EU Approves GE's Acquisition of Alstom's Energy Business -- Update
September 08 2015 - 11:31AM
Dow Jones News
By Tom Fairless
BRUSSELS-- General Electric Co. secured approval from Europe's
top antitrust authority for its acquisition of Alstom's power
business on Tuesday after agreeing to sell assets to an Italian
rival that regulators hope will become a strong new competitor in
Europe.
The European Union's approval, which follows eight months of
tough negotiations, puts GE on the brink of closing its biggest
ever deal. U.S. authorities are also expected to signal their
approval on Tuesday, a person familiar with the matter said. Around
20 other regulators have already given the green light.
Margrethe Vestager, the EU's antitrust chief, said at a news
conference that her agency had "very carefully assessed" the deal
amid concerns that it would lead to higher prices in Europe for
large gas turbines. "There was a great risk of choice going down
and prices going up," Ms. Vestager said.
To assuage those concerns, GE agreed to sell "central parts of
Alstom's heavy-duty gas turbines business" to Ansaldo Energia of
Italy, the EU said in a statement.
The divestments "will allow the purchaser to replicate Alstom's
previous role in the market, thereby maintaining effective
competition," the EU said.
"I am glad that we can approve this transaction, which shows
that Europe is open for business and that Europe-based technology
can thrive and attract foreign investment," Ms. Vestager said.
When it was announced more than a year ago, GE valued the deal
around EUR12.5 billion ($14 billion). However, that has fallen to
around EUR8.5 billion due to changes in the deal structure and
price adjustments to reflect the EU's conditions, a person familiar
with the matter said.
Under the agreement with Brussels, GE agreed to divest Alstom's
technology for two models of large gas turbines, as well as "a
large number" of Alstom's turbine-research engineers, two test
facilities in Switzerland, and Alstom's Florida-based servicing
business.
The U.S. company will also divest the long-term servicing
contracts for 34 turbines that have already been installed by
Alstom. GE has said that Alstom's servicing contracts were a key
attraction of the deal, but a person close to the deal said the
divested contracts amounted to only 4% of Alstom's total installed
base.
The EU must sign off on the transfer of assets to Ansaldo before
the deal can go ahead, Ms. Vestager said.
Despite the asset sales, people close to GE stressed that the
economic and strategic value of the deal had been preserved. GE has
secured a $300 million rebate from Alstom for the remedies.
Write to Tom Fairless at tom.fairless@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 08, 2015 11:16 ET (15:16 GMT)
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