ABB and Alstom are to merge their power generation businesses in a 50-50 joint venture, to be called ABB Alstom Power. The new company, the largest power plant supplier in the world, will be registered in the Netherlands, and will have its head offices in Brussels. Simultaneously with this merger, Alstom sold its heavy duty gas turbine business to GE, with which Alstom had a licence agreement.
ABB Alstom Power expects to save $450 million annually within 3-4 years, due to improvements in efficiency and productivity and economies of scale.
The President and CEO of the new company will be Claude Darmon, presently Deputy CEO of Alstom. The management board will initially have 2-3 other members, and may be expanded later. The Chairman of the Supervisory Board will be Göran Lindahl, President and CEO of ABB. The new company’s Supervisory Board will consist of six members, three designated by ABB and three by Alstom.
ABB Alstom Power will comprise all of ABB’s Power Generation segment – excluding its nuclear activities, and its distributed power business (< 10 MWe) which encompasses BOO, service, and financing – and all of Alstom's Energy Sector activities, including industrial gas turbines, but excluding the heavy gas turbines (ie > 20 MWe).
To compensate for the difference in size of the consolidated businesses, Alstom will pay ABB $1.5 billion. The 1998 pro-forma revenues amount to $11 billion ($8 billion from ABB, $3 billion from Alstom).
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