GE Vernova Inc. agreed to pay $9 billion to acquire Trench Group, a deal aimed at expanding its capacity to supply high-voltage grid equipment as demand for electricity surges. The purchase will be funded equally with cash and debt and is expected to close in late 2027, according to a statement Wednesday. The company is also raising sales guidance as its customer backlog expanded to $197 billion. The shares gained more than 2% before the start of regular trading in New York.
GE Vernova is one of the companies that has benefited from the global AI race by supplying systems needed to generate electricity. While there has been some concern in recent weeks that the boom may be easing off, the company's results indicate that demand for power remains strong. "We're in the early cycle of the world shifting from the molecule to the electron, and as it does, above and beyond data centers, there's a substantial need for our equipment," Scott Strazik, the company's chief executive officer, said in an interview.
Trench Group serves more than 800 utilities and data center companies globally, and its manufacturing operations include 11 sites across Europe, North America and Asia. The deal will boost GE Vernova's portfolio of components needed to deliver electricity across the grid. Germany-based Trench is an existing supplier to the company. Bloomberg News reported last month that European buyout firm Triton Partners was working with advisers on a potential sale or listing of Trench.
The race to power data centers is driving demand for electric equipment, including GE Vernova's natural gas turbines, with manufacturing slots filling years in advance. The company reported $29 billion of orders in the third quarter, and its backlog increased by $20 billion from the prior quarter. Order growth accelerated to 96% from 88%. "We're acquiring Trench because it's an existing supplier that's going to help us fulfill on that backlog growth," Strazik said. The company now expects full-year revenue of $46.5 billion to $47.5 billion, up from its July forecast of $45.5 billion to $46.5 billion.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing