GE advances in Alstom acquisition
USA, Connecticut: Alstom formally endorsed a $ 17 billion all-cash offer from General Electric for its energy division.
This is the biggest acquisition GE has ever attempted, reports Forbes. The company is close to taking over the Alstom business that generated $ 20.5 billion in 2013. It would also gain the electric grid products unit formerly owned by Areva that GE had bid for in 2009. Areva opted to sell it to Alstom and Schneider Electric after the government put pressure on the company to keep the business in French hands.
“Alstom is levered to those themes in which GE believes. GE would essentially be doubling down on power generation, transmission [and] distribution.” said analyst Steven Winoker of Bernstein Research.
Alstom will form a committee of independent board members to review GE’s bid. They will make a decision by the 2nd June on whether Alstom should advance to exclusive talks to conclude a deal.
Meanwhile, Siemens submitted a letter with more details to the offer to Alstom. The company is proposing an asset swap in which it would acquire Alstom’s power businesses. In return Siemens is offering Alstom its high-speed and suburban train units to combine with the French company’s healthier train business. According to the offer, Siemens would retain a 19 % stake in the resulting train company, and would pay up to € 11 million in cash to Alstom shareholders.
However, Siemens has reportedly complained about the lack of cooperation from Alstom.
The GE offer is supported by Alstom’s largest investor, the French conglomerate Bouygues, controlled by billionaire Martin Bouygues.