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EU clears GE takeover of Alstom on condition it sells parts of heavy duty gas turbine business
- 8 years ago (2015-09-14)
- David Flin
GE has been given clearance from European and US anti-trust regulators to buy most of Alstom’s energy business.
The European Commission’s (EC’s) approval is conditional on GE and Alstom fulfilling commitments given to the EC. Specifically, GE will divest to Ansaldo Energia, a segment of Alstom’s heavy-duty gas turbine business. This will include:
• Alstom’s GT26 product line for new unit sales.
• Alstom’s GT36 technology development programme, 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 of approximately 720 units will remain with GE.
• GE will divest Alstom’s Power Systems Manufacturing (PSM) business, which provides after-market parts and services for other OEMs’ equipment.
Last year, GE agreed to buy Alstom’s gas turbine operations and create joint ventures in the steam turbine, renewable energy, and transmission businesses in a €12.4 billion deal. GE said that the final purchase price, adjusting for remedies, joint ventures, and changes in the deal structure, is expected to be about €8.5 billion. Deane Dray, an analyst with RBC Capital Markets, said that it would take GE years to integrate the large operation and achieve the promised synergies of $3 billion in five years.
The European Commission had argued that the original deal may have restricted innovation and triggered price rises by leaving only Siemens as GE’s main rival in Europe in the market for gas turbines used in power plants. To address these concerns, Ansaldo will acquire Alstom’s technology for large and very large gas turbines. Alstom will also cede two test facilities for these turbine models in Birr, Switzerland. Ansaldo should gain a foothold in the maintenance business by taking over the long-term contracts held by Alstom to service 34 previously sold gas turbines. Ansaldo will also acquire Alstom Power Systems Manufacturing unit, which can service different makes of gas turbines.
