The Alstom acquisition marks GE’s largest ever industrial deal.
GE has officially completed the acquisition of Alstom’s power and grid businesses, following regulatory approval of the deal in over 20 countries and regions. It is GE’s largest-ever industrial acquisition, and spans the EU, the U.S., China, India, Japan, and Brazil.
GE reached an agreement with Alstom in 2014 to purchase Alstom’s power and grid businesses for €12.35 billion.
Adjusting for the joint ventures announced in June 2014 (renewables, grid, and nuclear), changes in the deal structure, price adjustments for remedies, net cash at close, and including the effects of currency, the current purchase price is €9.7B (approximately $10.6B). This figure includes working capital of approximately €0.6B in October of this year.
GE expects the deal to generate $0.05 to $0.08 of earnings per share in 2016, and $0.15 to $0.20 of earnings per share by 2018. GE is targeting $3.0 billion in cost synergies in year five and strong deal returns. The overall economics and strategic rationale remain the same as GE announced in April 2014.
“The completion of the Alstom power and grid acquisition is another significant step in GE’s transformation,” said Jeff Immelt, chairman and CEO, GE. “The complementary technology, global capability, installed base, and talent of Alstom will further our core industrial growth. We are open for business and ready to deliver one of the most comprehensive technology offerings in the energy sector for our customers.”
The GE and Alstom combination will benefit U.S. customers in New Jersey for the combined-cycle power plant, PSEG Sewaren (GE 7HA gas turbine + Alstom heat recovery steam generator). Among other global projects, GE and Alstom are also preferred bidders for a combined-cycle plant project in Asia.
GE continues to execute its strategy to become a simpler, more focused company. In addition to the Alstom acquisition, GE is moving forward with several plans: the split-off of Synchrony Financial has commenced; the GE Capital exit strategy is ahead of plan with $126 billion of signed dispositions; the recent formation of GE Digital is consolidating all digital capabilities across the company to provide customers with the best industrial solutions and software; and GE is winning in the marketplace and delivering strong financial results.
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