Alstom board backs GE offer; final deal in sight

The board of the French industrial conglomerate Alstom said it had unanimously backed General Electric's offer to acquire most of its energy business for $13.5 billion, essentially ending the battle for the company. A final deal was still awaiting the successful outcome of negotiations between the government and Alstom's largest shareholder over the sale of a stake to the state.

Members of the Alstom board "expressed their satisfaction" about the offer in a statement on Saturday, saying General Electric's discussions with President François Hollande's government produced "a business proposal that not only addresses the interests of Alstom and of its stakeholders, but also provides assurances in connection with concerns expressed by the French state".

General Electric hailed the decision and said it would begin consulting with Alstom's works councils, which represent Alstom employees, and would seek the approval of regulators and shareholders in order to close the deal next year.

"We will now move to the next phase of the Alstom alliance," GE's chairman and chief executive, Jeffrey R Immelt, said in a statement. "We look forward to working with the Alstom team to make a globally competitive power and grid enterprise. We also look forward to working with the French government, employees and shareholders of Alstom."

The announcement came a day after France's economy minister, Arnaud Montebourg, blessed GE's bid over a rival offer from Siemens and Mitsubishi Heavy Industries.

But Montebourg said the final deal was contingent on the state buying into Alstom, which would be left as a holding company after the deal, housing three 50-50 joint ventures with GE and an expanded rail transport business, bolstered by the addition of GE's rail signaling unit.The state agency that manages national shareholdings, the Agence des Participations de l'État, was negotiating Saturday to obtain a 20 per cent stake in Alstom from its largest shareholder, the Bouygues family, which holds 29 per cent of the shares. But a government spokeswoman said negotiators had "taken a pause" after a full day of talks. Kathleen Chotard, a Bouygues spokeswoman, declined to comment.

On April 30, GE proposed paying $13.5 billion for Alstom's energy business, which makes power-generation equipment and the electrical grid to deliver it, leaving Alstom's rail unit, which accounts for less than a third of its sales, to stand alone under the company name.

But that offer met with a sharp reaction from the French government, which sees Alstom - a company with euro 20.3 billion, or about $28 billion, in revenue last year, and about 18,000 employees in France - as a strategic asset and feared the political fallout from ceding the business to a large American company at a time of anxiety about the French economy.

Eventually, after the government solicited a rival offer from Siemens and Mitsubishi Heavy, and threatened to block any deal that failed to meet its concerns, GE made a new offer on Thursday that gives it Alstom's prized gas turbine business, but creates an alliance with the French company in three other areas: renewable energy, the electrical grid and nuclear steam turbines. G.E. has also promised to hire 1,000 employees in France over the next three years.

Immelt said in the statement that none of that had changed the basic picture.

"For GE, the overall economics of the deal remain intact," he said, and the transaction will add to the American company's profit "in Year 1."

©2014 The New York Times News Service