Abby L. Harvey
GHG Monitor
6/27/2014
An ad hoc committee formed by Alstom’s board of directors recommended this week accepting an offer put forth by GE for its energy business. GE first submitted an offer to Alstom in late April. Following the announcement of the GE offer, the French Government issued a decree giving the government the power to veto acquisitions of national importance. Last week, Alstom received a counteroffer from Siemens and Mitsubishi Heavy Industries. Both offers were later updated leaving the board to review the competitive offers before the June 23 binding deadline included in the original GE offer. Alstom’s business is extensive, including a sizable carbon capture and storage division producing state-of-the-art carbon mitigation technologies which have been implemented at a number of CCS pilot and demonstration projects around the world.
GE will acquire the thermal power, renewable power and grid sectors of Alstom, as well as corporate and shared services, for a value of $16.9 billion. Under the terms of the updated GE offer, Alstom and GE will establish joint ventures in grid and renewable power, according to a release issued by Alstom early this week. The updated offer would also create 1,000 French jobs over three years and keep the GE-Alstom energy business headquarters in France as well as leadership teams in four global businesses: grid, offshore wind, hydroelectric and steam turbines according to a GE release. These steps were noted by Alstom in their deliberations and the committee “expressed their satisfaction that the productive exchanges established with the French State had resulted in 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,” according to the Alstom release.
The deal also has the support of the French Government, according to a GE press release. “The French State has confirmed that, subject to execution of definitive agreements for the various alliances between GE, Alstom and the State, including the Global Nuclear & French Steam Alliance, and the State entering into an agreement to purchase shares in Alstom, it will grant the required foreign investment authorization,” the release says. The agreement will now go through Works Councils consultation, regulatory approvals and Alstom shareholder approval before closing in 2015, the GE release says.
The Siemens and Mitsubishi Heavy Industries offer did not “adequately address the interests of Alstom and of its stakeholders,” the Alstom release says. Under that offer Siemens would acquire Alstom’s gas business for $5.9 billion and MHI would purchase a minority stake in the combined steam, grid and hydro business for $5.3 billion.
