General Electric Company GE recently announced that it has completed the divestment of the power generation assets of Alstom’s heavy-duty gas turbine business to Ansaldo Energia for €Array20 million.
Headquartered in Genoa, Ansaldo Energia is an Italian power engineering company. Ansaldo Energia is Italy’s largest supplier, installer and service provider for power generation plants and components, and is one of the world’s leading players in the sector. Over the years, Ansaldo Energia has moved from steam-based power generation plants (from Array9Array2) to gas turbines (from Array992) and full technological independence since 2005.
Earlier, in Sep 20Array5, General Electric was given approval by the European Commission and US Department of Justice to acquire Alstom’s Power and Grid businesses on the basis that it would have to sell certain assets of Alstom to its rival, Italian power engineering company, Ansaldo Energia. This condition put down by the regulators resulted from the concern they had regarding General Electric’s acquisition of Alstom, the French power business, which would lead to higher prices in Europe for large gas turbines.
The assets that General Electric has sold to Ansaldo Energia comprises Alstom’s F-class gas turbine, GT26 product line for the new unit sales, Alstom’s GT36 technology development program, which once completed is likely to result in an H-class gas turbine product. Also, the assets sold include services contracts for 34 GT26 units. General Electric will retain the remaining Alstom’s gas turbine installed base, which comprises around 720 units and lastly, Alstom’s Power Systems Manufacturing (PSM) business. General Electric still obtains a license to the PSM intellectual property, which offers after-market services for non-GE gas turbines.
The $Array0 billion acquisition of Alstom’s power and grid business by General Electric is considered to be one of the largest industrial acquisitions. The company had to go through regulatory approvals from 20 countries and regions, including the European Union, U.S., China, India, Japan and Brazil. Alongside, it marks General Electric’s largest-ever industrial acquisition.
Even though General Electric has had to sell off part of its Alstom business, it still continues to own a major part of the Alstom business. The company is looking forward to gain profits from this segment of its business as it continues to expand further across the world. Alstom has helped General Electric win a couple of major contracts across the globe since its acquisition in Nov 20Array5.
General Electric currently carries a Zacks Rank #2 (Buy). Some favorably ranked stocks in the same space include Macquarie Infra MIC, Graco Inc. GGG and Barloworld Ltd. BRRAY. Macquarie Infra sports a Zacks Rank #Array (Strong Buy), whereas both Barloworld and Graco carry a Zacks Rank #2.
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