GE would offer concessions to win EU approval of Alstom deal: executive

May 11
6:48 PM 2015

General Electric Co (GE.N) said on Monday for the first time it would be willing to consider concessions in order to win European approval to acquire the power equipment unit of France's Alstom (ALSO.PA).

"We are willing to explore remedies to get this deal done even though again we believe in the merits of the deal," Steve Bolze, president and CEO of GE Power & Water, the conglomerate's biggest industrial unit, told Reuters in an interview.

Any concessions would have to "preserve the deal economics and our strategic value," he said.

Bolze, however, declined to discuss any potential areas of remedies that GE might consider.

Earlier on Monday, Reuters reported that the U.S. conglomerate was unlikely to gain unconditional European Union clearance for its 12.4 billion euro ($13.83 billion) bid, citing two sources familiar with the matter.

The European Commission opened a full investigation in February to consider competition implications of a deal that would remove one of GE's three rivals in the manufacturing of heavy-duty turbines for gas-fired power plants.

EU regulators typically prefer merging companies to sell overlapping assets or make it easy for rivals to enter the market. GE's gas turbine competitors include Siemens AG (SIEGn.DE) and Mitsubishi Heavy Industries Ltd (7011.T).

The Alstom deal, which would be the biggest acquisition in GE's history, stands to expand GE's installed base of power turbines, which would allow GE to gain even more lucrative revenue from servicing the equipment.

GE already altered the deal to win the French government's backing during last year's two-month battle, in which it fended off Siemens and Mitsubishi.

In the interview, Bolze acknowledged the "protracted process" for Alstom, and said GE was focused on "how to move ... forward as it makes sense."

In GE's first-quarter conference call last month, Chief Executive Jeff Immelt backed the deal's fit for GE, but said if it "ever would become unattractive, we wouldn't do it."

GE, which is undergoing an overhaul involving the exit of most of its finance assets, has said it expected synergies from the Alstom deal to add between 6 to 9 cents in earnings per share in 2016.

But some analysts have told Reuters they doubt GE's stock would take a big hit should the deal collapse, with the idea that GE could make up those earnings with stock buybacks or other deals.

The antitrust investigation was halted on April 24, according to a filing on the European Commission website. GE said on Monday it expects regulators to resume scrutiny of the deal this week and that the temporary suspension was part of the regulatory process.

"This is a procedural step to give them time to review additional information," the company said in a statement.

EC spokesman Ricardo Cardoso said regulators are waiting for data from the companies before a setting a new deadline to act. The previous deadline was Aug. 6.

Immelt met European Competition Commissioner Margrethe Vestager last week to present the merits of the company's case.

GE shares settled 1.6 percent lower at $26.92 in Monday trading on the New York Stock Exchange.

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