The European Commission has approved American conglomerate GE’s plans to acquire certain assets of France-based Alstom, including hydropower.
In addition, the U.S. Department of Justice has filed a proposed consent decree that would permit the acquisition to close. GE could complete the transaction early in the fourth quarter.
GE reached an agreement with Alstom in April 2014 to purchase Alstom’s power and grid businesses for €12.35 billion (US$13.91 billion). Adjusting for the joint ventures announced in June 2014 (renewables, grid and nuclear), changes in the deal structure, price adjustments for remedies and net cash at close, the purchase price is expected to be about €8.5 billion (US$9.5 billion). GE says this will be its largest-ever industrial acquisition.
“The more we learned about Alstom’s technology and capabilities over the last 15 months, the more we liked the deal,” says Jeff Immelt, GE chairman and chief executive officer. “It’s the right deal at the right time for GE.”
According to a press release, combining Alstom and GE’s power and grid technology and geography will result in about 1,500 GW of installed base power generation (a 50% increase in GE’s current installed base), improved total thermal power plant design capability, a broader grid portfolio, and more.
EC’s approval is conditional on GE and Alstom fulfilling commitments given to the EC in connection with the clearance. Specifically, GE will divest to Ansaldo Energia a segment of Alstom’s heavy duty gas turbine business, including the company’s GT26 product line for new unit sales, the company’s GE36 technology development program, service contracts for 34 GT26 units. GE will also divest Alstom’s Power Systems Manufacturing business, which provides after-market parts and services for other original equipment manufacturers’ equipment. GE will receive a license to the power systems manufacturing intellectual property used to offer after-market services for non-GE gas turbines.
GE says it is close to finalizing a deal to divest these assets to Ansaldo, and that transaction would be expected to close after closing of the GE/Alstom transaction.
Alstom has long been a leading player in the hydropower turbine manufacturing sector and has an extensive track record of reference projects, for example winning the Renewable Energy World hydro project of the year in 2013 with its Xiangjiaba Power Plant, located on the Jinsha River in China.