GE One Step Closer To Alstom Deal

Major acquisition passes another hurdle; France approves GE offer

Posted on June 24, 2014

The government of France has won the option to purchase 20% of Alstom S.A. from industrial group Bouygues S.A. Because the government supports the acquisition under the condition that it first secured a stake in Alstom, GE may have passed the last obstacle to its US$17 billion acquisition of Alstom’s energy assets.

The French government's options to buy Alstom shares will begin after the GE-Alstom deal is completed and will last for 20 months. As part of the deal, the government can buy the shares at a discount from their market rate.

Alstom's board unanimously approved GE's offer on June 21. Siemens AG and Mitsubishi Heavy Industries (MHI) previously presented competing offers.

The deal calls for GE to sell its railroad signal business to Alstom for approximately US$825 million, and the company has signed a memorandum of understanding (MOU) to sell its signaling business to Alstom for US$825 million.

The deal also stipulates that the two companies will form three 50/50 joint ventures: the companies’ combined power grid assets; Alstom’s offshore wind and hydro business; and Alstom’s production, servicing and development of nuclear plants, as well as Alstom’s steam turbine equipment and servicing for application in France. Alstom said it will invest US$3.5 billion in cash for the joint ventures.

GE said the deal, which is now dependent on shareholders’ and customary regulatory approval, is expected to close in 2015.