General Electric Co. (GE)’s planned $17 billion purchase of Alstom SA (ALO)’s energy assets, which includes creating joint ventures and a stake sale to the French state, will take time and face operational challenges, according to the French company’s chief executive officer.
Executing the agreed deal will be “long and difficult,” Alstom CEO Patrick Kron told reporters today at an Alstom plant in Belfort, eastern France. GE CEO Jeffrey Immelt said the agreement is still a “good deal” for both companies, adding that customers have responded positively.
Immelt last week sealed GE’s biggest acquisition ever, prevailing over a Siemens AG (SIE) counterproposal and initial opposition from the French government. GE is buying Alstom’s gas turbine operations and creating joint ventures in the steam turbine, renewable energy and electrical-transmission businesses.
As part of the deal, the French state will buy as much as 20 percent of Alstom. Economy Minister Arnaud Montebourg had said that the state would block the GE deal without that stake.
Based in the Paris suburb of Levallois-Perret, Alstom built France’s power grid and makes the high-speed TGV trains as well as the generators that produce most of the nation’s electricity. That history has helped cement its status as a local industrial icon, and spurred the government’s pursuit of an equity stake.
GE refined its initial offer by proposing alliances in nuclear technology and rail, and adding safeguards to its pledge to create 1,000 local industrial jobs.
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