Boosting AI electricity demand! GE Vernova (GEV.US) spends $5.3 billion to acquire the remaining 50% stake in Prolec.

Focus on the power system and Clean Energy Fuels Corp. American Electric Power Company, Inc. giant GE Vernova (GEV.US) has agreed to acquire the transformer manufacturer Prolec GE in which it does not already own a stake, the current artificial intelligence boom is driving a surge in demand for products and services in the power industry. GE Vernova will pay approximately $5.3 billion to acquire the remaining 50% stake in Prolec from its joint venture partner, Mexico's Sigmuus Group. GE Vernova CEO Scott Strazic stated in an interview: "This acquisition aligns well with many of our current priorities." He said that acquiring full ownership of Prolec means that GE Vernova can increase its investments in the North American power grid equipment sector and expand its services to large-scale enterprises building data centers. "Every quarter, we are strengthening our connections with data centers," he added. As the power consumption of data centers needed to achieve the AI goals of large technology companies continues to rise, coupled with the ongoing electrification of the economy, global electricity demand is growing rapidly. Data shows that by 2035, data centers are expected to consume approximately 4.4% of the world's electricity. The scale of their energy consumption is so massive that it ranks fourth in the electricity consumption "national rankings" after China, the United States, and India. GE Vernova, spun off from GE Aerospace and listed last year, is a major beneficiary of this wave of power demand, largely due to the strong performance of its gas turbine business. The company's stock price has risen by approximately 78% this year. In September, the company agreed to sell its industrial software business, Proficy, to alternative asset management company TPG for $600 million, with plans to reinvest the proceeds into its core business. Prolec is a supplier of power grid equipment, producing transformers covering most rated power and voltage levels. It has 7 production facilities globally (including 5 in the U.S.) and employs approximately 10,000 people. The joint venture was originally established in 1995 by GE Aerospace and Mexico's Sigmuus Group. Strazic added: "We see a significant growth in demand for power equipment, which is our fastest-growing business." He revealed that Sigmuus was originally the controlling party of Prolec, and this transaction will give GE Vernova more decision-making power in product development. According to company data, the non-compete clause in the joint venture agreement had previously restricted GE Vernova's ability to sell transformers in North America, but this restriction will be lifted after the completion of the transaction.