GE to buy Alstom’s energy stakes in JVs for $3.1bn

Bloomberg

General Electric Co. will be required to buy Alstom SA’s stakes in three energy joint ventures for 2.59 billion euros ($3.1 billion), closing a lengthy chapter in the massive 2015 tie-up that has become a headache for the beleaguered US manufacturer.
Alstom said that it will exercise its options to exit the renewable energy, grid and nuclear businesses that were created as part of the original $10 billion deal, which gave GE control of the French company’s gas-turbine operations. The transfer to GE of the joint-venture assets will occur on October 2, according to a statement.
The redemption adds to the strain on GE’s resources as the Boston-based company grapples with weak cash-flow and slumping demand — especially for the kind of equipment it acquired in the Alstom deal. GE said in a regulatory filing in February that it had already been informed of Alstom’s intent to exit the ventures this year.
Alstom and GE set up the units partly to give the French government a veto over some decisions in the nuclear-equipment business, which is considered strategic by the country because of its heavy reliance on atomic energy. The Alstom transaction was pushed through by former GE Chief Executive Officer Jeffrey Immelt after wrangling with the French government and a hard-fought battle against rival Siemens AG.
Since then, the market for gas turbines has soured. GE’s current CEO, John Flannery, has acknowledged that the company was late to recognise the slowdown in demand. In the latest blow, the manufacturer has fallen behind Mitsubishi Hitachi Power Systems and Siemens in winning orders this year.