EU Approves GE's Acquisition of Alstom's Energy Business Subject to Conditions

By Tom Fairless 

BRUSSELS-- General Electric Co. won approval from Europe's top antitrust authority for its acquisition of Alstom's power business on Tuesday after the U.S. industrial giant agreed to sell assets that regulators hope will create a strong new competitor in Europe.

EU regulators had worried that the deal would lead to higher prices in Europe for large gas turbines. 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.

The EU'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.

Under Tuesday's agreement, 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 and two test facilities in Switzerland.

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.

GE will also sell Alstom's Florida-base servicing business.

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 [e-mail]

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September 08, 2015 10:27 ET (14:27 GMT)

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