The Board of French engineering company, Alstom has given the green light to US energy giant General Electric to purchase its energy business at a price of $17bn. In order to protect the country’s interests and facilitate the deal, the French government will purchase a 20% stake in Alstom from its main shareholder, Bouygues.
Siemens and Mitsubishi Heavy Industries also submitted acquisition proposals, but General Electric’s proposal won unanimous approval from Alstom directors. General Electric will now acquire Alstom’s power grid business, renewable operations, and nuclear steam turbines to form three joint ventures. In doing so, it hopes to open up its operations in China and Africa.
Conversely, General Electric (GE) is to sell its railway signal business to Alstom, who are the manufacturers of France’s TGV high speed trains. The deal is expected to close in 2015.
General Electric’s Chairman and CEO, Jeff Immelt said of the deal: “We will now move to the next phase of the Alstom alliance. We look forward to working with the Alstom team to make a globally competitive power and grid enterprise. We also look forward to working with the French government, employees and shareholders of Alstom. As we have said, this is good for France, GE and Alstom.”
According to a Reuters report, the two companies already have history. In Alstom’s home town of Belfort, 2,500 of its employees have worked for more than a decade ‘building electrical turbines just a few dozen metres away from a GE plant, whose workers they meet each day at lunchtime in a shared canteen’.
The article continues: “GE’s history in Belfort stretches back even further, to 1928, when one of its subsidiaries, Thomson-Houston, merged with the Socieate Alsacienne de Construction Mecanique to form Alssthom, then spelled with an ‘h’”.
Written by Gail Taylor