Abstract

MONTRÉAL—General Electric Co. (GE) has agreed to sell its Water & Process Technologies business (often referred to as GE Water) to Caisse de dépôt et placement du Québec (CDPQ) and SUEZ for approximately $3.4 billion, the companies announced. The proposed sale is expected to close in mid-2017 and is subject to regulatory approval and other conditions.

Under terms of the agreement, CDPQ, one of Canada’s largest pension funds, will pay more than $700 million for a 30% stake and SUEZ will own the balance of GE Water. SUEZ said it plans to place its industrial water business in GE Water to create a new “self-standing” unit within the company that has a global focus on industrial water.

GE Water has operations in 130 nations and more than 7,500 employees. Its business includes treatment equipment and specialty chemicals, as well as water and wastewater services.

In a statement released by GE, Heiner Markhoff, the president and CEO of GE Water said, “…I can say that we have just found a great home for our people and our business.” He further noted that by joining SUEZ “we hope to take product innovation to the next level, combine our highly complementary strengths, better serve our customers, and grow in new and exciting ways.”

For CDPQ, the transaction will increase its exposure to the water sector. CDPQ is an institutional investor that manages funds primarily for public and parapublic pension and insurance plans. At the close of 2016, it held $270.7 billion in net assets.

"With an emphasis on industrial applications, GE Water has positioned itself as a key player in the water treatment industry,” said Michael Sabia, president and CEO of CDPQ in a press release. He went on to say that the investment fits with CDPQ's “long-term vision and its strategy of increasing its emphasis on stable assets anchored in the real economy, alongside a world-class operator such as SUEZ.”

In a statement about the proposed sale, SUEZ CEO Jean-Louis Chaussade said the GE Water acquisition “will accelerate the implementation of SUEZ' strategy by strengthening its position in the “promising and fast-growing industrial water market.”

“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, a financial investor which shares our long term vision for our business,” Mr. Chaussade said.

As noted, SUEZ has its own industrial water businesses. As a part of its overall business, the company offers municipal drinking water and wastewater treatment services worldwide. It provides drinking water to 92 million people and wastewater treatment services to 65 million people. Globally, SUEZ has 82,536 employees and had revenues of €15.3 billion in 2016.

Sale closes chapter on water business effort launched in 1999

The planned sale by GE of its water business to SUEZ and CDPQ will conclude the chapter on a business unit that began in October 1999 when the company bought 82% of Glegg Industries Inc., a maker of high-purity water systems for semiconductor and power generation applications.

Following that deal, GE went on to buy BetzDearborn in February 2002, Osmonics in February 2003, Ionics in February 2005, and ZENON Environmental Inc. in June 2006.

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