Alstom Board Okays GE Offer For Power, Grid Businesses

(RTTNews) - General Electric Co (GE) said Saturday the board of French speed-train maker Alstom SA (ALSMY, AOMFF, ALS.L) unanimously approved GE's $17 billion offer to acquire the power and grid businesses of Alstom.

The deal is subject to the French government acquiring a 20 percent stake in Alstom from Bouygues SA, the French conglomerate that has a 29.3 percent stake in Alstom.

The deal is also subject to customary approvals and is expected to close in 2015.

Today's announcement brings to an end months of intense efforts by GE to acquire most assets of Alstom.

In a statement, GE Chief Executive Jeff Immelt said, "We will now move to the next phase of the Alstom alliance. We look forward to working with the Alstom team to make a globally competitive power and grid enterprise."

"For GE, the overall economics of the deal remain intact," Immelt said. "This transaction remains accretive in year one."

GE's acquisition of the Alstom businesses was almost certain as on Friday the French Economy Minister Arnaud Montebourg said his government favors the deal. While Alstom had been keen to clinch a deal with GE, but France was concerned that any deal should not impact jobs and that decision making at Alstom should not move beyond the country.

The French government also had insisted that the joint venture HQs remain in France with the European HQ of the turbine business taken over by GE.

The GE offer generated a political debate in France. GE in April offered to acquire Alstom, but the French Foreign Minister Arnaud Montebourg opposed it, and also backed a joint offer for the energy assets of Alstom by GE's German rival Siemens and Japan's Mitsubishi Heavy Industries. But GE's recent sweetened offer finally found favor with the French government.

GE will acquire the power and grid businesses of Alstom for $13.5 billion enterprise value and $3.4 billion of net cash, totaling $16.9 billion. GE would also establish three 50-50 joint ventures for Alstom's grid, renewable energy and nuclear turbine businesses, and create 1,000 new jobs in France over the next three years. Also in a separate deal, Alstom will buy GE's train signaling unit for about 1 billion euros.

As for Siemens and Mitsubishi, the two companies in their modified proposal, offered to inject an additional cash contribution of 1.2 billion euros to take the total offer figure to 8.2 billion euros, and brought the total valuation of Alstom's energy business to 14.6 billion euros.

GE stock closed Friday at $26.97, up $0.04 or 0.15%, on a volume of 49.8 million shares on the NYSE.