Following regulatory approval in over 20 countries and regions, General Electric (NYSE:GE) has completed the acquisition of Alstom's (OTCPK:ALSMY) power and grid business - its largest-ever industrial acquisition.
Adjusting for JVs announced in June 2014, changes in the deal structure, price adjustments for remedies, net cash at close, and the effects of currency, the purchase price is €9.7B ($10.6B).
The company expects the deal to generate $0.05-0.08 of earnings per share in 2016 and $0.15-0.20 of earnings per share by 2018.
GE also announced today it has completed the sale of its rail signaling business to Alstom for approximately $800M.
GE says it will sell "central parts of Alstom’s heavy-duty gas turbines business” to Ansaldo Energia to ease the concerns of EU regulators that the deal would lead to higher prices in Europe for large gas turbines.
GE 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 part of the deal, but WSJ reports that the divested contracts amount to only 4% of Alstom’s total installed base.
General Electric (NYSE:GE) is likely to win EU approval in the coming days for its $14B deal to buy Alstom’s (OTCPK:ALSMY, OTCPK:AOMFF) energy assets, Financial Times reports, citing people close to the deal who say GE has offered significant remedies.
FT says sources at the European Commission and lawyers in Brussels believe GE had learned lessons from its failed 2001 attempt to buy Honeywell case, and noted that CEO Jeff Immelt had taken a far more diplomatic approach than his predecessor, Jack Welch; for example, Immelt visited the EU competition commissioner two times during negotiations.
People in Brussels with knowledge of the case reportedly said technical points were still under discussion between GE and the EC but did not think those would stop the transaction from being approved.
Alstom (OTCPK:ALSMY, OTCPK:AOMFF) says it will accept a €300M reduction in the price it will get for selling its power turbines unit to General Electric (GE +0.4%) as a contribution to GE's efforts to gain antitrust clearance in Europe for its acquisition of the company's energy assets.
GE said on July 16 it had offered unspecified concessions in an attempt to counter EU regulatory concerns about the deal.
In response to today's filing, GE says it is working "constructively" with the commission to explore remedies that could both address the EU's concerns and preserve the deal's economics, and that it still aims to close the transaction in H2 of this year.
The timing of the statement of objections gives GE and Alstom about two months to reach a compromise with the EU ahead of its Aug. 21 deadline to rule on the deal.
Alstom (OTCPK:ALSMY) says it will continue to provide evidence on the positive impact of its power unit sale to General Electric (NYSE:GE), following reports that stated EU antitrust regulators could issue a statement of objections today over the proposed bid.
Such a document would set out the EU's view of why the deal is anti-competitive, and would be a prelude to a veto unless the companies come up with strong arguments or concessions.
The comments are the most concrete indication to date of what remedy GE is willing to offer to break an impasse over approval for the deal.
Immelt said GE would not do anything that impacts the service revenue stream.
The EC has argued that a combined GE-Alstom would control about half of the market for 50Hz frequency turbines in Europe and the rest of the world excluding China; as a rule of thumb, the EC is wary of post-merger concentrations greater than 40%.
GE rejects concerns that the tie-up would distort competition, saying that European demand is too small for distortions of competition to be a serious concern, as only about four gas turbines are sold in Europe each year out of global sales of 200.
Earlier: Immelt presents: GE Capital sales ahead of plan
EU antitrust regulators have resumed their investigation into General Electric's (NYSE:GE) bid for Alstom's (OTCPK:ALSMY) energy unit after receiving the information they had requested to conclude the case.
The new deadline for a decision is Aug. 21, six weeks later than the initial deadline of July 8.
“We are willing to explore remedies to get this deal done,” Steve Bolze, the head of GE’s Power and Water business, says, adding that the length of the European regulatory approval process is taking a toll on Alstom’s business.
The comments come as the deadline for approval slid even further, to the third week in August, after European regulators held up their review for two weeks.
General Electric's (GE +0.6%) Jeff Immelt is schedule to meet EU antitrust chief Margrethe Vestager tomorrow, Reuters reports, amid an ongoing investigation into the U.S. group's €12.4B bid for Alstom (OTCPK:ALSMY).
GE is looking to convince the European Commission to approve the deal without concessions.