France claims victory in forcing GE to revise its Alstom energy bid
Operations At Alstom SA's Power Station Turbine Plant As Takeover Battle Intensifies...Bloomberg Photo Service 'Best of the Week': An employee uses a caliper micrometer to measure a section of a turbine at Alstom SA's power plant turbine refurbishment facility in Rugby, U.K, on Tuesday, April 29, 2014. The battle for Alstom intensified after Siemens AG stepped up plans for a bid to counter General Electric Co. (GE) in what would be the biggest tug of war for a French industrial company ever. Photographer: Chris Ratcliffe/Bloomberg©Bloomberg
Siemens is bidding €3.9bn for Alstom’s gas turbines business as part of an offer that is more complex than GE’s but one designed to win over the Alstom board with promises of co-operation
France’s socialist government has claimed a resounding victory for state intervention after forcing General Electric to significantly revise its $16.9bn takeover deal for Alstom’s energy businesses, which both companies approved at the weekend.
The government announced on Sunday night it had agreed terms with the French conglomerate Bouygues for its purchase of a 20 per cent state stake in Alstom, worth about €1.7bn at prevailing market prices. The government insisted on acquiring the stake as a condition of accepting the GE deal.
Arnaud Montebourg, economy and industry minister, said Alstom would have “disappeared” if the state had not stepped in to halt GE’s initial bid in April, following up later by taking powers that gave it a veto over a wide range of industrial takeovers.
“Entering the capital of Alstom will assure the alliance is properly respected, including the number of employees. There will be no knockdown sale of our interests,” Mr Montebourg said in an interview with Le Parisien newspaper.
Alstom and GE boards both unanimously approved the revised terms offered by the US company after months of wrangling with the government. The deal was backed by Paris over a rival joint offer by Siemens of Germany and Japan’s Mitsubishi Heavy Industries.
Well, we have no reason to further push what is not being appreciated
- Joe Kaeser, Siemens chief executive
Siemens and MHI accepted the government’s decision in favour of GE on Friday evening. In a letter to staff, Joe Kaeser, Siemens chief executive, complained bitterly that Patrick Kron, Alstom’s chief executive, had been “determined to prevent Siemens’ involvement at all costs from a very early stage”.
Mr Kaeser said the Siemens-MHI bid was worth €2.3bn more than GE’s offer. “Well, we have no reason to further push what is not being appreciated.”
Under the GE deal, the biggest ever industrial acquisition by the US company, it will take over Alstom’s global gas turbine operations, the biggest part of the French company’s business.
In the main revised elements of the agreement, it will enter 50-50 joint ventures with Alstom in the French group’s power grid, renewable and nuclear turbine operations.
The French state will have a “golden share” in the nuclear unit, as well as assured rights over its technology. The government will impose penalties on GE if it does not meet promises to add 1,000 new jobs in France over the next three years.
GE also agreed to sell its signalling business to Alstom to boost the latter’s remaining transport business, which the government feared would lack critical mass as a standalone company.
The revised bid put a value of $3.5bn (€2.6bn) on the stakes the French group will own in the three businesses that will be joint ventures with GE, meaning that the net cash cost of the deal to the US group will be $10bn.
Manuel Valls, the reformist prime minister, said: “Alstom would today be in the hands of GE without conditions if we had not intervened.”
Mr Kron, Alstom chief executive, said they hoped to close the deal, which will be submitted to competition authorities, early next year.