General Electric Co. (GE) won France’s support to buy Alstom SA (ALO)’s energy assets, a prize also sought by Siemens AG (SIE), on the condition that the government acquire a 20 percent stake in the French engineering company, reports Bloomberg.
Siemens sees little chance of prevailing and is poised to admit defeat, said a person with knowledge of the matter who asked not to be identified. GE declined to comment while it reviews demands set forth today by Economy Minister Arnaud Montebourg, said Gary Sheffer, a company spokesman.
“GE is probably going to be flexible and try to get the deal done,” said Christian Mayes, an Edward Jones & Co. analyst based in Des Peres, Missouri, who rates GE as hold. “It sounds like the government is behind them on this and that was the key sticking point.”
Montebourg’s announcement clears a path for GE to acquire Alstom’s gas turbine operations and create joint ventures in the steam turbine, renewable energy and electrical grid businesses. GE still has to respond to the requirement for a French government stake, which Montebourg disclosed after GE Chief Executive Officer Jeffrey Immelt and Siemens CEO Joe Kaeser met with French President Francois Hollande.
“It’s a prerequisite that France takes 20 percent of the capital,” Montebourg said in Paris today. “If that’s not realized, GE’s bid will be blocked.”
Siemens is likely to issue a statement later today on the bidding for Alstom, said the person with knowledge of the matter, who asked not to be identified because the details are private. A spokesman for the Munich-based company couldn’t immediately be reached for comment.
GE fell 0.1 percent to $26.90 at 1:39 p.m. in New York, while Alstom gained 1.1 percent to 28 euros at the close in Paris. Siemens rose 0.3 percent to 100.25 euros.
GE refined its bid yesterday by adding alliances in nuclear technology and rail. The cash element of its original plan, which valued Alstom’s energy operations at $17 billion, will be pared, GE said, without giving a figure. GE said today it’s still offering more cash than the Siemens-Mitsubishi offer.
Alstom, based in the Paris suburb of Levallois-Perret, built France’s power grid and the generators that produce most of the nation’s electricity. The transport business makes the TGV high-speed trains, which Alstom will keep as it buys GE’s rail-signaling operations.
Read more of this report from Bloomberg.