GE and Honeywell appeal
General Electric (GE) and its rival Honeywell have launched appeals against the European Commission’s decision to block their planned $43bn merger.
The two separate appeals, filed with Europe’s Court of First Instance, are not seeking to revive the deal, which was blocked on competition grounds, but are aimed at reversing some of the Commission’s conclusions.
GE is believed to be concerned that competitors could use the Commission’s finding that it had a dominant position in the market for jet engines, to challenge the group in court or with regulators.
GE is also expected to argue against the Commission’s finding that it and Honeywell could have “bundled” aerospace products and services to squeeze out rivals.
The GE deal would have been the world’s largest industrial merger. It is the first all-US takeover to be blocked by the European authorities after having been cleared by regulators in the US.
US market brings mixed fortune
Turbulent power prices across the US and power shortages in California have brought mixed results for power companies operating in the US market.
UK electricity group ScottishPower (SP) announced major losses from Pacificorp, its US operation. The company said that forward purchase contracts had left it with excess power costs of $300m to the end of March next year. This was due to a price collapse in the western US from $200/MWh to $30.
SP said the loss will be reflected in its results for the second quarter, ending September 30 and would reduce Pacificorp’s earnings per share by 9 pence (6.4à‚¢) from existing forecasts. The announcement caused a 9.5 per cent fall in its share price to
SP has now taken action to mitigate risk and improve processes. This includes: active discussion with regulators to ensure that commodity pricing risk is appropriately reflected in rates; regulatory recovery of all allowable costs and stronger management and system resources around commodity risk management.
SP also said it will increase its generating capacity in the US by ten per cent this year to move out of the contract power market.
But the turbulent US market has not brought ill-fortune for all companies. Generating rental company Aggreko has seen power shortages in California and a string of new contracts help it report a 21 per cent increase in pre-tax profits for the first half of 2001.
The problems with power supply in California drove profits up by 12 per cent in the US to $18.8m. Profits were up by 18 per cent in the rest of the world as Aggreko won more international power projects.
VA Tech and Weir Engineering in strategic alliance
VA Tech Hydro of Austria and Weir Engineering Services (WES) have set up a strategic alliance to support the anticipated growth in the service, rehabilitation and new build of hydropower generation plant in the UK and Ireland.
Peter Syme, managing director of WES and Michael Komboeck, member of the business unit, management service and rehabilitation at VA Tech Hydro said: “The timing of this announcement could not have been better planned, particularly with the recent announcement of the UK government to boost hydroelectric generation in order to meet climate change targets.”
According to the companies, the alliance brings to the UK market the broad technical expertise and advantages of a key player in VA Tech, combined with the local facilities, personnel and experience of WES.
Fortum reshapes core units
Finnish energy company, Fortum will reorganize its operations into 12 business units instead of the existing 26 performance units. According to the company, the new business units will form more natural entities in well-defined industry segments. At the same time, each unit will be more independent and responsible for its own strategic targets. The new business structure is aligned with Fortum’s strategic direction.
Pratt & Whitney reorganizes
US company, Pratt & Whitney has reorganized its industrial gas turbine business under a single organization, Pratt & Whitney Power Systems (PWPS).
With this, the company said it can deliver and support the industrial gas turbines built at Pratt & Whitney Canada (250 kW to 4 MW) as well as the FT8 product line (25-60 MW) provided by the former Turbo Power and Marine organization.
At the same time, the company announced that it was enhancing its FT8 line of gas turbines with an upgraded unit. This will be available in 2002 – in time for summer peak demand. The FT8 Plus will deliver 15 per cent more power than the existing model.