GE redesigns offer in battle for France’s Alstom
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General Electric on Thursday rejigged its offer for French power and railway giant Alstom, proposing an alliance based on 50:50 joint ventures that would safeguard sensitive nuclear activities.
It was the latest push in a nearly two-month-long tussle for control of Alstom’s energy business. It comes just days before the board of the French group is to choose between GE’s proposal and a rival one from Siemens and Japan’s Mitsubishi Heavy Industries (MHI).
While GE did not raise its €12.35 billion bid, it made several changes including allowing a government veto over sensitive nuclear energy technology. GE chief executive Jeff Immelt said the deal would ensure that France remains a European leader in the energy sector.
"France will have one of the most complete energy capabilities of any country in the world and certainly in Europe," Immelt told journalists during a visit in Paris.
GE said the new offer had been agreed with Alstom management and that it would create an “alliance” - the term that France’s Socialist government has said it favours to describe any tie-up involving the engineering group.
“Our discussions with the French government over the past seven weeks have been productive,” Immelt said in a statement.
“The alliance will retain and strengthen France’s presence in the energy business and reinforce Alstom Transport. It creates jobs, establishes headquarters decision-making in France and ensures that the Alstom name will endure,” he said. Immelt earlier met with French government and trade union officials.
Alstom originally approached GE, but when the Socialist government of President François Hollande learned of the advanced talks to sell 70 percent of the power business, it objected on the basis that jobs and decision-making power could be lost.
It encouraged Germany's Siemens to make a counter offer, hoping that a Siemens-Alstom tie-up would create a global-scale European group.
Hollande calls in key ministers
Later on Thursday, Hollande summoned Prime Minister Manuel Valls, Economy Minister Arnaud Montebourg and Ecology Minister Ségolène Royal for an evening meeting to discuss GE’s sweetened offer. They are scheduled to meet again on Friday morning, just before Hollande receives the heads of both GE and Siemens/Mitsubishi.
Whereas the previous GE offer was largely a straight purchase of Alstom’s power activities, the updated offer proposed two 50:50 joint ventures in grid and renewable energies, and a global nuclear and steam alliance.
The 50:50 nuclear alliance will see the government hold a preferred share, giving it a veto and other rights over issues related to security and technology of nuclear plants.
Sensitive intellectual property related to Alstom’s Arabelle nuclear steam turbine technology would be transferred to a special-purpose vehicle wholly owned by the French government.
Alstom shares fell further after the announcement and closed down 6 percent.
GE said it had signed a memorandum of understanding with the French group’s management to strengthen the transport activities of Alstom, maker of the famed TGV high-speed train.
Under the plan, GE said it would sell its signalling business to Alstom and enter collaboration pacts for services, technology, manufacturing and support in the United States.
The Siemens-MHI proposal would take just the gas turbines arm of Alstom and give MHI minority stakes in its other power activities. Siemens says it values Alstom’s energy business at around €2 billion more than the GE offer, but sources close to Alstom had cited concerns over its complexity.
GE's offer is valid until Monday.
(FRANCE 24 with AFP, REUTERS)
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