May 14 (Bloomberg) -- China XD Group, a state-controlled power equipment maker, is in talks to buy General Electric Co.’s joint venture with Mexico’s Xignux SA for as much as $1 billion, said three people with knowledge of the matter.
XD Group’s discussions to acquire Prolec GE Internacional are at an early stage, said one of the people, who asked not to be identified because the information is private. GE owns 49.99 percent of Prolec GE, according to a May 2012 statement by XD Group’s listed unit China XD Electric Co.
GE last year paid $536 million for a 15 percent stake in XD Electric, the nation’s biggest maker of power transmission and distribution equipment. The companies also agreed to create a China joint venture, with Xi’an-based XD Electric holding 59 percent and GE the rest.
Prolec GE, which makes power transformer products, has annual sales of about $600 million, a person with knowledge of the matter said last month. Citigroup Inc. is advising GE on the sale of the venture, the people said.
XD Group, founded in 1959, has more than 70 subsidiaries and 22,000 employees, according to its website. It exports products and technologies to more than 50 countries including Germany, the U.S. and Singapore, the website shows.
XD Electric’s shares rose as much as 1.5 percent in Shanghai trading today and closed up 0.9 percent at 3.38 yuan apiece, the highest in about three weeks. The benchmark Shanghai Composite Index fell 1.1 percent.
Seth Martin, a spokesman for Fairfield, Connecticut-based GE, declined to comment, as did XD Group spokesman Hu Gengmin. Jose Cantu, an executive at Xignux, didn’t immediately respond to an e-mail seeking comment.
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