Ge Alstom Essay

2562 words - 11 pages

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Alstom saga ends with a “ménage à trois”
General Electric; Market Cap: $299.6bn (as of 06/11/2015)
Alstom; Market Cap: $9.06bn (as of 06/11/2015)

General Electric finally concluded its €9.7bn (about $10.6bn) acquisition of Alstom’s power business after getting the final
regulatory approvals. The deal represents GE’s biggest ever industrial acquisition.
GE's offer was accepted by Alstom at €12.35bn in April 2014, but then the French government rightfully forced some
changes in the deal structure. To win the approval from the French government, GE’s newest proposition involved setting
up joint ventures in renewable ...view middle of the document...

Founded in 1878, General Electric has a tradition of innovation and excellence in the Energy division and throughout the
years it has been able to explore other businesses, becoming a major player in many industries with a high customer
satisfaction. At the moment, General Electric operates worldwide with offices in more than 130 countries.
General Electric’s strong position in the market is given by increasing operating margins (16.2% in 2014 and expected to
grow up to 17% by the end of 2016) as well as high R&D of $10bn to $15bn each year.
GE’s operating margin is perfectly in line with the industry average, confirming the competitive position of the firm in its
segment. However, ever since the CEO Mr. Immelt arrived, the company has never been able to outperform the market
expectations and shares are still priced 30% less than in 2000 under the former CEO, Mr. Welch.
In 2014, GE paid out $10.8bn in dividends and in stock buybacks returning about $30mn to shareholders every day.
The General Electric’s strategy is to become the world’s best infrastructure and technology company, retaining a small
financial division. General Electric is planning to drive infrastructure leadership through investments in innovations in
order to achieve a greater industrial leadership.
Moreover, the recent formation of GE Digital is consolidating all digital capabilities across the company to provide
customers with the best industrial solutions and software as GE keeps winning in the marketplace and delivering strong
financial results.
About Alstom
Alstom, headquartered in Levallois-Perret, Paris (France), is an industrial multinational company which operates in the
transportation and energy business. Alstom was originally founded in 1928 as the merger between Compagnie Française
Thomson-Houston and the Société Alsacienne de Constructions Mécaniques. About ten years ago, the French government
bailed out the company providing more than €3bn in the form of equity investments, loans, and financial guarantees to
Alstom customers. The success of Alstom is the result of a strong focus on environmental and operational excellence
achieved thanks to a diverse and entrepreneurial team across the globe.

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The key shareholder of Alstom is the French government that in June 2014 decided to buy 20% of shares from Bouygues, a
French industrial group which has owned a considerable stake in Alstom, in order to strengthen its position on Alstom that
employs thousands of people in France.

For the upcoming years, Alstom is planning to focus only on its transportation business, becoming a global player with
offices in more than 60 countries worldwide.
Alstom’s sales and operating revenues increased by 7.63% YoY (from €5.73bn to €6.16bn). Despite growing revenues, an
increase in cost of goods sold as a percentage of sales (from 83.90% to 84.97%) was responsible for a decline in net
income, YoY, from...

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