In a move that bolsters industrial operations and continues the shift away from financial services, General Electric (NYSE: GE) is buying Metem Corp.
Metem provides precision cooling hole manufacturing technologies that aim to enable turbine engines to function more efficiently, which can save money, reduce emissions and allow the engines to operate longer. The company's technology is used by the power generation and aerospace industries.
GE expects the deal to increase supply chain efficiency, especially for GE Power, the company's power generation unit. Metem and GE have worked together since the '70s, and GE is Metem's largest customer.
The deal follows GE's purchase of Alstom's power business, a $14 billion deal that closed in November.
“Gas turbines coupled with services are the core of GE Power," says Mike Chanatry, vice president of GE's Gas Power Systems Supply Chain. "Our acquisition of Alstom’s power business has significantly improved our competitiveness, particularly in our technology leadership position and global presence… Acquiring Metem would help achieve synergies by improving the overall cost base of products.”
The move comes as GE works to divest its financial services unit, GE Capital, with the aim of focusing more on industrial operations. GE CEO Jeffrey Immelt announced the plan on April 10. A significant portion of the GE Capital business has already been sold, including PE lending unit Antares Capital, which Canada Pension Plan Investment Board bought in August for about $12 billion.