Insight – RE upsides to Alstom/GE
Uniting the wind assets of Alstom and GE offers more benefits to both parties than an alternative tie-up between the French group and rival bidder Siemens, says a research note from Recharge Insight on the acquisition race gripping the global power sector.
A successful GE bid would give the American giant access to specific wind markets such as Brazil and the offshore sector, easing its dependence on the volatile US market and making it “a solid top-three player in wind”, predicts Recharge Insight.
While noting that the main drivers for GE’s interest in Asltom lie beyond renewables, Recharge Insight director Robert Clover says: “It also looks positive in renewables, even if these constitute a small slice of the assets that would be acquired.”
The Insight analysis points to far greater overlaps between Alstom’s wind business and that of Siemens.
“From a purely wind standpoint, Siemens taking over Alstom’s business would be closer to taking out a competitor, in contrast to the GE/Alstom combination, which looks to have synergistic benefits for both businesses,” Clover writes.
Clover adds: “A greater degree of job preservation from a GE/Alstom energy combination would probably result than from a Siemens/Alstom combination.”
Recharge Insights has ominous words for the position of Siemens after conclusion of the saga, if it ends up “the loser in a battle it did not want to fight”.
Clover says: “It also looks to be faced with a much more formidable competitor in renewables, power generation and grid in GE and potentially a more formidable competitor in transportation with a strategically focused and cash-rich Alstom. In short, it is stuck between a rock and a hard place."
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