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General Electric (GE) & Xignux's JV Unit Buy SPX Transformer

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·3 min read
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GE-Prolec Transformers, Inc. — a subsidiary of General Electric Company GE and Xignux, S.A. de C.V.’s joint venture unit — recently closed the acquisition of SPX Transformer Solutions business from SPX Corporation SPXC. The buyout, which is valued at $645 million in cash and assumed debt, was announced in June 2021.

It’s worth noting that the joint venture between General Electric and Xignux is Prolec GE. Prolec GE specializes in offering a wide range of electrical transformer solutions to the power transmission industry.

General Electric’s shares dropped 0.9% yesterday to eventually close the trading session at $104.90.

Details of the Buyout

SPX Transformer Solutions is a leading designer and manufacturer of high-quality power transformers as well as transformer service solutions and components in the United States. The company, which employs around 1,000 people, is recognized for its Waukesha transformers, services and components. Its manufacturing facilities are based in Waukesha, WI, Goldsboro, NC and Dallas, TX.

The addition of SPX Transformer Solutions’ expertise in mid-sized transformer technology, strong innovation capabilities and efficient team will enable Prolec GE to offer a comprehensive suite of electric power transmission and distribution solution offerings to customers. Prolec GE also expects the buyout to help it effectively support the development of the electric grid infrastructure in the Americas.

General Electric’s Other Notable Buyouts

In May 2021, General Electric acquired France-based Zionexa, which is likely to strengthen its offerings in the precision health and theranostics space. In September, the company entered into a $1.45-billion deal with Altaris Capital Partners for the acquisition of BK Medical. The BK Medical buyout will augment General Electric’s $3-billion ultrasound business and enable it to expand in diagnostics, surgical and therapeutic interventions.

Zacks Rank, Price Performance and Estimate Trend

General Electric, with a $116.4-billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from acquired assets, solid contract wins, a healthy liquidity position and the restructuring of its portfolio. The market-related challenges in the Aviation segment is a concern.

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In the past six months, the company’s shares have declined 2.1% against the industry’s growth of 6.7%.

The Zacks Consensus Estimate for 2021 earnings has moved down 3.9% to $1.97 in the past 60 days. Earnings estimates for 2022 have declined 8% to $4.01 over the same period.

Stocks to Consider

A couple of better-ranked stocks from the same space are Raven Industries, Inc. RAVN and Danaher Corporation DHR. While Raven currently sports a Zacks Rank #1 (Strong Buy), Danaher carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Raven pulled off an earnings surprise of 42.59%, on average, in the trailing four quarters.

Danaher delivered an earnings surprise of 27.52%, on average, in the trailing four quarters.

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General Electric Company (GE) : Free Stock Analysis Report

Danaher Corporation (DHR) : Free Stock Analysis Report

Raven Industries, Inc. (RAVN): Free Stock Analysis Report

SPX Corporation (SPXC) : Free Stock Analysis Report

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