STRASBOURG, France—The EU announced Tuesday it had approved a deal for U.S. giant General Electric (IW 500/6) to acquire the energy business of French company Alstom for 12 billion euros ($13.4 billion), after Alstom agreed to sell some assets to an Italian rival.
The decision ends months of uncertainty and tension over the deal, part of a drive by the American conglomerate to stake more of its future on industrial operations.
EU anti-trust regulators had expressed concern the deal could lead to too much concentration in the gas-turbine sector, leaving only GE and Siemens in the highly strategic market.
"Following an in-depth review, the Commission has approved the acquisition of Alstom's energy businesses by General Electric subject to divestment of central parts of Alstom's heavy duty gas turbines business to Ansaldo," the European Commission said.
EU Competition Commissioner Margrethe Vestager said her greenlight was a "big deal", opening the way to GE's biggest-ever acquisition.
With it, GE also succeeds where it fell short with the EU’s 2001 rejection of a takeover of fellow US giant Honeywell, which sent a shockwave across the world of big business.
Vestager said "the case illustrates that Europe is open to investment" but that "you cannot buy your way to a monopoly."
With the Alstom decision now behind her, the tough-minded former Danish finance minister must focus on Google, the US Internet giant.
The EU has filed formal anti-trust charges against Google's shopping services, but the Silicon Valley firm is not backing down calling the accusations "wrong".
'We Are Very Happy'
GE hailed the EU green light.
"We are very happy with this decision," said Mark Hutchinson, the GE executive in charge of handling the Alstom buyout.
"We wanted to preserve the economic rationale for this transaction. We believe we have achieved that," he said.
Alstom CEO Patrick Kron said that in addition to fulfilling the EU's wish to maintain competition, GE's commitments "protect the interests of Alstom employees, shareholders and customers."
GE also won regulatory clearance in the United States, but that was expected.
"We have had a very close and successful cooperation with the Antitrust Division of the US Department of Justice both as regards the investigation and the analysis of suitable remedies," Vestager told reporters at the European Parliament in Strasbourg.
The deal was first proposed a year ago but in a sign of the jitters it triggered in Brussels, the Commission twice delayed making a decision on whether to wave the buyout through.
The EU concerns centered primarily on possible distortions in the market for maintaining high-power gas turbines, used mainly in electricity generating plants.
This lucrative market is dominated by GE with a 50% stake, followed by Siemens of Germany, Mitsubishi Hitachi Power Systems, Alstom and Ansaldo Energia of Italy.
After initially putting up resistance, GE ultimately agreed to shed some maintenance service assets and patents to Ansaldo Energia.
Turbine maintenance is a money maker for GE and at the heart of the potential $3 billion in synergies it hopes to make in the deal with Alstom. It has forecast that after the deal its profits will double from 2016 to 2018.
GE has also promised the French government it will create a thousand jobs, among other commitments.
The US giant had insisted it would not make concessions that would render the deal less attractive, but in the end it has seemingly given in, although not without winning a slightly lowered the selling price from Alstom.
Copyright Agence France-Presse, 2015
