GE ready to offer concessions over Alstom

General Electric of the US said on Monday it was prepared to offer concessions to the European Commission to secure approval for its planned €12.4bn purchase of the energy businesses of France's Alstom.

GE declined to specify its intended concessions, which could include disposals or other measures to strengthen competition, but said it would come up with detailed proposals within a month.

Any concessions would "preserve the economic and strategic rationale of the deal", the company said.

It still aims to close the acquisition by the middle of this year. The proposed takeover is part of a radical transformation of GE planned by chief executive Jeff Immelt, which includes the group shedding most of its financial services operations to focus on its industrial businesses.

Reuters reported on Monday that the commission was unlikely to give unconditional approval to the deal without concessions from GE, citing people familiar with the matter.

The Commission said in February that it was launching an in-depth inquiry, after its preliminary investigation had indicated "potential competition concerns in the market for heavy-duty gas turbines", which are mainly used in gas-fired power plants.

GE argues that there is today almost no market for heavy-duty gas turbines in the EU, where electricity demand has been weak since 2008 and coal is generally a cheaper fuel for power generation than gas.

Just 2.34 gigawatts of gas-fired generation were connected to the grid in the EU last year, 8.7 per cent of all new capacity installed, according to the European Wind Energy Association.

GE also argued that the time taken to conclude its takeover plan, which first became public in April 2014, was taking its toll on Alstom.

The French company has reported that orders for the energy businesses that it plans to sell to GE were down 12 per cent for the year to March 31 2015, at €13.3bn.

In a presentation to investors this month, Alstom highlighted "low order intake in thermal [gas and coal] power" generation equipment and a "sales decrease reflecting slower order intake in recent quarters".

GE suggested that resolving the uncertainty over its planned acquisition would help the Alstom businesses.

The US company also said the French government was "strongly supportive" of the proposed deal.

GE overcame the initial scepticism of the French government by modifying the terms of its offer last year.

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