Alstom considers GE's 12 billion euro offer for power business

Scope of the transaction includes the thermal power, renewable power and grid sectors, as well as corporate and shared services

French firm Alstom today said it is considering an offer of more than 12 billion euros from US-based General Electric for its power business and has also reviewed a declaration of interest from Siemens.

"The board of directors of Alstom announced today that it has received a binding offer from General Electric (GE) to acquire its energy activities. The proposed price is a fixed price representing an equity value of euro 12.35 billion," Alstom said in a statement.

The scope of the proposed GE transaction includes the thermal power, renewable power and grid sectors, as well as corporate and shared services.

Proceeds from the sale will be used mainly to expand the company's transport business.

"Should this offer be approved and completed, Alstom would refocus on its transport activities, for which it is a global leader. Alstom would use the sale proceeds to strengthen its transport business and give it the means of an ambitious development, pay down its debt and return cash to its shareholders," the company statement said.

Alstom, with 65,000 employees, registered sales of 14.8 billion euros in fiscal 2012-13 from the power business.

The Alstom board has decided to set up a committee of independent directors, led by Jean-Martin Folz, to review the proposed transaction with GE before the end of May, taking into consideration the interests of all stakeholders, including the French State.

"The combination of the businesses of Alstom and GE would create a more competitive entity to better service customer needs. The proposed transaction would allow Alstom to develop its transport business as a standalone company, with a strong balance sheet to capitalise on opportunities in the dynamic rail transport market," Patrick Kron, Chairman and CEO of Alstom, said in the statement.

Alstom builds the fastest train and the highest capacity automated metro in the world, according to its website. The company also provides integrated power plant solutions and associated services for various energy sources and offers solutions for power transmission, with a focus on smart grids.

The company said the board also reviewed a declaration of interest from Siemens regarding an alternative transaction.

Siemens will have fair access to information needed to make a binding offer, should it decide to do so, Alstom said, adding that the declaration will be reviewed in light of Alstom's corporate interests and the interests of all stakeholders, in accordance with the commitments made.