ALSTOM Acquires ABB's Share in ABB ALSTOM Power

Completing its exit from the power generation business, ABB plans to sell its 50% share in ABB ALSTOM POWER to for 1.25 billion Euro. Goran Lindahl, ABB's president and CEO, said the transaction meets the global technology group's strategy to increase its reliance on IT-driven solutions, as well as general high-tech and on service.

"Today we focus more on industrial IT, and on infusing IT solutions and service into our activities in automation, building technologies, oil, gas and petrochemicals, and financial services," Lindahl said. "But our IT-driven strategy also means that we create IT-based solutions for the dramatically changing needs in the markets of power transmission and power distribution."

Proceeds from the divestment will be used to enhance ABB's position in B2B e-commerce, as well as for expansion in the business segments beyond automation, for example in power distribution, building technologies, and financial services, he said.

Going forward, the power company will become part of ALSTOM's sector reporting structure. From the closing date, Claude Darmon, president and CEO of ABB ALSTOM POWER, will be re-confirmed in his position as head of ALSTOM Power and, in addition, is being appointed deputy CEO of ALSTOM.

"We are genuinely excited by this new milestone in the implementation of ALSTOM's strategy to concentrate our activities around the fields of energy and transport infrastructures," Darmon said. "In our new configuration these activities will represent almost 80% of the company's sales."

Pierre Bilger, ALSTOM's chairman and CEO, said the timing of the transaction couldn't be better. He pointed out that the company and the power generation industry now face a turnaround both in the context of renewed economic growth worldwide and also in terms of the power company's on-going initiatives to significantly improve operating performance.

"With this move, ALSTOM stands to benefit one hundred percent from the new growth prospects and the full synergy effects," Bilger said.

The transaction, which includes the resolution of all outstanding matters relating to the formation of the joint company a year ago, is subject to all the customary regulatory approvals. However, the transaction is expected to close within a month.

With 1999 pro-forma sales of 9.8 billion Euro, ABB ALSTOM POWER focuses on the supply of power generation services and equipment and employs more than 50,000 people worldwide. Present in 60 countries, ALSTOM provides specialization in energy and transport infrastructures, and organizes around six sectors—energy, transmission and distribution, transport, power conversion, marine and contracting.

Edited by April C. Murelio, Editor, Power Online