market that it is estimated to be worth $95bn.
Besides, Suez will be able to increase its innovation capabilities, as the acquisition offers a global network of research and development centres and a large portfolio of patents.
SUEZ CEO Jean-Louis Chaussade said: “Clients will benefit from the combined knowledge, expertise, geographic footprint and leading edge products and services available. The transaction will also deliver strong value to our shareholders by enhancing SUEZ’s profitable growth profile.
“I look forward to integrating GE Water’s highly skilled staff to our teams to form an unparalleled industrial water platform. We are also thrilled to join forces with CDPQ, which shares our long term vision for our business.”
CDPQ president and CEO Michael Sabia said: “With an emphasis on industrial applications, GE Water has positioned itself as a key player in the water treatment industry thanks to its cutting-edge technology and a management team that has proven itself highly skilled at leveraging that competitive advantage.
“Operating in a core industry, GE Water has built a premier business with recurring revenues and a high-quality and diversified customer base. This investment is therefore highly aligned with CDPQ’s long-term vision and its strategy of increasing its emphasis on stable assets anchored in the real economy, alongside a world-class operator such as SUEZ.”
CDPQ is, a Quebec, Canada-based institutional-investor which invests funds from pension and insurance plans. By 2017, the company has net assets of around $270bn. For the transaction, CDPQ will invest about $700m (€664m) for its 30% stake.
Image: Suez to acquire GE’s Water unit. Photo: Courtesy of John Kasawa/FreeDigitalPhotos.net.