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Alstom offers concessions to keep GE deal on track

Gas turbine

A worker walks past a gas turbine under construction at the gas turbines production unit of the General Electric plant in Belfort, June 24, 2014. [Reuters]

Alstom is to accept €300 million less than previously agreed for its power turbines unit from General Electric as a contribution to the US-based buyer’s efforts to win antitrust clearance in Europe.

The last-minute 2.4% discount to the previously agreed €12.35 billion deal is the latest in a series of knocks Alstom shareholders have suffered since the deal was announced in April 2014.

“In order to support General Electric in its offering of a comprehensive set of remedies addressing the concern of the (European) Commission, Alstom’s board […] would contribute financially to such remedy package through a reduction of €300 million,” the French engineering company said in a statement.

“The parties continue to have constructive discussions with the Commission regarding the transaction,” it added.

The amount Alstom shareholders will receive will now be between €3.2 billion and €3.7 billion once the deal is closed, the company said, down from €3.5-€4 billion previously.

On July 16, GE said it had offered unspecified concessions in an attempt to counter EU regulatory concerns about the deal, which was announced last year and would be its biggest ever acquisition.

Just over a year ago, modifications demanded by former French economy minister Arnaud Montebourg obliged Alstom to reinvest some proceeds in other businesses.

Then, in December, Alstom announced that it would be absorbing the cost of a $772 million bribery fine it was due to pay in the United States – a blow that was only partly offset by €400 million from GE in additional commercial agreements.

A GE spokesman confirmed on Monday (27 July) that the price adjustment related to remedies proposed to the Commission and only applied if they were approved.


General Electric's €12.4 billion bid for Alstom's power equipment came under close scrutiny by the European Commission, which opened a full-scale antitrust investigation into the deal on 23 February.

The Alstom deal is part of GE's efforts to increase its focus on industrial operations and away from finance. However, the takeover would remove one of GE's three main rivals in heavy-duty turbines used in gas-fired power plants, the Commission said. This could lead to price rises, EU antitrust regulators warned, piling pressure on the US conglomerate to offer concessions.

The Commission said it is worried that GE would discontinue the production of certain models of Alstom heavy duty gas turbines (HDGTs) and not bring to the market the French company's advanced HDGT technology.

>> Read: EU regulators take closer look at GE's Alstom deal

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