Alstom accepts €10 billion GE bid for its energy unit

 

Paris/Frankfurt: The board of Alstom SA accepted General Electric Co’s (GE) €10 billion ($13.82 billion) bid for its energy unit on Tuesday, several sources familiar with the situation told Reuters.

 

Sources said GE is not in exclusive talks with Alstom. The French transport-to-turbines group is also set to receive an offer from its much larger German competitor Siemens AG , which said it had sent a letter to Alstom after its managing and supervisory boards had decided to make an offer.

 

Alstom is expected to make a statement about the two offers early on Wednesday, before its shares, suspended since late last week, resume trading.

 

The rival bids have triggered a fierce national debate about the fate of power turbine and train manufacturing in France—both integral to the country’s engineering pedigree. The French government has said it favours the Siemens offer, which via an asset swap would create two European sector champions: Siemens in electricity and Alstom in trains.

 

“Alstom’s board has accepted the GE offer, it will be examined by an independent committee,” one source close to the talks told Reuters.

 

“The two groups will not enter into exclusive negotiations. This means Alstom cannot go and look for other offers, but there is nothing to stop it from examining offers it receives without soliciting them,” the source added.

 

Earlier on Tuesday, Germany’s Siemens said it would make an offer to Alstom if given four weeks to examine its books and draw up a detailed plan to rival a move by GE.

 

“The prerequisite is that Alstom agrees to give Siemens access to the company’s data room and permission to interview the management during a period of four weeks, to enable Siemens to carry out a suitable due diligence,” Siemens said.

 

It gave no further details of its plans, but at the weekend Siemens approached Alstom with a proposal to exchange part of its train business plus cash for Alstom’s power arm. In a short letter, it had outlined its proposal worth $14.5 billion.

 

French concerns

In a letter to French president Francois Hollande, published by financial daily Les Echos and authenticated by GE, GE chief executive Jeffrey Immelt responded to several of the French government’s key concerns about the US-based firm’s offer.

 

Immelt said that if GE were to buy Alstom’s energy unit, it would boost employment in France and locate global headquarters for several key businesses in the country, including for grids, hydro power, offshore wind and steam turbines.

 

GE would also work with the French government, utility EDF and nuclear group Areva to protect France’s strategic nuclear sector and its exports and would be willing to sell Alstom’s wind turbine activities to French investors.

 

GE also offered France a representative for its board, and offered to look into the possibility of a transportation joint-venture with the remaining transport activities of Alstom, which are widely considered to be too small to survive independently.

 

Defensive move

France’s Socialist government has declared that it must have a say in the outcome of the bidding war, as thousands of jobs are at stake and state-owned utility EDF and the national railways are major clients of Alstom.

 

“There aren’t only financial interests at stake in this matter; there are also industrial, social and human interests,” economy minister Arnaud Montebourg said after a meeting with unions. “The government does indeed intend to defend our country’s interests.”

 

RANJAY KUMAR,

PGDM 2nd SEM,

SOURCE-: MINT