On March 8th, Wednesday, French-based utility company SUEZ bought over 70 per cent of General Electric Co.’s (GE) water unit with Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ) taking the remaining 30 per cent for €3.2 billion (USD$3.38 billion), becoming a dominant player in the industrial water services market. The deal, initially announced in October 2016, is predicted to close by mid-2017.
While SUEZ will be able to strengthen its presence worldwide with their newfound business models and wide-ranging access to many more industrial clients – especially emerging markets and the United States, the purchase comes amidst apprehension regarding regulatory opposition to the GE-Baker Hughes merger.
CEO of SUEZ, Jean-Louis Chaussade, said: “I am very proud to announce the acquisition of GE Water, which will accelerate the implantation of SUEZ’ strategy by strengthening its position in the promising and fast-growing industrial water market. This combination will create further value for both our employees, clients and shareholders. 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’ 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.”
In recent years, lethargic industry demand in Europe and low inflation rates undercut and crippled SUEZ’ growth, with the share price slowly meandering down from April 2015. The sale would boost the company’s cash flow as well as earnings per share.
“We’re getting into a strategic area, which is growing fast,” Chaussade added on a conference call.