ALSTOM (Reuters) - The head of General Electric Co's (>> General Electric Company) power division said on Tuesday the company will come "out of the box very strong" as it seeks to wring out $3 billion in cost savings over five years from its acquisition of Alstom's energy business (>> Alstom).
The deal with France's Alstom, cleared by European Union regulators earlier on Tuesday, will add up to 65,000 employees to GE's current workforce of about 305,000, and significantly expand GE's reach in the global market for power generation equipment.
Steve Bolze, head of GE's power business, called the Alstom acquisition a "game changer."
"We’re positioned to be the broadest base power supplier with the largest installed base of services," Bolze told Reuters in an interview shortly after EU regulators approved the deal.
Bolze said GE employees know how the combined company will be shaped, "so that people know how we're going to hit the ground, day one, on organization."
A GE spokesman said the company has not indicated how many jobs could be cut through the Alstom deal, only that the company has committed to adding 1,000 jobs in France.
Investors will be tracking GE's efforts to deliver promised cost savings. Alstom's large base in Europe, where works councils can make job cuts difficult, could pose obstacles for GE's plans.
The weaker economic outlook, especially in emerging markets, presents another challenge by potentially crimping power demand.
"We see the world as complicated," Bolze said. However, over the long term, global power demand is expected to rise by 50 percent over the next 20 to 25 years, he said.
The Alstom acquisition is a key part of the U.S. conglomerate's move away from financial services into big-ticket industrial products.
GE shares closed up 4 percent at $24.96 after the European approval was announced, the biggest gainer in the Dow Jones industrials index <.DJI>.
GE has some regulatory hurdles left, but Bolze said the company plans to close the deal "as early as possible" in the fourth quarter.
"At this point, we see clear path to closing and we’re ready to roll."
To win EU approval, GE agreed to sell off more Alstom assets and service agreements than originally proposed. That was one of several factors that contributed to a change in the purchase price to 8.5 billion euros ($9.5 billion) from the original 12.35 billion-euro ($13.8 billion) price tag GE put on the deal.
GE Chief Executive Jeff Immelt said in May that the company would reject any EU demand to give up highly profitable service business. But Bolze said divested service contracts affected only a small part of Alstom's total base of 750 gas turbines.
"Everything we need in terms of expanding and growing the service franchise - all intact,” he said.
Bolze, 52, is a potential candidate to succeed Immelt, 59, and leading the integration of Alstom will be a high-profile test, analysts say.
Bolze said he is focused on the task at hand. "The rest of the things will be resolved by the board."
(Reporting by Lewis Krauskopf in New York; Editing by Christian Plumb and Matthew Lewis)
By Lewis Krauskopf
