Alstom SA’s chief executive says the French heavy engineering firm’s agreement to sell off most of its power generation business to US rival General Electric Co (GE) will save jobs and protect France’s national interests.
Patrick Kron says the US$17 billion deal agreed over the weekend “is a combination of Alstom’s qualities and GE’s economic strength.”
After the deal is completed Kron will be left running the company’s train, tram and railway signaling business, which accounts for around a quarter of the group’s total sales and operating profit.
GE will take over Alstom’s money-spinning gas turbine business, while the two companies keep equal stakes in the small renewable energy and power grid businesses.
The French state will also buy a stake in the new rump Alstom.
French Economy Minister Arnaud Montebourg said on French television on Sunday that the government will buy a 20 percent stake in Alstom from construction giant Bouygues SA, a main shareholder of the French company.
The move fulfills his pledge to ensure that the French government would retain a say in jobs and decision-making at the company, which builds power plants and France’s famed high-speed TGV trains. He did not comment on the final price of the stake to be bought from Bouygues.
Under the agreement with Alstom, GE agreed to sell its railroad signal business to the French company for about US$825 million. The deal also calls for the companies to set up three 50-50 joint ventures: one for the power grid businesses, another for offshore wind and hydro-power operations and a third for nuclear steam turbines.
GE has said that if shareholders and workers’ representatives sign the deal, the acquisition of Alstom’s energy unit should close sometime next year.