Alstom accepts $13.5bn cash offer from General Electric

Alstom forged ahead yesterday with its planned deal to sell its energy business to General Electric despite French government objections, formally accepting a binding cash offer that values the units at $13.5 billion (€9.7 billion).

The French group left the door open to a rival offer from Siemens of Germany, but made clear its strong commitment to a takeover of its energy operations by GE that would leave a rump standalone Alstom transport business.

“The combination of the very complementary energy businesses of Alstom and GE would create a more competitive entity to better service customer needs,” said Alstom chief executive Patrick Kron.

In a concession to government demands for more time to evaluate the consequences for a treasured national industrial champion, Alstom said it was setting up a committee of independent board members to review the GE offer by the end of May.

It said the board had reviewed what it called a declaration of interest from Siemens. “Siemens will have fair access to information needed to make, should it decide to do so, a binding offer,” it said, adding that it would take into account “the interest of all stakeholders” in considering a Siemens bid.

At a joint press conference in Paris with Mr Kron, GE chief executive Jeffrey Immelt said they were confident their deal would be completed.

Asked about the Siemens proposal, Mr Kron said: “How can I comment on what might be an offer? This is not science fiction.”

Offer from Siemens
Siemens has proposed, in effect, an asset swap that would see the creation of two European champions in energy and transport. Siemens has sweetened its original proposal and is prepared to inject into Alstom its urban transport business, which includes underground trains and trams.

A person close to the talks said Siemens had complained to Alstom’s board about a lack of co-operation, which it attributed in particular to Mr Kron. Siemens declined to comment.

Alstom and GE made clear their determination to overcome French government doubts about the US bid.

In a letter to French president François Hollande published by Les Echos newspaper, Mr Immelt said: "We understand and respect to the highest degree the importance of Alstom for France. "

Responding to concerns voiced by Mr Hollande at a meeting between the two on Monday, Mr Immelt promised to make the combined operation a “global leader in France”, pledging to increase jobs in France and make the country the global base for its steam turbine, hydropower, offshore wind and grid businesses.

French nuclear assets
He also pledged to respect France's control of its nuclear assets, to strengthen Alstom's remaining transport business with a joint venture in signalling, and to place a senior French business figure on the GE board.

In the first government reaction, Arnaud Montebourg, the economy and industry minister who first raised objections to the GE move, said: “The case is not closed.” – (Copyright The Financial Times Limited 2014)