GE Vernova's $9 Billion Trench Deal Meets a Record Backlog

GE Vernova is using a record order book and almost $17 billion of cash to buy more of the grid equipment supply chain. The company agreed to acquire Trench Group for a U.S.-dollar equivalent of $9 billion, while reporting third-quarter orders of $29 billion and lifting its full-year financial guidance.

The proposed purchase brings a specialized supplier inside GE Vernova's Electrification segment. Trench makes high- and medium-voltage bushings, instrument transformers and coils used in power transmission. It serves more than 800 utilities and hyperscalers, employs more than 3,000 people and operates 11 manufacturing sites across Europe, North America and Asia.

GE Vernova expects Trench to produce about $1.9 billion of revenue in 2028 at an adjusted EBITDA margin of roughly 36%. The purchase price equals about 13 times that projected 2028 adjusted EBITDA before synergies. Trench also has approximately $5 billion of backlog and framework agreements, some extending into the next decade.

The financing plan is material. GE Vernova expects to fund the purchase equally with cash and debt, which implies roughly $4.5 billion from each source at the current dollar valuation. The cash portion alone would equal about 27% of the company's $16.8 billion quarter-end cash balance. The deal is expected to close in late 2027, subject to regulatory approvals and employee-representative consultations, so foreign-exchange rates and closing conditions can still change the final dollar amount.

The industrial logic is capacity as much as product breadth. Trench is already a supplier to GE Vernova, and its components are present in most high-voltage direct-current lines built globally. A new Charlotte, North Carolina, facility is scheduled to begin producing 765-kilovolt equipment in late 2027. Bringing those capabilities in-house could reduce a bottleneck as utilities and data centers demand more transmission equipment.

Third-quarter results give management room to act. Orders rose 96% organically to $29 billion, while backlog increased $20 billion from the previous quarter to $197 billion. Revenue rose 27% to $12.6 billion, or 18% organically. Net income was $1.3 billion, adjusted EBITDA was $1.9 billion at a 15.4% margin, and free cash flow reached $5.4 billion.

GE Vernova now expects 2026 revenue of $46.5 billion to $47.5 billion, up from $45.5 billion to $46.5 billion. It raised adjusted EBITDA margin guidance to 13.5% to 14.5% from 12% to 14%, and free cash flow guidance to $16 billion to $17 billion from $11.5 billion to $12.5 billion. The board also doubled the share-repurchase authorization to $20 billion.

The acquisition therefore arrives from a position of unusual cash generation, but it still commits significant cash and adds debt more than a year before closing. Investors now need to see whether Trench's margin and backlog convert as projected, and whether GE Vernova can integrate the supplier without weakening the capital returns that its stronger quarter made possible.