GE Completes Acquisition of Alstom Power and Grid Businesses

GE announced that it has completed the acquisition of Alstom's power and grid businesses. The company reached an agreement 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 ultimate purchase price is €9.7B (approximately $10.6B). 

This deal is GE's largest industrial acquisition to date, and the company is targeting $3.0 billion in cost synergies by year five. The acquisition boosts GE’s installed power generation base to some 1,800 gigawatts, more than enough to supply all of the U.S.

Customers are expected to realize immediate benefit from the combination of the two companies.  With Alstom’s global power and grid footprint, GE will be able to apply big data analytics to an even larger installed base to reduce unplanned downtime and improve performance of turbines, power plants, wind farms, and the grid.

This deal will also leave GE with a broad renewable energy portfolio. While GE has been a leader in onshore wind, the acquisition will allow GE to expand into offshore wind. For example, GE acquired the massive Haliade wind turbines that will power America’s first offshore wind farm off the coast of Block Island, RI.

According to GE, the ties between the two companies predate the creation of GE itself. The name Alstom (originally Alsthom) underscores the links between the two firms:  the name is a mash-up of the Société Alsacienne de Constructions Mécaniques (giving “Als” to the name) and the Thomson-Houston Electric Company (the “thom” of the original moniker).  These two firms merged in 1928. Thomson-Houston, a predecessor to General Electric, merged with the Edison General Electric Company in 1892 to form GE.

GE also announced it has completed the sale of its rail signaling business to Alstom for approximately $800 million. This deal does not include the rest of GE Transportation, including the large locomotive business.

Keywords: Renewables, Grid, Nuclear, Smart Grid, Cycle Power Plant, Heat Recovery Steam Generator, ARC Advisory Group.