GE sweetens offer for France's Alstom

19th June 2014, Comments 0 comments

General Electric on Thursday sweetened its offer for French power-to-rail group Alstom to win the government's backing for its bid over a rival offer by Siemens and Mitsubishi.

GE did not raise its $17 billion (12.35 billion euros) bid for Alstom's power generation business but offered to sell Alstom, the maker of France's TGV high-speed train, its profitable rail signalling business.

It also proposed creating joint ventures and 1,000 new jobs.

"Our discussions with the French government over the past seven weeks have been productive," said GE chief executive Jeff Immelt, who is visiting Paris.

The proposed joint ventures "will retain and strengthen France's presence in the energy business and reinforce Alstom Transport. It creates jobs, establishes headquarters decision-making in France and ensures that the Alstom name will endure."

The move marks a step-up in GE's effort to clinch the Alstom deal after German engineering group Siemens and Japanese firm Mitsubishi Heavy Industries (MHI) on Monday together offered takeover proposal for Alstom that they said was worth 2.0 billion euros more than GE's.

GE said a joint venture on nuclear steam technology would see the French government holding a preferred share "giving it veto and other governance rights over issues related to security and technology of nuclear plants."

The US giant said it would also set up two other joint ventures with Alstom "to strengthen France's and Alstom's presence in energy and support its energy transition."

"The JVs will develop and deliver advanced technology and services to customers around the world, under the GE and Alstom brands," the statement said.

GE's offer for all of Alstom's power-generation business is valid until Monday.

- GE advertising blitz -

The US giant, in a bid to win public support, has been running media advertisements explaining that it has been doing business in France for 100 years.

Alstom originally looked at a deal with GE, but when the Socialist government of President Francois Hollande learnt of the advanced talks to sell 70 percent of power business, it objected on the grounds that jobs and decision-making could be lost.

It encouraged Germany's Siemens to make a counter offer, hoping that a Siemens-Alstom tie-up would create a global-scale European group.

Initially, it looked as though Siemens might bid 10.5-11.0 billion euros for the power business and transfer its rail activities to Alstom.

But Siemens linked up with Mitsubishi Heavy Industry (MHI), and the details which emerged show that Siemens would pay 3.9 billion euros to buy the gas turbine business, and MHI would be a minority shareholder in three joint ventures with Alstom.

One of these would cover steam turbines used in nuclear power stations, and MHI invited the government to take stakes in the joint ventures.

Siemens has a railway equipment division and has suggested putting this under the control of Alstom to form a leading world rail group.

GE and Siemens have both had talks with Hollande for whom the fate of Alstom, a top name in French industry and a strategic supplier to the French power industry, is a hot issue.

While the government has appeared to favour the Siemens-MHI offer, several analysts warn it would lead to breaking up the company.

Hollande has made rejuvenation of industry a centrepiece of a policy U-turn helping businesses and cut public spending in an effort to reduce a huge trade deficit and record unemployment.

Shares in Alstom slumped 6.0 to 27.70 euros, as investors did not welcome GE's pledge to give the French government a veto in the joint venture including nuclear reactors turbines.


© 2014 AFP

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