European Union approves GE’s $13.4 billion takeover of Alstom’s power assets
The clearances open the way for GE to finalize the transaction early in the fourth quarter as the company continues a corporate shift back to its industrial roots after a previous diversification into the finance sector.
Competition regulation was a sensitive issue since the European Union blocked in 2001 the all-American $46 billion merger between General Electric Co. and Honeywell worldwide Inc. even though it was cleared by USA regulators.
The assets at Alstom, in particular the steam and gas turbine business would help strengthen the company’s footing in the world’s emerging markets such as India and China, where the air pollution via coal power is a public health menace.
GE noted it is close to sealing a deal with Ansaldo.
GE said the deal will give it access to one of the broadest and deepest renewables portfolios in the industry, allow it to improve total thermal power plant design, and provide it with a broader grid portfolio with the footprint and scale to compete globally.
The commission’s in-depth review, which focused on markets for the sale and servicing of heavy-duty gas turbines operating at 50 Hz, revealed that a GE-Alstom merged entity would have accounted for more than 50% of the European Economic Area market.
Under the agreement with Brussels, GE agreed to divest Alstom’s technology for two models of large gas turbines, as well as “a large number” of Alstom’s turbine-research engineers, two test facilities in Switzerland, and Alstom’s Florida-based servicing business. “The commitments offered by GE address these concerns”, the Commission said. LLC (PSM) in order for GE to proceed with its proposed approximately $13.8 billion acquisition of Alstom.
Also important, she said, was the fact that the deal would “ensure that existing European know-how is preserved and that there is room for future high-tech innovation”.
Alstom has been always regarded as the crown jewel of French industry and its purchase by GE, an American company had been controversial from the very beginning.
The USA conglomerate will also sell Alstom’s service contracts for 34 installed turbines and its U.S.-based subsidiary Power System Manufacturing to Ansaldo.