GE acquires Alstom's power and grid business for US$16.9 billion
General Electric (NYSE:GE) will now own Alstom's power grid business, the French company's gas and steam turbine-making operations.
Announced today the all-cash totaling $16.9 billion transaction values the acquired business units at 7.9 times earnings before interest, taxes, depreciation and amortization.
Alstom board of director unanimously approved GE's offer. The deal, which GE had been chasing for several months, is expected to close in 2015. The French government says it will allow the acquisition subject to conditions, such as job protection, energy independence and continued decision-making in some spheres.
General Electric dropped NBC Universal last year. The Alstom deal is a step t0wards greater focus on servicing large industrial equipment used in power generation, aircraft engines and oil and gas operations.
Once closed, GE and Alstom would form three joint ventures:
- Grid: the combined grid assets of GE and Alstom
- Renewables: Alstom’s off-shore wind and hydro businesses
- Global nuclear and french steam: Alstom’s production and servicing of equipment for nuclear power plants, and development and sales of new nuclear equipment around the world; and Alstom’s steam turbine equipment and servicing for applications in France.
While accepting the GE bid, Alstom rejected a similar alliance from Siemens and partner Mitsubishi Heavy Industries.
"We will now move to the next phase of the Alstom alliance," said GE Chairman and CEO Jeff Immelt.
"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.
"For GE, the overall economics of the deal remain intact,” Immelt said. “This transaction remains accretive in year one."
Image of United States Secretary of Labor Hilda L. Solis touring a Alstom Power manufacturing facility in Richmond, VA in 2012.