Question: After GE extended the deadline for a decision on its offer until 23 June, how will the wind industry be affected if GE succeeds in its take over bid of Alstom's Energy division?
Philip Totaro – CEO and Founder, Totaro Associates
The French Government has an obvious financial interest in the outcome of any Alstom deal, and therefore desires to make the GE offer more attractive. Thus we have seen the encouragement by the French Government to bring Siemens in to competitively bid for the Alstom assets, presumably to drive up GE's offer price.
It now appears that a key component to the deal is Areva, with an acquisition of Alstom's wind assets presumably being folded into the Gamesa JV. This significantly increases Areva's leverage in the JV, but drastically changes the scope, which may cause Gamesa to raise objections or seek control over the onshore Alstom assets themselves.
The proposed Areva plan to secure the Alstom offshore contracts to somehow re-bid their un-fielded 8MW turbine is unlikely, even if it might be Areva's most desired outcome. Protection of the Alstom jobs in France that go hand-in-hand with the Haliade 150 turbine is of the utmost importance to the Government, so the Alstom technology would have to be retained.
GE may have to seek other partners for the wind assets to close the deal if Areva won't play ball, but we expect a GE / Alstom deal to be announced soon.
Dan Shreeve – Partner, Make Consultants
The bid for Alstom's energy assets must satisfy French government officials keen on maintaining an industrial base within France. Consequently, GE must engage in industrial JVs or part with key assets such as Alstom's offshore wind business.
GE remains an offshore wind detractor, and is no rush to sink capital into that portion of the market. Alstom's offshore unit is in its infancy and GE's prior foray into the sector with Scanwind, another direct drive provider with limited experience, yielded unfavorable results. Furthermore, GE would need to build out the organization and ramp up local production quickly to honor Alstom's commitments to EDF from the first 1.9GW French offshore wind tender.
AREVA has emerged as a potential beneficiary within this dynamic. AREVA covets Alstom's French offshore order backlog, while a merger with Alstom operations would enable a rationalization of the two companies' industrial footprints in France. If GE pushes Alstom's offshore unit to AREVA, it would create a strong challenger to Siemens dominant position in the European offshore wind market.