Alstom Board Clears GE's Sweetened Offer for Power Business
Deal Still Hinges on French Government Reaching Agreement With Bouygues
PARIS—The board of French engineering group Alstom SA said Saturday it has officially accepted General Electric Co.'s sweetened offer for its power-equipment unit, ending a two-month scramble for the maker of turbines for power plants.
The deal still hinges on the French government finding an agreement with Bouygues SA to buy a 20% stake in Alstom from the construction-to-telecoms conglomerate. The government has said it wanted to become Alstom's largest shareholder before allowing GE to buy Alstom's assets.
The board accepted the revised offer made by GE on Friday, when the U.S. group changed its $17 billion initial offer for the whole of Alstom's power business to make it more palatable to the French government, which was reluctant to let the industrial jewel fall into U.S. hands.
Under the revised GE bid, Alstom would sell its gas turbine business, the largest part of the power-equipment unit, to the U.S. company and house the French part of its steam and nuclear turbines, renewable-energy activities and grid equipment in 50/50 joint ventures with GE.
The board said the new offer benefits Alstom, its shareholders and other stakeholders.
The new GE offer still values the power equipment business at $17 billion, but values the Alstom investment in the joint-ventures at €2.5 billion ($3.4 billion), the Alstom board said Saturday.
After the transaction, Alstom will buy GE's train signalling business and merge it with its own train business, that makes the signature French bullet trains. Alstom intends to focus on its train business in the future, the board said.
The original attempt to buy the Alstom assets in late April angered the combative French Economics Minister Arnaud Montebourg. He struck back, encouraging GE's German rival Siemens to team up with Japanese firm Mitsubishi Heavy Industries to make a separate offer.
The GE response to the Siemens-Mitsubishi counter offer, eventually convinced the French minister, who publicly blessed it Friday. Alstom's board followed Mr. Montebourg and accepted the GE bid.
Under terms of the deal made public so far, GE gets the majority of what it sought in first attempting to acquire Alstom, especially its global business in manufacturing and servicing gas and steam turbines, the giant machines at the heart of power plants.
Alstom's steam turbine business will raise GE's involvement in coal-fired power, especially in regions of the world where such facilities are still being built, like China and Africa. GE officials say that will complement GE's existing business making turbines for gas-fired power plants, in which it is the world leader.
Corrections & Amplifications
The GE-Alstom deal hinges on the French government finding an agreement with Bouygues SA. An earlier version of this article incorrectly spelled the company's name Bougues.