Suez, a waste and water company based in France, has announced the finalization of its deal to acquire GE Water at a price of $3.4 billion. According to the chief executive of Suez, Jean-Louis Chaussade, when the activities of Suez’s old industrial business are combined with those of GE Water the resulting entity will generate revenues of up to $2.6 billion.
Additionally in the coming 3 to 5 years, there will be an extra $200 million added in revenue as a result of the synergies. There are also about 65 million euros that are expected to arise from cost synergies, most of which are likely to be realized within a period of three years. The French water company will present a new strategy later in the year.
Merger with Baker Hughes
General Electric’s decision to dispose of its GE Water unit had been announced last year in October partly because of an overlap that resulted after the conglomerate merged with Baker Hughes.
“By creating a more simplified and focused business we’ll be better positioned to leverage Power’s strengths across the entire electricity value network to serve our customers and position the business for growth moving forward,” said the president and chief executive officer of GE Power, Russell Stokes.
The acquisition of GE Water by Suez comes a little over a week since the American conglomerate sold its Industrial Solutions unit to Swiss engineering firm ABB at a price of $2.6 billion. This was in line with a readjustment plan set forth by the former chief executive officer of General Electric, Jeff Immelt. The current chief executive officer of GE, John Flannery, is expected to outline his plans next month.
To increase technical capabilities and boost productivity of its newly acquired GE unit, the chief executive officer of ABB, Ulrich Spiesshofer, has indicated that the Swiss engineering firm will spend approximately $400 million restructuring the business. Spiesshofer expects annual cost synergies to reach a figure of $200 million after half a decade.
According to ABB the acquisition of GE Industrial Solutions is expected to put the Swiss firm in a stronger position in the electrification business worldwide. Currently ABB is in the number two position as it trails the French-based Schneider.
In 2016 the amount of pre-tax profits generated by GE Industrial Solutions was approximately $160 million. With the acquisition, ABB’s total investments in the United States have reached close to $14 billion since 2010.