GE to buy Alstom’s stakes in energy joint ventures

22 May 2018

France’s Alstom and US-based General Electric (GE) signed an agreement on 4 May to implement arrangements reached in 2015 which will enable Alstom to pull out of three energy joint ventures (JVs) - grid technology, renewable energy, and global nuclear and French steam power. These had been set up in November 2015 as part of the sale of the Alstom Energy business to GE, partly to appease the French government, which held a part of Alstom, giving Alstom non-controlling interests, but also redemption rights that would require GE to purchase all of Alstom’s interests within three-years.

Alstom now intends to exercise its “put” options to sell its interests in the renewables and grid JVs in September 2018. That will automatically trigger GE to exercise a “call” option to buy Alstom’s stake in the JV pertaining to the companies’ nuclear and French steam power businesses, and the transfer of all interests will occur on 2 October for a total of €2.594bn ($3.2bn). This is the amount GE shaved off the purchase price when it acquired Alstom, and GE will then effectively have full financial control of all three JVs.

Alstom had sold its energy activities to GE in 2015 in exchange for GE’s rail signalling business. The acquisition of Alstom was expected to give GE a firm foothold in the global energy equipment market and to strengthen Alstom’s positioning in the transport industry. GE-Alstom Nuclear Systems had been planning to provide turbine island solutions for all reactor types. However, after two years, GE was under financial strain because of the underperforming $10.1bn investment in Alstom.

In January, Alstom informed GE that it intended to exercise redemption rights with respect to the grid technology and the renewable energy JVs by September 2018, and with respect to the global nuclear and French steam power JV (in which the French government holds preferred interest) in the first quarter of 2021. GE noted that the “redemption price would generally equal Alstom’s initial investment plus annual accretion of 3% for the grid technology and renewable energy JVs and plus annual accretion of 2% for the nuclear and French steam power JVs”.

In recent months, Bulgarian officials have held several rounds of talks with CNNC, but reports in the Bulgarian media suggested that CNNC had no interest in using the Russian reactors and would prefer to use its own technology.  However, sources close to Bulgaria’s nuclear sector told NEI that the Belene site was originally designed for four units and the plan being discussed involved using the Russian reactors for the first two units and Chinese technology (probably ACP1000 reactors) for two more.



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