China’s XD Group in talks to buy General Electric JV Prolec GE for up to $1 bn: report

China's power equipment maker XD Group is in talks to buy Prolec GE Internacional, the joint venture between General Electric Co (GE) and Mexico's Xignux SA, for up to $1 billion, Bloomberg today reported, citing three people with knowledge of the matter.

The talks are at an early stage, one of the people told Bloomberg.

Mexico-based Prolec GE, where GE holds a 49.9 per cent stake, is one of the largest transformer manufacturers in the Americas, offering a complete line of transformer products used for the generation, transmission, and distribution of electric power.

It  has annual sales of about $600 million, according to a Bloomberg source.

Founded in 1959, state-controlled XD Group, also known as XD Electric Group, is the largest manufacturer of transformers in China.

The Shanghai-listed company specialises in manufacturing equipment for electrical transmission and distribution systems, such as high voltage substations, DC voltage lines, transformers, and gas-insulated switchgear.

It has nine core manufacturing companies, of which 3 are highly specialised firms that are engaged in international businesses, and has 6 foreign joint ventures. 

In May 2012, GE acquired a 15-per cent stake in XD Electric Group for about $535 million, in order to enter into China's vast electrical infrastructure market. (See: General Electric to buy a 15 % stake in China XD Electric for $535 mn)

GE and China XD had also agreed to form a 41:59 per cent joint venture to distribute GE's electrical grid solutions to XD's local customers.