Alstom is acquiring ABB’s share in their 50-50 joint venture ABB Alstom Power for 1.25 billion euro. Closure of the acquisition is expected within one month. The purchase will allow each company to be able to move closer to its strategic goals.

The power company will be integrated into Alstom’s sector reporting structure. From the closing date, Claude Darmon, President and CEO of ABB Alstom Power, will be reconfirmed as head of Alstom Power and, in addition, will be appointed Deputy CEO of Alstom.

Goran Lindahl, ABB President and CEO, said the transaction is in line with ABB’s strategy to increase its reliance on IT-driven technology solutions. “Today, we focus more on industrial IT, and on infusing IT solutions into all our actvities. The proceeds from the divestment will be used to enhance ABB’s position in business-business eCommerce.” Alstom gains control of a power plant builder able to take good advantage of the economic recovery in Asia and east Europe.

Analysts say Alstom has achieved good financial conditions. This is partly because the agreement resulted from a dispute that began in October when the joint venture announced a 637 million euro pretax charge. The provision followed a higher risk assessment on a number of projects brought to the joint venture by ABB. Alstom argued that ABB should carry the majority of the cost. The companies began an arbitration process that Alstom Chief Executive Pierre Bilger said led to the deal agreed. Both companies declined to disclose details of the settlement.

ABB’s half of the business has been valued at 1.9 billion euro, considerably more than the 1.25 billion euro Alstom paid. Goran Lindahl said the sale price was adjusted to settle the dispute, and to cover pension liabilities for former ABB employees.

The transaction is subject to the customary regulatory approvals.