GE prepared to concede more to finalise Alstom deal

General Electric has announced that it is willing to offer concessions to satisfy the European Commission that its acquisition of Alstom does not break European competition rules.

The company, led by CEO Jeff Immelt, did not disclose what those concessions are likely to be but said they would ‘preserve the economic and strategic rationale of the deal.’ They also said that the details would be proposed within a month as the company looks to tie up the deal by the middle of this year.
Jeff Immelt
The £12.4bn takeover of Alstom’s energy business is said to have concerned the Commission. The Commission said in February that it was launching an in-depth inquiry, after its preliminary investigation had indicated “potential competition concerns in the market for heavy-duty gas turbines”, which are mainly used in gas-fired power plants.

However GE argues that there is today almost no market for heavy-duty gas turbines in the EU, where electricity demand has been weak since 2008 and coal is generally a cheaper fuel for power generation than gas.

The French company has reported that orders for the energy businesses that it plans to sell to GE were down 12 per cent for the year to March 31 2015, at €13.3bn.

The FT reports that in a presentation to investors this month, Alstom highlighted “low order intake in thermal [gas and coal] power” generation equipment and a “sales decrease reflecting slower order intake in recent quarters”.

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