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GE beaming as Alstom deal is sealed

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GE beaming as Alstom deal is sealed

General Electric’s impending purchase of French manufacturer Alstom won’t necessarily mean more manu
GE beaming as Alstom deal is sealed
The General Electric Plant downtown campus on Edison Avenue in Schenectady Wednesday, September 9, 2015.
Photographer: Peter R. Barber

General Electric’s impending purchase of French manufacturer Alstom won’t necessarily mean more manufacturing in Schenectady, but it will provide a boost to the Power & Water unit headquartered here, company officials said.

“The bulk of those assets that we’re buying will become part of Power & Water, which is headquartered in Schenectady,” said Jim Healy, GE Power & Water spokesman. “So it makes Power & Water a much bigger business in the GE portfolio, and grows our product offerings and our services offerings.”

European and U.S. antitrust regulators this week approved GE’s $9.5 billion purchase of Alstom, which clears the way for GE to swallow Alstom’s power and grid business.

“Their power business is essentially a gas turbine, steam turbine and wind and hydro business,” Healy said.

The deal, first announced in 2014, would add billions of dollars in annual revenue to the Schenectady unit. GE expects to close on the acquisition in the fourth quarter of this year.

“It’s not necessarily more manufacturing in Schenectady, but we make steam turbines in Schenectady and do some services there,” Healy said. “So hopefully the business will have more opportunity to sell power, generate equipment and offer more services.”

He added: “This is GE’s biggest-ever industrial acquisition, and it’s in the space that’s headquartered in Schenectady.”

The deal should bring more work to GE Global Research in Niskayuna, he said, because “it’s more opportunity to work on new energy technologies.”

The European Commission’s approval requires GE to divest a segment of Alstom’s heavy-duty gas turbine business to Ansaldo Energia, an Italian supplier of power generation plants and components, according to a GE news release.

“[The commission] was concerned that there was overlap in GE and Alstom gas turbine businesses,” Healy said, adding that Schenectady’s operations would not be affected by the divestment.

The U.S. Department of Justice also filed a proposed consent decree Tuesday that permits the acquisition to be completed.

“We have addressed the EC’s and DOJ’s competition concerns while preserving the strategic and economic drivers of the deal,” GE Chairman and CEO Jeff Immelt said in the news release. “The complementary technology and geography of the Alstom assets will enable us to bring more value to customers and a strong return to GE shareholders.”

The acquisition of Alstom will boost by 50 percent the generating capacity of power equipment installed by GE, the company said. It will also give GE one of the broadest and deepest renewables portfolios in the industry.

“The more we learned about Alstom’s technology and capabilities over the last 15 months, the more we liked the deal,” Immelt said in the release. “It’s the right deal at the right time for GE.”

Charles Brown, a partner at Albany-based Hugh Johnson Advisors investment management firm, called the deal “the feather in Immelt’s cap.” He said Alstom was considered “a jewel of French industry,” so convincing European regulators to sign off took some maneuvering on Immelt’s part.

“He’s been on quite a tear over the last year and a half trying to get GE back to its ‘industrial roots,’ ” he said. “They’ve been divesting their GE Capital business, shrinking that business, becoming less reliant on the financing business, and those divestitures are going faster than we initially anticipated.”

He agreed that the deal should be a plus for GE shareholders because the business will be less susceptible to financial crises and see less regulation from the Federal Reserve.

There are no specific plans to add jobs in Schenectady, said Healey, “but we’re just getting started here.”

“We really can’t do anything until we close the transaction and start integrating the businesses, and then we’ll see how things play out over that time period,” he said.

That process will be a “massive effort” of bringing 130,000 total employees between GE and Alstom together and unifying the two companies’ practices, the GE Power & Water spokesman said.

“If you can imagine that, it’s every aspect of your business,” he said.

The acquisition is projected to bring Power & Water’s annual revenue from about $26 billion to $30 billion.

GE currently employs about 7,000 people in the Capital Region, including 4,000 at its Schenectady campus.

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