GE Alters Its Alstom Bid in Effort to Win French Support
PARIS - General Electric announced on Thursday a revised $13.5 billion bid for the the energy business of the French conglomerate Alstom aimed at easing concerns of the Socialist government of President François Hollande.
Instead of the straightforward takeover of Alstom's energy assets, largely power generation and grid equipment, G.E. is now proposing a structure that keeps some of those assets under an Alstom roof.
G.E. is not altering the financial valuation of the deal, and under the revised proposal, General Electric would still get Alstom's prized gas turbine business and its existing customer base.
But G.E. said it would take steps to maintain France's presence in the energy business. In one change to the offer, G.E. is now proposing to create two joint ventures with Alstom: one in the power grid business and another in renewable energy.
Jeffrey R. Immelt, General Electric's chairman and chief executive, has been seeking to win over the French government and derail a rival bid from Siemens and Mitsubishi Heavy Industries made earlier this week.
Mr. Immelt has been working for nearly two months to bring skeptical French officials around. On Thursday, he met with Economy Minister Arnaud Montebourg and representatives of Alstom's unions.
General Electric is also strengthening its bid by offering to sell to Alstom its rail signaling business for an undisclosed price. It said it would also form a tie-up with Alstom in North America, where G.E. has strong rail freight operations, 'complementing Alstom's worldwide positions notably in passenger transportation.'
'The alliance will retain and strengthen France's presence in the energy business and reinforce Alstom Transport,' Mr. Immelt said in a statement. 'It creates jobs, establishes headquarters decision-making in France and ensures that the Alstom name will endure.'
Addressing another of the government's key concerns, assuring France's nuclear energy security, G.E. would create a structure to house the combined companies' global nuclear and steam turbine business in a global alliance. And he proposed creating a special French government-owned company to house the intellectual property behind Alstom's advanced Arabelle nuclear steam turbines, leaving the state the final say over their licensing.
G.E. had set a deadline of June 23 for its offer to be accepted by the Alstom board. A G.E. spokeswoman, Deirdre Latour, said she could not say if the deadline would be extended.
G.E.'s original plan was backed by the Alstom chairman and chief executive, Patrick Kron, and the Bouygues family that is the largest shareholder in the French company.
Alstom's board will now have to decide whether to accept the revised proposal. Christine Rahard-Burnat, a spokeswoman for Alstom, said she had no information on the board's plans and declined to comment further.
A spokeswoman for Mr. Montebourg said the government 'is studying the new proposal.'
Under the original offer, G.E. had imagined simply absorbing Alstom's energy business, which contributes more than two-thirds of its revenue. It would have left Alstom's transport unit - which makes high-speed TGV trains, metro systems and rail infrastucture - as a stand-alone listed company bearing the Alstom name. But that proposal met with fierce opposition in the government, which feared having a French industrial prize, along with its nuclear technology, fall into foreign hands.
Siemens and Mitsubishi Heavy, encouraged by Mr. Montebourg, on Monday made their own offer, a 7 billion euro offer that would see Siemens take the French company's gas turbine business and Mitsubishi invest in a range of Alstom units. That offer left a number of questions unanswered, and its complexity had raised doubts among some analysts. The government on Monday called on both camps to improve their offers, but Joe Kaeser, the Siemens chief executive, showed little interest in doing so.
G.E. has also agreed to create 1,000 new French jobs over the next three years, 'in high-value areas such as manufacturing and engineering,' and it proposed a strict system for monitoring its performance with 'financial penalties if the goal is not achieved.'
The American company has also agreed to base several of its global headquarters in France, in the areas of electrical grid, offshore wind, hydroelectric power and steam turbines. G.E.'s European power business headquarters are already in Belfort, France.
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