GE to Acquire LM Wind Power, a Global Designer and Manufacturer of Wind Turbine Blades

GE announced its intent to purchase LM Wind Power, a Denmark-based manufacturer and supplier of rotor blades to the wind industry, for $1.65 billion (€1.5 billion). The deal in-sources wind turbine blade design and manufacturing for GE's Renewable Energy business, helping to improve its ability to increase energy output and create additional value for onshore and offshore customers. Since 2001, LM Wind Power has been owned by Doughty Hanson, a London-based private equity firm.

The acquisition is valued at 8.3 times pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) (2016 estimate). The transaction is subject to customary regulatory and governmental approvals and GE expects to close the transaction in the first half of 2017. GE expects the acquisition to be accretive to earnings in 2018.

As the cost of electricity from renewable sources continues to decline and nations pursue low-carbon forms of energy, renewable sources are gaining share in power generation capacity. In 2015, approximately 50 percent of all new electricity capacity additions were renewable energy sources, with wind representing 35 percent of that growth.

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. Today, GE is not producing blades, and LM Wind Power is its largest blade supplier. 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. 

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,.

GE Renewable Energy is expected to grow. The integration with Alstom Power is on track and global demand is increasing. The business can leverage elements of the GE Store. GE expects growth in margins and returns.

Following the closing of the deal, GE intends to operate LM Wind Power as a standalone unit within GE Renewable Energy, and will continue to support its 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.

Keywords: Renewables Industry, Wind Turbine Industry, Rotor Blades, Wind Turbine Blade Design, ARC Advisory Group.