Alstom helps GE with remedies for European Commission
Alstom has decided to lower the sale price of most of its energy assets to General Electric (GE) in an effort to win European Commission’s approval for the acquisition deal.
Since the Extraordinary General meeting held on December 19, 2014, which approved the acquisition by General Electric of Alstom’s Energy businesses, both companies have been working with regulators around the world to secure competition and regulatory authorizations.
The European Commission has been looking at the impact of the deal on competition and has raised a concern about the possible decrease in gas turbine competition that may result from the deal.
Both General Electric and Alstom believe the deal is pro-competitive but have agreed to explore remedies to secure clearance.
In order to support General Electric in its offering of a comprehensive set of remedies addressing the concern of the Commission, Alstom has decided to lower the original purchase price.
“Alstom’s Board of Directors has unanimously accepted that the Group would contribute financially to such remedy package through a reduction of €300 million from the original €12.35 billion purchase price. The parties continue to have constructive discussions with the Commission regarding the transaction,” it is stated in Alstom’s press release.
Under the contract details, GE and Alstom would form three joint ventures:
- Grid: the combined grid assets of GE and Alstom,
- Renewables: Alstom’s offshore wind and hydro businesses,
- Global Nuclear and French Steam: Alstom’s production and servicing of equipment for nuclear power plants, and development and sales of new nuclear equipment around the world; and Alstom’s steam turbine equipment and servicing for applications in France.
According to the Wall Street Journal, the regulators will make their decision about Alstom/GE deal by September 11, 2015.
The parties will continue to pursue the approval processes with the objective of closing the transaction as soon as possible within the coming months, with the approvals already granted in 15 countries, according to Alstom.