General Electric Company
) recently formed a joint venture with leading Chinese
transformer manufacturing firm XD Electric Group to be one of the
premier global providers of comprehensive transmission and
distribution (T&D) technology solutions. At the same time,
General Electric paid $552.2 million (3.38 billion yuan) for a
15% ownership stake in XD Electric along with a seat in the
The transaction took 15 months for completion since its initial
announcement in May 2012 due to pending regulatory approvals. The
partnership combined General Electric's state-of-the-art grid
automation capabilities and global energy presence with XD
Electric's comprehensive portfolio of high-voltage (HV) power
equipment to capitalize on the strong growth dynamics of a
The JV will offer end-to-end T&D solutions across the globe
and facilitate emerging countries to meet the demand-supply
imbalance for electricity due to rapid demographic and
urbanization trends. In addition, the JV will also provide an
opportunity to customers in developed countries with HV solutions
to upgrade their aging grids with more efficient and reliable
electrical power systems.
The aggregate electricity demand across the globe is expected to
increase by over 70% by 2035, while global grid modernization
investments are expected to rise by 10% over the next five years.
As such, the JV will provide a lucrative proposition to
prospective customers to upgrade and expand their electrical
infrastructure driven by the skilled expertise and technical
know-how of both the participating companies.
General Electric further anticipates doubling sales of power
transmission products and services in digital energy business to
$4 billion annually in the next decade. Moreover, the JV broadens
General Electric's customer and geographical footprint by
leveraging XD Electric's strong regional presence. On the other
hand, XD Electric will benefit its strategic objective of fast
globalization to become a stronger force to reckon with, in the
global T&D segment.
General Electric is one of the largest and most diversified
technology and financial services corporations in the world. With
products and services ranging from aircraft engines, power
generation, water processing, and security technology to medical
imaging, business and consumer financing, media content and
industrial products, the company serves over 100 million
General Electric currently has a Zacks Rank #3 (Hold). Other
companies in the industry that are worth mentioning include
Federal Signal Corp.
), both having a Zacks Rank #2 (Buy), while
Hutchison Whampoa Ltd
) holds a Zacks Rank #1 (Strong Buy).
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