The European Commission (EC) and US Department of Justice (DOJ) have approved General Electric’s (GE) proposed deal to acquire power generation and transmission assets of Alstom for €12.5bn ($13.9bn).

power trasmisstion

With the approval, the transaction, which already secured around 20 approvals, entered into final phase.

Upon completion of the transaction, Alstom plans to focus on its Transport business as part of its growth strategy while GE expects cost synergies of $3bn over the next five years.

During investigation, the Commission found that the deal would decrease competition in heavy-duty gas turbines segment in the European market.

It found that the deal could leave only two major players in the heavy duty market, including the merged entity and Germany’s Siemens, which could lead to higher prices and electricity cost.

To address the Commission’s concerns, GE agreed to divest the main, technologically most advanced parts of Alstom’s heavy duty gas turbine business and key personnel to Ansaldo, an Italy-based firm which is engaged in making heavy duty gas turbines among others.

GE also agreed to sell Alstom’s Power Systems Manufacturing (PSM) business, which provides after-market parts and services for other OEMs’ equipment to Ansaldo.

GE chairman and CEO Jeff Immelt said: "We have addressed the EC’s and DOJ’s competition concerns while preserving the strategic and economic drivers of the deal.

"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."

EC commissioner Margrethe Vestager, in charge of competition policy said: Divestment of Alstom’s key technology to produce heavy duty gas turbines to Ansaldo will ensure that European business and consumers continue to benefit from this innovation and know how."

The deal between GE and Ansaldo is expected to be completed following completion of the GE/Alstom transaction and is subject to required regulatory approvals.


Image: GE expects to save $3bn over next five years as it acquires Alstom’s energy businesses. Photo: courtesy of duron123 / FreeDigitalPhotos.net.