GE looks set to secure approval for Alstom deal

• 8 years ago (2015-09-07)
• David Flin

Asia 848 Europe 1061

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GE looks likely to win EU approval for its $14 billion deal to buy Alstom’s energy assets. GE’s partial takeover of France’s Alstom has been a very closely watched deal after the European Commission raised concerns that it would damage competition in the market for power turbines. Brussels is expected to make a decision on whether or not it will veto the deal by September 11.

In 2001, the European Commission blocked a $42 billion deal for GE to buy Honeywell. However, insiders have said that GE is taking a more diplomatic approach with the Alstom deal, and that French President François Hollande wants that deal to succeed to keep jobs in France.

Brussels’ greatest concern has been that the GE-Alstom group could control over 50 per cent of the market in Europe and the rest of the world, excluding China, for turbines operating at 50 Hz. The tie-up would reduce GE’s competitors to two main companies: Germany’s Siemens and Japan’s Mitsubishi Hitachi Power Systems, with Italy’s Ansaldo Energia as a niche player.

When the European Commission started its investigation of the GE-Alstom deal, GE initially denied that the deal would harm customer choice, because only about four 50 Hz turbines were sold in Europe each year. The EC said that the small sales volume was irrelevant in the sensitive power sector, considering the high cost of turbines. GE has offered some concessions, which are said to include GE divesting some of Alstom’s turbine business to Ansaldo, which is 40 per cent owned by China’s Shanghai Electric.