Commission approves ABB ALSTOM POWER joint company

Zurich, Switzerland, June 2, 1999 - ABB and ALSTOM announced today they have received approval from the European Commission to complete their proposed 50-50 joint company in power generation. Regulatory clearance in the U.S. and a few other jurisdictions is still outstanding.

As the two companies announced on March 23, the new joint company – called ABB ALSTOM POWER – would employ some 54,000 people in more than 100 countries, with 1998 pro-forma revenues of about US$ 11 billion. Operations are scheduled to begin following U.S. and other regulatory approvals.

“This decision is a major step towards the creation of a strong new competitor in the global power generation market, one that will be an important contributor to the long-term growth and profitability of both partners,” said Göran Lindahl, ABB’s President and CEO.

As announced in March, ABB ALSTOM POWER is to comprise all of ABB’s Power Generation Segment, excluding its nuclear activities and its distributed power business. The new company will also comprise all of ALSTOM’s Energy Sector activities, excluding their heavy duty gas turbine business, which ALSTOM is divesting.

To compensate for the difference in the size of the contributed businesses, ABB will receive a cash compensation from ALSTOM of US$ 1.5 billion. Improvements in efficiency and productivity and economies of scale are expected to yield synergy effects of about US$ 450 million annually within 3-4 years.

The President and Chief Executive Officer of the new company will be Claude Darmon, presently Deputy CEO of ALSTOM. Joining him on the the Management Board will be Alexis Fries, currently head of ABB’s Power Generation Segment, and Nick Salmon, head of ALSTOM’s Energy Sector. ABB CEO Göran Lindahl will be the Chairman of the Supervisory Board.

ABB <http://www.abb.com> is a globalized technology and engineering company serving customers in power generation, transmission, and distribution; automation; oil, gas, and petrochemicals; industrial products and contracting; and financial services. ABB employs about 200,000 people in more than 100 countries. (End)

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    • John Fox
      ABB Corporate Communications, Zurich
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