General Electric's China CEO to Manage Alstom Integration


General Electric Company (GE) has elected Mark Hutchinson, CEO of its Chinese operations, to handle the integration of Alstom’s energy assets into the U.S. conglomerate’s business framework.

Hutchinson, who has served as the company’s Chief Executive for Greater China since 2011, will be succeeded by Rachel Duan, head of GE Healthcare operations in China. Hutchinson will relocate to Paris as Integration leader to supervise the proposed acquisition of Alstom's power and grid businesses.

The management changes were called for, subsequent to General Electric’s successful $16.9 billion bid for Alstom’s energy assets. (Read: GE Wins Alstom Board Approval; Govt Seeking 20% Stake)

Late June, Alstom accepted General Electric’s proposal to buy its core operations in a complicated deal. The decision marked the end of a two-month-long scuffle that entailed intense political negotiations, along with counter bids from rival contenders Siemens and Mitsubishi Heavy Industries.

General Electric’s offer started out as an outright cash buyout of Alstom’s power business. This initial bid was refined to appease the French government, with the conglomerate proposing alliances in steam-turbine, renewable-energy and electrical-transmission businesses while selling its rail-signaling operations to Alstom. It also pledged to create 1,000 local industrial jobs.

Alstom’s board accepted the offer on Jun 21 as the French state decided to buy a 20% stake in the company. Economy Minister Arnaud Montebourg had stipulated the stock deal as a non-negotiable demand, concerned that Alstom’s divestitures would jeopardize the country’s energy independence.

Hutchinson undertakes integration duties at a time when General Electric has been striving to reduce its dependence on its financial unit and increase focus on the more lucrative core industrial operations. For instance, energy and infrastructure are viewed as sectors with high growth potential, especially in fast-growing economies.

In tune with its corporate strategy to retrace its industrial roots, the Alstom deal promises excellent return on capital, supply chain efficiencies and deep synergies. It also marks the biggest acquisition ever for General Electric and would significantly expand its footprint in a recovering Europe.

General Electric currently has a Zacks Rank #3 (Hold). Other stocks that look promising include Noble Group Limited (NOBGY), sporting a Zacks Rank #1 (Strong Buy), and ITT Corporation (ITT) and Carlisle Companies Incorporated (CSL), both carrying a Zacks Rank #2 (Buy).

Read the Full Research Report on ITT
Read the Full Research Report on GE
Read the Full Research Report on CSL
Read the Full Research Report on NOBGY

Zacks Investment Research

View Comments (1)