GE On Verge of Finalizing Alstom Offer worth USD 17 billion

Published By : 23 Jun 2014 | Published By : QYRESEARCH

General Electric Co. is inching closer to what could be its biggest acquisition to date, as it finalizes talks for a USD 17 billion deal with French company Alstom SA for its energy assets. The deal received a concrete boost after the managing board of Alstom approved the offer. 

On Saturday, an agreement was announced by the companies, even as talks in the backdrop continued about France purchasing a 20% stake in Alstom that was currently held by Bouygues SA. This 20% stake purchase is one of the key conditions set by the state to approve GE’s purchase. Reports also stated that Bouygues and the French government are nearing an accord – and this was also corroborated by sources close to the deal.

Earlier, the deal was briefly threatened in the face of a counterproposal by Siemens AG, and initial opposition from the French government. GE will be purchasing the gas turbine operations of Alstom’s, as well as forming other joint ventures in segments such as: renewable energy, steam turbine, and electrical-transmission. The French company, in turn, will gain control over the rail-signaling operations of GE for USD 825 million.

In a statement, GE’s CEO Jeffrey Immelt said that the company will now proceed towards finalizing the next phase of its alliance with Alstom. The company also said that since its formal offer on April 30, 2014, the valuation of the deal hadn’t changed. It also predicted the deal to close by 2015.

According to Alstom, proceeds from this sale will in turn leverage its metro and train signaling business, while also helping it to pay its debt and return shareholders’ cash. The company also plans to invest approximately 2.5 billion euros in joint ventures being discussed with GE.
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