Industrial giant GE announced Tuesday (Oct. 11) its plans to purchase Danish wind turbine maker LM Wind Power for $1.65 billion, allowing the U.S. industrial giant to continue expanding its renewable energy reach across the globe.
LM Wind Power operates a scaled-down manufacturing facility at the Little Rock Port Authority where the company’s payroll has ranged from 100 workers to more than 500. The Danish wind turbine maker originally employed 300 workers in Little Rock, but cut hundreds of jobs at the beginning of 2013 due to the expiration of a federal tax credit provision.
A few months later, though, LM Wind Power rehired hundreds of workers to fill new orders across the globe for its giant wind turbines.
The company had to repay the state of Arkansas $3.4 million for not meeting the terms of the incentive package it received in 2007, when it announced plans to hire on 1,100 employees. Talk Business & Politics has reached out to local LM Wind Power officials and will update this story if the company responds.
On LM Wind Power’s Facebook page for its Little Rock operations, company officials wrote: “A new chapter in the history of LM Wind Power begins today.”
Since 2001, LM Wind Power has been owned by Doughty Hanson, a leading London-based private equity firm. GE said the acquisition, which is valued at 8.3 times pro forma earnings before interest, taxes, depreciation and amortization, will in-source 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.
”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.”
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. GE does not produce blades and LM Wind Power is its largest blade supplier.
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.
Following the closing of the deal, GE said it 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.
Company officials said 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.
GE Renewable Energy said it is expected to sustain a solid growth rate with LM Power over the next few years, but offered no information on the synergies and efficiencies it expects by folding the Danish company’s employees into its GE’s larger global operations.
“LM Wind Power has a terrific team, with a strong passion for their mission to power a cleaner world,” Pécresse stated. “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 deal with LM Wind Power comes nearly a year after GE purchased Paris-based Alstom’s power and grid businesses for $13.5 billion, the largest-ever industrial acquisition for the U.S. conglomerate. GE said integration with Alstom Power is on track and global demand for the company’s power products is robust.
GE said it expects sustainable growth in margins and returns from both the Alstom and LM Wind Power acquisitions, and the deal with the Danish wind turbine maker to be accretive to earnings in 2018. The acquisition is subject to regulatory and governmental approvals and GE expects to close the transaction in the first half of 2017.