Why Alstom Sold to GE

The History of Alstom and GE

Alstom was founded in 1928 as a merger of several French electrical companies. The company quickly became a leader in the power generation and transmission industry, and by the early 2000s, it was one of the largest industrial companies in Europe.

GE, on the other hand, was founded in 1878 by Thomas Edison. The company started out as a manufacturer of light bulbs, but it soon expanded into other areas, including electrical power generation, transportation, and medical imaging. By the early 2000s, GE was one of the largest and most diversified companies in the world.

The Buyout Offer

In 2014, GE made a buyout offer to Alstom for $17.5 billion, equivalent to €12.35 billion at the time. This was a significant premium over Alstom's market value, which was around $13 billion. Initially, the offer was rejected by Alstom's board of directors, but GE eventually persuaded the board to accept the deal by raising its bid to $20 billion, equivalent to €16.9 billion.

The Reasons for the Sale

There were a number of reasons why Alstom agreed to sell itself to GE. First, the company was facing a number of financial challenges, including declining sales and increasing debt. Second, Alstom was facing competition from other global energy companies, such as Siemens and Mitsubishi Heavy Industries, which were seen as being more innovative and efficient. Third, GE offered Alstom a number of attractive benefits, including access to its global sales network, its research and development resources, and its financial strength.

The Impact of the Sale

The sale of Alstom to GE had a significant impact on both companies. For Alstom, the sale meant that it would no longer be an independent company. For GE, the acquisition gave it a major boost in its power generation and transmission business, which was already one of the largest in the world.

The Future of Alstom and GE

The future of Alstom and GE is uncertain. Alstom is now a subsidiary of GE, and it is unclear how much autonomy it will have. GE, on the other hand, is facing a number of challenges, including declining sales and increasing competition. It is unclear how the company will navigate these challenges and whether it will be able to maintain its position as a global leader in the power generation and transmission industry.

Conclusion

The sale of Alstom to GE was a significant event in the history of both companies. It remains to be seen how the sale will impact the future of both companies, but it is clear that the deal has had a major impact on the global energy industry.

Frequently Asked Questions

Why did Alstom agree to sell itself to GE?

A: Alstom agreed to sell itself to GE for a number of reasons, including financial challenges, competition from other global energy companies, and attractive benefits offered by GE.

What was the impact of the sale on Alstom and GE?

A: The sale had a significant impact on both companies. For Alstom, it meant that it would no longer be an independent company. For GE, the acquisition gave it a major boost in its power generation and transmission business.

What is the future of Alstom and GE?

A: The future of Alstom and GE is uncertain, but the sale is likely to have a major impact on the global energy industry.

What are some of the challenges facing GE?

A: GE is facing a number of challenges, including declining sales and increasing competition. It is unclear how the company will navigate these challenges and whether it will be able to maintain its position as a global leader in the power generation and transmission industry.

What are some of the opportunities for Alstom and GE?

A: Alstom and GE have a number of opportunities, including the growing demand for energy, the need for new and more efficient energy technologies, and the increasing focus on renewable energy. It remains to be seen how Alstom and GE will take advantage of these opportunities, but they have the potential to drive significant growth for both companies.