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General Electric has won EU approval for its 12.4-billion-euro ($13.9 billion) acquisition of Alstom's power business after agreeing to sell some of the French company's turbine assets to Italian rival Ansaldo Energia. Both Alstom and GE said they expected to finalise the deal as early as possible in the fourth quarter.
The acquisition of Alstom's energy business is likely to bring together two manufacturers of power plant hardware. The deal has been approved by regulators elsewhere, including in the United States. But overcoming the European hurdle will nevertheless come as a relief to GE, as EU officials stymied its $42 billion offer for Honeywell International 14 years ago despite U.S. clearance.
Under GE's concessions, it will divest Alstom's heavy-duty turbine product line and the technology it is developing for very large turbines to Ansaldo, of which Italian state-backed investment fund Fondo Strategico Italiano and China's Shanghai Electric (601727.SS) each own 40 percent.
The U.S. conglomerate will also sell Alstom's service contracts for 34 installed turbines and its U.S.-based subsidiary Power System Manufacturing to Ansaldo. Credit Suisse analysts said the GE concessions were also positive for Shanghai Electric, as through Ansaldo acquiring Alstom assets it would gain a strong footing in the European and the U.S. gas turbine market.