GE's Alstom Deal Clears Antitrust Hurdles

FAIRFIELD, CT—Antitrust regulators in Europe and the US have given a conditional go-ahead to GE's planned acquisition of Alstom's power and grid unit. The US Department of Justice and the European Union both informed GE that they would approve the deal provided that Alstom subsidiary Power Systems Manufacturing is divested.

To that end, GE said Tuesday it would sell the subsidiary to Italian-based Ansaldo Energia, a supplier of power generation plants and components. Expected to close late in the fourth quarter, the Alstom deal is now valued at US$9.5 billion, representing GE's largest industrial acquisition to date, and will mark a major step in the company's focus on its core businesses. The company began winding down its GE Capital arm earlier this year, selling billions of dollars worth of commercial real estate debt and assets globally.

“We have addressed the EC's and DOJ's competition concerns while preserving the strategic and economic drivers of the deal,” says Jeffrey Immelt, GE's chairman and CEO. “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.”

GE says the combination of its power and grid technology and geography and Alstom's will add up to approximately 1,500 gigawatts of installed base power generation, a 50% increase over GE's current installed base. It will also mean one of the broadest and deepest renewables portfolio in the industry, improved total thermal power plant design capability and  expanded capabilities to provide project expertise and financing for power projects.

The winding down of GE Capital remains ahead of schedule, according to GE. Last month the company closed on the sale of its US Sponsor Finance business and a bank loan portfolio to Canada Pension Plan Investment Board in a transaction valued at more than $11 billion. It also closed on the $5-billion sale of its US fleet services business to Element Financial Corp.