GE's (GE) Move to Acquire LM Wind Power Helps to 'De-risk' Supply Chain - RBC Capital
- Dow opens at record high led by oil, bank stocks
- Oil tops $55 for first time in 16 months as OPEC deal fuels buying
- Consolidated Communications (CNSL) to Acquire FairPoint Communications (FRP) in $1.5B Deal
- Wall St. stock futures fall after Italy referendum
- Pre-Open Stock Movers 12/05: (FRP) (GMED) (CHK) Higher; (CERC) (HDSN) (MRVL) Lower (more...)
Get the Pulse of the Market with StreetInsider.com's Pulse Picks. Get your Free Trial here.
The firm commented on the deal:
Given that LM Wind Power was the largest supplier of rotor blades for GE (which does not produce any blades in-house), this deal effectively in-sources another component of the design and manufacturing of GE’s wind turbines within the Renewable Energy segment. In our view, this vertical integration helps “de-risk” the supply chain for GE and reduce costs in the wind turbine manufacturing process. In addition, management believes it can increase the energy output of its wind turbines to create value for customers. The transaction multiple of 8.3x pro forma 2016 EBITDA is reasonable in our view, and consistent with GE’s prior vertical integration deal of Avio Aero for 8.5x in 2013. The deal is expected to be accretive to earnings in 2018, following a targeted completion date in 1H17. Since 1978, LM Wind Power has produced over 185,000 blades and manages a global manufacturing footprint of 13 factories in 8 countries. Importantly, LM Wind Power is expected to operate as a standalone unit within GE Renewable Energy and still supply wind turbines to others OEMs in the industry besides GE.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Credit Suisse Upgrades National Beverage (FIZZ) to Outperform
- Mizuho Securities Upgrades Citrix Systems (CTXS) to Buy
- Jefferies Raises Price Target on Teleflex (TFX) Ahead of Vascular Solutions (VASC) Acquisition
Create E-mail Alert Related CategoriesAnalyst Comments
Related EntitiesRBC Capital, Earnings, Definitive Agreement
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!