The Board of Directors of Alstom has unanimously voted to accept General Electric's €12.35bn offer to acquire it's energy business - choosing the deal over a rival bid from Siemens and Mitsubishi Heavy Industries.
Under the terms of the deal, GE would acquire Alstom's thermal power, renewable power and grid sectors, as well as corporate and shared services for an equity value of €12.35bn and an enterprise value of €11.4bn. However, in an updated offer on 20 June, Alstom and GE will establish joint-ventures in grid, renewables and nuclear steam turbines, and proposes the sale of GE's signaling business to Alstom for €602 million.
The deal means GE would take a 50% stake in Alstom's hydro and offshore wind businesses, while in grid,, each company would hold a 50% stake in a global business combining Alstom Grid and GE Digital Energy. The companies would also create a 50/50 Global Nuclear and French Steam alliance. Finally, GE would sell Alstom its signaling business, and the companies would sign multiple collaboration agreements including a service agreement for GE locomotives outside of the United States, R&D, sourcing and manufacturing and commercial support in the US.
Completion of the GE transaction is expected in 2015, subject to works council consultation, customary regulatory approvals and Alstom shareholder approval.
"The combination of the very complementary Energy businesses of Alstom and GE would create a stronger entity, best placed to serve customers globally and invest in people and technology over the long run," said Patrick Kron, chairman and CEO of Alstom. "Alstom would be associated to this ambitious combination through the Energy alliances. Alstom Transport, a solid leader with a large portfolio of technologies and a worldwide presence in a dynamic market, would be further strengthened through the acquisition of GE's signaling business as well as a far-reaching rail alliance with GE."
If the offer is approved and completed, Alstom says it would use the proceeds of this transaction to strengthen its transport business, to invest in its energy alliances, to pay down its debt and return cash to its shareholders.
