Eyeing energy trends, GE goes shopping
Our information and communications might be increasingly virtual, wireless and in the cloud, but there’s one limitation all the technology in the world can’t erase: IT’s dependence on energy.
That fact explains why companies like GE are looking to broaden their presence in energy-related sectors and buy up firms with products and services that can help ensure a more energy-smart corporate future. In recent months, for example, GE has acquired energy technology company Dresser Inc. and, just this week, Lineage Power. It’s also planning to make an offer for Wellstream Holdings PLC, a UK-based maker of oil pipes.
Each of the acquired or targeted firms has its own particular specialty. Dresser, for example,snapped up for $3 billion, makes technologies to measure, regulate and control aspects of gas and fuel distribution. It currently provides these types of infrastructure devices and services to customers in more than 150 countries.
The $520 million deal for Lineage Power, on the other hand, gives GE new access to high-efficiency power conversion products and services used in telecommunications and data centres. That leaves it well placed in the $20 billion a year power conversion industry, which is see fast-growing demand thanks to the growth in cloud computing and applications for mobile internet voice, video and data communications.
“According to recent studies, there will be 1.1 billion smartphones sold globally by 2013,” said Dan Heintzelman, president and CEO of GE Energy Services. “Every new mobile device plugs into an infrastructure that requires an ever increasing amount of high-quality power. The growth in high-bandwidth mobile internet applications and cloud computing is accelerating that demand.”
The acquisition, he added, builds on GE’s goal of expanding its $40 billion energy technology from “the electric grid to data centres, cell towers, routers, servers and circuit board electronics.”
The proposed acquisition of Wellstream Holdings, meanwhile, would provide GE a greater foothold in the offshore oil and gas industry. Wellstream, with a capital value of $1.3 billion, makes flexible pipes for subsea transportation of oil and gas.
By targeting Wellstream, GE makes it clear it understands the realities of today’s fossil fuel market: cheap and easy-to-access supplies are out, difficult,, costly and risky-to-get-at resources are what’s left. In discusssing the proposed acquisition, Claudi Santiago, president and CEO of GE Oil & Gas, noted the new products and services would help GE serve customers in Brazil, Africa and Asia “tackle their toughest deepwater challenges and to optimise the efficient production of oil and gas.”
