The European Commission (EC) has approved the proposed Alstom deal with GE and the Department of Justice has also filed a proposed consent decree that would permit the acquisition to close.
The EC’s approval is conditional on GE and Alstom fulfilling commitments given to the European Commission in connection with the clearance. Specifically, GE will divest to Ansaldo Energia, a supplier of power generation plants and components, a segment of Alstom’s heavy duty gas turbine business.
This will include:
- Alstom’s GT26 (an F-class gas turbine) product line for new unit sales
- Alstom’s GT36 technology development program, which upon completion would result in an H-class gas turbine product.
- Services contracts for 34 GT26 units. The remainder of Alstom’s gas turbine installed base (approximately 720 units) will remain with GE.
- In addition, in order to address concerns raised by the DOJ and EC regarding competition for the service of GE gas turbines, GE will divest Alstom’s Power Systems Manufacturing (PSM) business, which provides after-market parts and services for other OEMs’ equipment. GE will receive a license to the PSM intellectual property used to offer after-market services for non-GE gas turbines.
Jeff Immelt, GE Chairman and CEO said: “Today’s decisions by the European Commission and Department of Justice are major milestones in completing this deal as early as possible in the fourth quarter.”
“We have addressed the EC’s and DOJ’s competition concerns while preserving the strategic and economic drivers of the deal. The complementary technology and geography of the Alstom assets will enable us to bring more value to customers and a strong return to GE shareholders,” he added.
The news comes after GE reached an agreement with Alstom in April of 2014 to purchase Alstom’s power and grid businesses for €12.35 billion. Adjusting for the joint ventures announced in June 2014, the purchase price is expected to be approximately €8.5 billion (approximately $9.5 billion).
“The more we learned about Alstom’s technology and capabilities over the last 15 months, the more we liked the deal,” said Immelt. “It’s the right deal at the right time for GE.”
“Navigating the global regulatory environment is more challenging than ever, including in the U.S.,” Immelt continued. “Throughout the regulatory process, we have worked constructively with the European Commission, the Department of Justice and other regulators around the world. The cooperation among the various agencies has enabled a thorough review of the transaction and we are happy to now have these important clearances that we need to proceed towards closing.”