Alstom has agreed to exit from three joint ventures covering grid, nuclear and renewable businesses with GE for a payment of €2.594bn ($3.08bn) from the latter.
The French manufacturing company had created the joint ventures with GE in 2015 as part of its €12.35bn sale of its energy business to the US firm.
The company, in a statement, said: “Alstom intends to exercise its options to sell its interests in the “Renewables” and “Grid” Joint Ventures in 2018 (pursuant to Alstom’s put options).”
Alstom said that if these options are exercised during the exercise period between 4 September and 10 September, GE will then be deemed to have exercised its option to acquire Alstom’s interest in the “Nuclear” joint venture.
The three joint ventures of grid, nuclear and renewable will be transferred for 100% ownership of GE on 2 October, said the French company.
It was in 2014 that GE signed an agreement with Alstom to purchase the latter’s energy division, which was made up of power and grid businesses. The transaction was completed in November 2015 after securing more than 20 approvals.
Alstom agreed to sell its energy business to focus on its transport business as part of a growth strategy. On the other hand, GE made the purchase, hoping to realize cost synergies in the tune of $3bn within five years of the completion of the deal.
GE, then, said that customers will get immediate benefit from its combination with Alstom’s energy business, which included projects such as the PSEG Sewaren combined cycle power plant in New Jersey, Punjab Pakistan Bhikki combined cycle power plant, Exelon Power Plants in Texas and Chempark combined heat and power project in Germany.
In order to get the transaction approved in the US and the European Union, GE agreed to sell the major, technologically most advanced parts of Alstom’s heavy duty gas turbine business and also transfer key employees to Ansaldo, an Italian heavy duty gas turbine manufacturer.
GE also agreed to offload Alstom’s Power Systems Manufacturing (PSM) business to Ansaldo to address various competition concerns raised by regulators.