GE said to prepare improved offer for Alstom energy assets

PARIS – General Electric Co., which is working to refine its offer for Alstom SA’s energy assets, will present new terms on Thursday as it seeks to thwart a counter bid by Siemens AG, said two people familiar with the matter.

GE is in talks with France to give more guarantees on jobs, planned investments and access to nuclear technology ahead of a June 23 offer deadline, people familiar with the matter said Tuesday, asking not to be named as the matter is private. The U.S. company doesn’t plan to raise the cash component of its offer, the people said.

The offer by Germany’s Siemens, which aims to carve up Alstom together with Japan’s Mitsubishi Heavy Industries Ltd. and Hitachi Ltd., values the energy assets at 14.2 billion euros ($19.3 billion), compared with GE’s 12.35 billion-euro valuation for those operations.

GE CEO Jeffrey Immelt unveiled his bid seven weeks ago as he tries to expand in Europe and win business from Munich-based Siemens, the region’s biggest engineering company. France’s role is pivotal as political leaders seek concessions on issues such as local employment and the country’s energy independence.

- Advertisement -

Preliminary approval

Steve Bolze, CEO of GE’s power and water unit, and the lead negotiator, John Flannery, are in France for meetings this week, one person said.

GE’s team “had good, constructive meetings with the French government again,” the Fairfield, Conn.-based company said Tuesday in an emailed statement. “We are making progress and are very confident in our proposal.”

Alstom’s board has given preliminary approval to GE’s bid. The French company said it would consider other offers before the June 23 deadline, and Siemens unveiled details of a joint bid with Mitsubishi Heavy for Alstom’s energy operations on June 16.

Siemens CEO Joe Kaeser told France’s National Assembly Tuesday that the Munich-based company would also safeguard jobs and local investments.

Siemens is offering 3.9 billion euros for Alstom’s gas turbines, while Japan’s Mitsubishi and partner Hitachi Ltd. would pay 3.1 billion euros for stakes in the steam-turbine, power-grid and hydro businesses. The German manufacturer is also offering to combine its entire rail business with Alstom’s to create a leading European company in that field.

Binding offer

Mitsubishi has approached Bouygues SA about acquiring a stake of as much as 10 percent in Alstom, a stake valued at about 900 million euros, CEO Shunichi Miyanaga told the lawmakers, adding that he wants the French state to also take a 10 percent stake in the French company to support the deal.

The French government hasn’t ruled out taking a stake in Alstom, a person familiar with the matter said Wednesday.

Siemens shares were little changed at 99.17 euros in Frankfurt as of 1:52 p.m, while Alstom gained 1.7 percent to 29.46 euros in Paris. GE rose 0.2 percent to $26.87 at the close on Tuesday in New York. The stock has slid 4.1 percent this year, trailing the 5.1 percent advance for the Standard & Poor’s 500 Index.

GE has made a binding offer to acquire Alstom’s energy business, which makes turbines and power transmission equipment, including for Deepwater Wind LLC’s 30-megawatt Block Island Wind Farm project. The proposal doesn’t include the French company’s transport business making high-speed TGV trains. Immelt said last month that GE also would consider selling its rail signaling unit to Alstom.

‘Too complex’

Alstom’s initial assessment of the Siemens plan is that it’s too complicated, requiring a mix of cash and assets and the creation of joint ventures and the separation of existing operations, two people familiar with the matter have said. The French company doesn’t view a separation of the gas and steam turbines business as workable, said the people.

“It is both highly complex in structure and likely to be immensely more so from an operating standpoint,” Nicholas Heymann, a New York-based analyst at William Blair & Co., said in a report on Tuesday. “Splitting gas and steam turbines may not be viable.”

No posts to display