Finland’s Wartsila and U.S. peer Cummins are interested in potentially buying General Electric’s (GE) 3 billion euro ($3.6 billion) distributed power operations, which GE is looking to sell to bolster its finances, people close to the matter said.
GE (GE.N) said last week it might be able to announce a deal by mid-year for the unit, which includes the reciprocating gas engines makers GE Jenbacher and Waukesha.
Besides Wartsila (WRT1V.HE) and Cummins (CMI.N), buyout groups Advent, Bain, CVC, KKR (KKR.N) and B&C Holding have made it to the second round of the auction, the people said.
One of the people said that, before final bids, the suitors may be asked for confirmatory offers in a couple of weeks.
All of the companies mentioned declined to comment.
GE Chief Executive Officer John Flannery, who took the helm last summer, reiterated last week he was open to breaking up the company and said a spin-off of any of its units, which include power, healthcare and aviation, was a possibility.
GE has said it expects to book as much as $10 billion in proceeds from divesting industrial assets this year.
Selling the industrial gas engine business would help streamline GE’s power division, whose profit plunged last year as sales of power plants and services fell sharply.
The unit for sale makes multi-ton gas turbines that generate on-site power to keep industrial plants running. Jenbacher and Waukesha engines cover the small to mid-sized segment of GE’s power business, ranging from 100 kilowatts to 10 megawatts.
The unit is expected to post earnings before interest, tax, depreciation and amortization of about 250 million euros this year and to be valued at 12-13 times that in a potential deal, the sources said.
Jenbacher has its roots and large production facilities in Austria and was acquired by GE in 2003, while Waukesha, founded in 1906 in Wisconsin as a maker of engines for trucks and tractors, has been part of GE since 2010.