General Electric Company (GE) Received Approval from French Authorities to Purchase Alstom (ALO.PA)’s Power Unit

General Electric (GE)

Earlier this year, General Electric Company (NYSE:GE) made an offer to purchase a majority stake in Alstom (ALO.PA)’s power business and the same has been given a green light by the French Authorities. The U.S. energy company would acquire majority stake in the renewable, grid and thermal business of Alstom.

General Electric Company (NYSE:GE) made a total offer worth $16.9 billion to the French company with $13.5 billion enterprise value and net cash equaling $3.4 billion. According to the French Economy Minister, Emmanuel Macron, the government would take up to 20% stake in the GE-ALO partnership after the completion of the deal. The government would purchase stakes from Bouygues SA (EPA:EN) in the French engineering group.

General Electric (GE)

Both the companies are planning three new joint ventures after the completion of this transaction. These joint ventures include: 1) Grid: combination of the gird assets of both the companies; 2) Renewable: Offshore wind and hydro business of Alstom; 3) Global Nuclear and French Steam: Alstom’s nuclear production and servicing units along with steam turbine units in France. The combined operations of both the firms are likely to produce synergies of $1.2 billion in the next five years.

At the same time, General Electric Company (NYSE:GE) agreed to sell signaling business unit to Alstom and work under multiple collaboration agreements in supply chain, services, manufacturing, and technology industries. GE would sell the signaling unit for $825 million.

General Electric its third quarter 2014 results last month with net revenues of $36.2 billion and $3.8 billion in operating earnings with operating EPS of $0.38. The company generated cash worth $3.8 billion during this quarter with GAAP earnings of $3.5 billion. The most important figure during this quarter was the backlog amount of $250 billion for against its equipments and services.

This article has been written by Prakash Pandey.

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