(AP) – General Electric revised its bid for the power arm of Alstom on Thursday to respond to political concerns in France, offering joint venture opportunities and providing guarantees to the French state.
It was the latest shot in a two-month fight for control of Alstom’s energy business, days before the French group’s board must choose between GE’s offer and a rival one from Germany’s Siemens and Japan’s Mitsubishi Heavy Industries.
French trade unions who met French Economy Minister Arnaud Montebourg over the deal said Siemens-MHI had also revised its offer, putting new money on the table to buy bigger stakes in parts of Alstom’s businesses. A Mitsubishi spokesman said no decision had been taken and a Siemens spokesman declined comment.
President Francois Hollande summoned key ministers including Montebourg on Thursday evening to examine the rival offers.
“They will all reach a common position tonight,” Francis Orosco, head of the CFTC energy sector trade union, told Reuters, adding: “Montebourg has no preference.”
GE said the new offer had been agreed with Alstom management and that it would create an “alliance”, a term that France’s Socialist government has said all along it favours to describe any tie-up involving the engineering group.
While the new offer would create 50:50 joint ventures in grid, nuclear and renewable assets, GE would still end up with all of the lucrative gas turbines arm, which accounts for roughly a third of Alstom’s revenue from power.
The U.S. conglomerate’s move to revise what was a straight purchase offer to include joint ventures across individual industrial sectors came after France’s government said it would veto any deal that did not protect local jobs and interests.
GE said its overall valuation for Alstom power assets at 12.4 billion euros ($16.9 billion) remained unchanged, while the cash component would drop to reflect the fact it was buying fewer assets outright. It stressed that the deal, if approved, would immediately boost the U.S. company’s earnings per share.
“We have reached agreements with Alstom’s management that will create an alliance between our companies in both spirit and practice,” GE Chief Executive Jeff Immelt said in a statement.
“It creates jobs, establishes headquarters decision-making in France and ensures that the Alstom name will endure,” said Immelt, who earlier met French government and union officials.
The Siemens-MHI proposal would take just the gas turbines arm of Alstom and give MHI minority stakes in its other power activities. De Maistre said the Siemens-MHI proposal valued Alstom’s energy business at around 14.2 billion euros, some 1.8 billion euros more than the GE plan.
Bernard Devert, head of the metallurgy arm of the CGT trade union, told Reuters that MHI was now offering to put a further 800 million euros on the table to take higher stakes in two parts of Alstom’s business.
Such an offer, if accepted, would leave the Japanese group with 40 percent stakes in Alstom’s steam, hydro and renewables business, he said.
Siemens mentioned no such plan in an earlier statement arguing its existing offer was better than GE’s.
“The counter offer of GE reinforces the credibility of the joint MHI/Siemens concept. It actually follows our approach – but doesn’t change the game. Our concept is still superior,” Siemens France CEO Christophe de Maistre said.
Alstom CEO Patrick Kron, who was present at GE France’s headquarters in Paris as GE briefed journalists, declined to make any comment on the new GE offer.
NUCLEAR SAFEGUARDS
The nuclear alliance proposed by GE would see the government hold a preferred share, giving it a veto and other rights over issues related to security and technology of nuclear plants – a vital point in France, which relies heavily on nuclear energy.
Sensitive intellectual property related to Alstom’s Arabelle nuclear steam turbine technology would also be transferred to a special purpose vehicle wholly owned by the French government.
Alstom shares extended losses after the announcement and closed down 6 percent. One trader cited the state’s veto right on nuclear issues as having spooked some investors.
GE said it had also signed a memorandum of understanding with the French group’s management to boost the transport activities of Alstom, maker of the famed TGV high-speed train.
Under the plan, GE would sell its signaling business to Alstom and enter collaboration pacts for services, technology, manufacturing and support in the United States.
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