China's XD Group in talks to buy General Electric JV Prolec GE for up to $1 bn: report
14 May 2013
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.