General Electric Co. is moving toward a deal to sell an industrial gas-engine business as Cummins Inc. and CVC Capital Partners weigh initial bids that could value the operation at more than $3 billion, people with knowledge of the matter said.
Buyout firms EQT Partners and KKR & Co. also are considering submitting offers this week for GE’s Jenbacher unit, said the people, asking not to be identified because the deliberations are private. GE is working with Citigroup Inc. and Credit Suisse Group AG on the sale process, which is still at an early stage and may not lead to a deal, they said.
A sale of Jenbacher, which makes engines that generate power and heat for industrial facilities, is poised to be GE’s biggest to date in CEO John Flannery’s plan to reshape the company and arrest one of the deepest slides in its 126-year history. After taking the helm last year, he pledged to sell at least $20 billion of assets, strengthen cash flows and overhaul management. GE also is weighing more dramatic changes, including a possible breakup.
Cummins, which makes engines and generators, said it would continue to evaluate “a range of opportunities inside and outside the company” while keeping its primary focus on strengthening the core business. Representatives for GE, Credit Suisse, Citigroup, KKR and EQT declined to comment. CVC couldn’t be reached.
Jenbacher, named for the Austrian town Jenbach, was founded in 1959 and bought by GE in 2003. It is part of GE’s distributed power business, alongside the Waukesha operations.
GE’s deal activity is picking up, with the company agreeing earlier this month to sell a piece of its health-care business for $1.05 billion. That was the largest transaction since September, when the Boston-based manufacturer sold its industrial-solutions division for $2.6 billion to ABB Ltd.