General Electric (GE) will buy Alstom’s stakes in three energy joint ventures for 2.59 billion euros, equivalent to $3.1 billion, adding to GE’s exposure in a struggling market as the French company exercises its right to sell out.
The Boston-based Dow Jones component acquired Alstom’s power business in November 2015 for roughly $10.6 billion, its largest industrial acquisition ever. The joint ventures in renewables, grid and nuclear energy, were created as part of that deal.
Alstom said Thursday it will exercise its options to exit those businesses in 2018. GE likely will take control on Oct. 2.
GE shares rose 0.5% at 14.69 on the stock market today. General Electric’s Dow Jones conglomerate peers, United Technologies (UTX) and 3M (MMM), climbed 0.8%. Germany’s Siemens (SIEGY) rose 1.4% and Honeywell (HON) gained 1.1%.
In 2015, General Electric expected the Alstom deal to boost earnings per share by 5-8 cents in 2016 and 15-20 cents by 2018. Instead, a sharp slump in the global power market drove an earnings loss in 2017. One Wall Street analyst recently argued GE was “fleeced” in the Alstom deal.
Alstom now focuses on the transport sector.
The market for gas turbines and power generation continues to be challenging, GE said last month in its first-quarter earnings report.
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