The Board of Directors of energy and rail transport firm Alstom (Paris, France) received, on June 20, an update to the offer from General Electric (GE, Fairfield, Conn., USA) to acquire the power and grid businesses of Alstom. It also received on June 20 a revised proposal from Siemens and Mitsubishi Heavy Industries.
The ad hoc committee of independent directors appointed by the Board on April 29 and led by JeanMartin Folz, reviewed the proposed transactions. Based on the works of the committee and financial and legal advisors, the Board of Directors has unanimously decided to issue a positive recommendation of the offer from GE.
The Directors of Alstom expressed their satisfaction that the productive exchanges established with the French State had resulted in a business proposal that not only addresses the interests of Alstom and of its stakeholders, but also provides assurances in connection with concerns expressed by the French State.
GE would acquire, as previously announced, the Thermal Power, Renewable Power and Grid Sectors, as well as corporate and shared services (the Energy Transaction) for a fixed and unchanged price representing an Equity Value of €12.35 billion and an Enterprise Value of €11.4 billion.
Under the terms of the updated offer, following completion of the Energy Transaction, Alstom and GE would establish joint ventures in Grid and Renewable Power.
In Grid, each company would hold a 50 percent stake in a global business combining Alstom Grid and GE Digital Energy. In Renewables, each company would hold a 50 percent stake in Alstom’s Offshore Wind and Hydro businesses.
In addition, Alstom and GE would create a 50/50 Global Nuclear and French Steam alliance, which would include the production and servicing of the “Arabelle” steam turbine equipment for nuclear power plants, as well as Alstom’s steam turbine equipment and servicing for applications in France. In addition, the French State would hold a preferred share giving it veto and other governance rights over issues relating to security and nuclear plant technology in France.
Completion of the GE transaction will be subject to works council consultation and merger control and other regulatory clearances, including French Foreign Investment authorization. Should this offer be approved and completed, Alstom would refocus on its fully owned Transport activities and on its Energy alliances with GE. Alstom 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.
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