General Electric announced on Thursday a revised $13.5 billion bid for the energy business of the French conglomerate Alstom aimed at easing concerns of the Socialist governmentof President François Hollande, reports The New York Times.
Instead of the straightforward takeover of Alstom’s energy assets, largely power generation and grid equipment, G.E. is now proposing a structure that keeps some of those assets under an Alstom roof.
G.E. is not altering the financial valuation of the deal, and under the revised proposal, General Electric would still get Alstom’s prized gas turbine business and its existing customer base.
But G.E. said it would take steps to maintain France’s presence in the energy business. In one change to the offer, G.E. is now proposing to create two joint ventures with Alstom: one in the power grid business and another in renewable energy.
Investors initially seemed skeptical of the success of the revised offer. Alstom’s shares were down nearly 6 percent in afternoon trading in Paris.
Jeffrey R. Immelt, General Electric’s chairman and chief executive, has been seeking to win over the French government and derail a rival bid made earlier this week by Siemens and Mitsubishi Heavy Industries.
Mr. Immelt has been working for nearly two months to bring skeptical French officials around. On Thursday, he met with Economy Minister Arnaud Montebourg and representatives of Alstom’s unions.
General Electric is also strengthening its bid by offering to sell its rail signaling business to Alstom for an undisclosed price. It said it would also form a tie-up with Alstom in North America, where G.E. has strong rail freight operations, “complementing Alstom’s worldwide positions notably in passenger transportation.”
“The alliance will retain and strengthen France’s presence in the energy business and reinforce Alstom Transport,” Mr. Immelt said in a statement. “It creates jobs, establishes headquarters decision-making in France and ensures that the Alstom name will endure.”
Addressing another of the government’s main concerns, assuring France’s nuclear energy security, G.E. would create a structure to house the combined companies’ global nuclear and steam turbine business in a global alliance. And he proposed creating a special French government-owned company to house the intellectual property behind Alstom’s advanced Arabelle nuclear steam turbines, leaving the state the final say over their licensing.
G.E. had set a deadline of June 23 for its offer to be accepted by the Alstom board. Asked at a briefing if G.E. was prepared to walk away if the deal was not agreed before the deadline, Mr. Immelt replied, “Yes, the deadline stands.”
G.E.’s original plan was backed by the Alstom chairman and chief executive, Patrick Kron, and the Bouygues family, the largest shareholder in the French company.
Alstom’s board will now have to decide whether to accept the revised proposal. Christine Rahard-Burnat, a spokeswoman for Alstom, said she had no information on the board’s plans and declined to comment further.
A Mitsubishi Heavy spokesman also declined to comment.
A spokeswoman for Mr. Montebourg said the government “is studying the new proposal.”
Under the original offer, G.E. had imagined simply absorbing Alstom’s energy business, which contributes more than two-thirds of its revenue. It would have left Alstom’s transport unit — which makes high-speed TGV trains, metro systems and rail infrastructure — as a stand-alone listed company bearing the Alstom name. But that proposal met with fierce opposition in the government, which feared having a French industrial prize, along with its nuclear technology, fall into foreign hands.
Read more of this report from The New York Times.