GE buys Alstom Power for $10B+

PHOTOGRAPHER: Marc Schultz

GE Power & Water and Alstom Power have combined to creater GE Power, headquartered in Schenectady. Seen is Building 37 at the GE Main Plant in Schenectady.

General Electric closed on the more than $10 billion purchase of a French-based power company on Monday, which more than doubles the size of the Schenectady-based division — GE Power.

But GE Power President Steve Bolze did not offer any details about what, if any, impact the deal would have on GE’s 4,000 Schenectady employees when he spoke with reporters Monday.

The company renamed the Schenectady division from GE Power & Water to just GE Power which, with the acquisition of Alstom Power, now has more than 65,000 employees across more than 150 countries and estimated revenue of $30 billion, up $4 billion from the earlier division.

Bolze said the deal, which has been in the works for 18 months, represents the largest industrial acquisition in GE history and cost around $10.6 billion. GE estimated the purchase, adding to GE’s steam, nuclear and gas power portfolio, would increase the company’s stock value by as much as 6 cents a share in 2016 and 20 cents a share by 2018.

“As we continue to expand around the world, this is our headquarters, this is our center of activity,” Bolze said of the Schenectady campus. “It will continue to be a showcase and that is why we invest here.”

The combined company becomes GE’s largest industrial division and it plans to focus its efforts on growing energy demand across the globe. Bolze pointed to gas plants and efficiency upgrades to existing energy infrastructure as areas of focus for GE Power. Renewable energy will be a separate business under the GE umbrella.

On Monday, GE officials touted the expanded division’s global reach, citing ongoing power projects in New Jersey, Pakistan and Germany. A handful of GE Power offices will be headquartered oversees — power and steam services in Switzerland and distributed power in Austria.

The purchase is also part of GE’s broader effort to focus on its “industrial roots” and pare back its financing business.

Bolze said the company was continuing to develop the details of “integration plans” and would evaluate market conditions before making decisions about the future of Schenectady’s workforce. He emphasized that the Alstom purchase represented an investment in the Schenectady-based power division. No major personnel relocations were planned as of Monday.

“There are no plans for any actions in Schenectady, but it’s early.” Bolze said. “We have to go through a lot of planning.”

As part of GE’s annoucements Monday, it said the company was targeting $3 billion in cost “synergies” over five years.

Charlie Brown, a partner at the Albany-based Hugh Johnson Advisors investment firm, where he oversees investments in GE, said the “synergy” target was a cue to investors about the company’s goal for cutting costs as the two companies transition to a single operation.

“If you are putting together two companies that are basically doing the same thing, there are opportunities to take costs out of the system …” Brown said. “The bigger opportunity is reducing redudant costs.”

General Electric stock prices were up more than 1.5 percent in trading Monday after the company released the final details of the Alstom Power purchase in the morning.