General Electric has clinched approval from European regulators to acquire Alstom’s power business in a 12.4 billion euro (US$13.9 billion) deal.
The go-ahead came after the US conglomerate agreed to sell some of the French company’s turbine assets to Italian rival Ansaldo Energia, Reuters reports.
EU officials said the concessions allayed concerns the deal would reduce competition in the European market for heavy-duty gas turbines to two major players, namely the merged company and Germany’s Siemens, potentially leading to higher prices and pushing up the cost of electricity.
The US giant’s acquisition of Alstom’s energy business — its largest deal ever — will bring together two of the world’s biggest manufacturers of power plant hardware.
It is part of GE’s plans to increase its focus on industrial operations and shift away from finance.
The EU decision, as well as creating a major new player in the sector in Ansaldo, will allow GE to press ahead with a cost-cutting program.
In May, the company told investors it expects US$3 billion in cost reductions over the next five years as it combines its operations with those of Alstom.
The deal has been approved by regulators elsewhere, including in the United States on Tuesday.
But overcoming the European hurdle will nevertheless come as a relief to GE, as EU officials stymied its US$42 billion offer for Honeywell International 14 years ago despite US clearance.
Both Alstom and GE said they expect to finalize the deal as early as possible in the fourth quarter.
Alstom comes with about 500 gigawatts of installed power around the world, while it has taken GE “since the days of Thomas Edison” to build up its 1,000 gigawatts of installed power generation, Steve Bolze, president and chief executive of GE Power & Water, said in an interview.
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