BRUSSELS: General Electric may need to offer stronger concessions to win approval from the EU for its purchase of Alstom’s power unit as regulators plan to warn the U.S. firm that its bid would harm competition, two people familiar with the matter said.
GE’s planned 12.4 billion-euro ($14 billion) purchase of Alstom’s power equipment business, the biggest deal in its history, is a key element of its expansion into high value industrial products and away from the finance business.
The European Commission said in February that the deal would leave just two players in Europe, with GE competing only with German peer Siemens while globally the third rival would be Mitsubishi Hitachi Power Systems.
GE is seeking to counter the Commission’s concerns with some concessions, the people said.
A statement of objections could come on Friday,” one of the people said.
Such a document sets out the EU regulator’s views why a deal is seen as anti-competitive and is a prelude to a veto unless companies come up with strong arguments or significant concessions.
Alstom shares were down 3.5 percent to 26.3 euros by 7.15 a.m. EDT, the biggest decliner in the French blue-chip index, after the Reuters story came out.
Last month GE Chief Executive Jeff Immelt said GE would consider selling intellectual property rights to a product but not concessions which would affect lucrative service revenues.
Commission spokesman Ricardo Cardoso declined to comment while Alstom had no immediate comment. GE said it was working constructively with the regulator.
“We are focused on a positive outcome that preserves the deal economics,” the company said, adding it was confident of closing the deal in the second half of the year.
The deal has already received the green light in Brazil, South Africa and India. GE’s planned $42 billion takeover of Honeywell International was rejected by the Commission in 2001.
