NEW YORK – General Electric Co. clinched its biggest acquisition ever, the $17 billion purchase of Alstom SA’s energy assets, after the resolution of the French government’s last condition for the deal.
CEO Jeffrey Immelt, approaching 13 years on the job, prevailed over a bid from Siemens AG and initial French opposition. Buying Alstom’s gas-turbine operations and creating joint ventures in the steam turbine, renewable energy and electrical-transmission businesses will help his push to return GE to its industrial roots.
Alstom is the company supplying turbines for Deepwater Wind LLC’s 30-megawatt Block Island Wind Farm project.
“If this was hearts, Jeff shot the moon,” said Nicholas Heymann, an analyst at William Blair & Co. in New York. “He got 90 percent of what he was shooting for, but he also made sure the business wasn’t locked and inaccessible for life between the company’s principal competitors.”
The final hurdle was Sunday’s agreement by Alstom shareholder Bouygues SA to sell a 20 percent stake to the French state. Concerned that Alstom’s divestitures would imperil French energy independence, Economy Minister Arnaud Montebourg set the stock deal as a non-negotiable demand on June 20.
Adding Alstom’s energy units will help Immelt, 58, tilt Fairfield, Conn.-based GE back toward manufacturing after finance arm GE Capital put the parent company at risk as credit dried up during the 2008-09 financial crisis.
Immelt has been making acquisitions in aviation, including a $4.3 billion deal for Avio SpA’s aerospace business in 2012, and oil and gas. In March, GE filed for an initial public offering for its North American consumer-lending unit, now called Synchrony Financial, as a first step toward exiting the business through a split-off transaction next year. That’s when GE also projects to close on the Alstom asset acquisition.
“It is consistent with them moving toward their industrial core and trying to reduce the role of finance in the business,” said Peter Jankovskis, co-chief investment officer for Lisle, Ill.-based OakBrook Investments LLC, whose $3.2 billion under management included 1.28 million GE shares as of March 31. “From that standpoint it is a positive move.”
Alstom will retain its transport business, which makes the TGV high-speed trains, and also buy GE’s rail-signaling operations for 602 million euros ($825 million).