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ABB and ALSTOM create world leader in Power
Generation

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Visit our media section and follow the link "Press contacts"

· A major consolidation in the power generation
industry

· Massive base for breakthrough R&D

· Successful track record in merging cultures

Brussels/Zurich/Paris, March 23 ABB and ALSTOM today
announced the merger of their power generation businesses in a
50-50 joint company, to be called ABB ALSTOM POWER.

The new company will employ some 54,000 people in more than
100 countries. Among the world leaders in all its businesses,
ABB ALSTOM POWER's 1998 pro forma revenues amount to about 9.9
billion euros (US$ 11 billion) (7.2 billion euros/US$ 8 billion
from ABB and 2.7 billion euros /US$ 3 billion from ALSTOM).

In a steadily growing market, the new company can better
respond to the changes and opportunities created by
privatization and deregulation, thanks to the complementary
product ranges, geographic scope and R&D capabilities of
its parent companies. In 1998 pro forma figures, ABB ALSTOM
POWER invested about 630 million euros (US$ 700 million) in
total R&D, equivalent to 6-7 percent of revenues.

Improvements in efficiency and productivity and economies of
scale are expected to yield synergy effects of about 400
million euros (US$ 450 million) annually within 3-4 years.

The merger is subject to the customary approvals.

'To be a successful leading player in this demanding and
dynamic market you need a comprehensive range of products and
solutions, a commitment to technological renewal, and global
presence. This capability mix, coupled with economies of scale,
will enable competitive cost levels,' said ABB President and
Chief Executive Officer Göran Lindahl. 'We are convinced
that ABB ALSTOM POWER will be successful. It will, in short, be
the most complete power generation company in the world.'

'Technological breakthrough is key to anticipate customer
demands and ensure long-term profitable growth,' said Pierre
Bilger, Chairman and Chief Executive Officer of ALSTOM. 'The
joint company will be a strong R&D powerhouse. ABB ALSTOM
POWER will benefit from its parent companies proven
capabilities to successfully integrate businesses from
different cultures. In return, this move will be a strong
accelerator for the performance of both parent companies.'

The new company will comprise all of ALSTOMs Energy
Sector activities, including industrial gas turbines but
excluding the General Electric-based heavy duty gas turbine
business (above 20 megawatts), which it is divesting to GE. ABB
ALSTOM POWER will also comprise all of ABBs Power
Generation Segment, excluding its nuclear activities - today
mainly fuel processing and service - and its service- and
financing-based distributed power business.

To compensate for the difference in the size of the
contributed businesses, ABB will receive a cash compensation
from ALSTOM of 1.4 billion euros (US$ 1.5 billion). Considering
the strong balance sheet of the new joint company, ABB and
ALSTOM do not foresee any need for future capital
injections.

The President and Chief Executive Officer of the new company
will be Claude Darmon, presently Deputy CEO of ALSTOM. The
Management Board will initially have 2-3 other members and may
be expanded later. A separate announcement will be made in due
course. The Chairman of the Supervisory Board will be
Göran Lindahl, President and CEO of ABB. The new
companys Supervisory Board will consist of 6 members, 3
designated by ABB and 3 by ALSTOM.

ABB ALSTOM POWER will be registered as a Naamloze
Vennotschap (N.V.) in the Netherlands and will consolidate its
accounts in the euro, with the fiscal year matching the
calendar year. The head office will be located in Brussels when
operations begin, although management may later decide on
another permanent location.

In anticipation of the establishment of the new joint
venture, management in the parent companies will immediately
start planning the integration process. Over the next three
years, the objective is to substantially increase the joint
companys margins and to achieve above-average
profitability.