Company directors suggest acceptance of General Electric's proposal
Alstom, a leading French multinational power and transportation company, has announced a series of potential transactions that could significantly reshape its business.
The company has received an improved offer from General Electric (GE) for the acquisition of its power generation and transmission businesses. According to the offer, GE proposes to acquire the Thermal, Renewable Energy, and Grid segments, as well as the corporate and shared services, for a fixed price of €12.35 billion Enterprise Value and €11.4 billion Equity Value.
The Board of Directors, after reviewing the proposal and consulting with financial and legal advisors, has unanimously determined that the offer from GE adequately addresses the interests of Alstom and its stakeholders.
If the offer is approved and concluded, Alstom would refocus on its Transportation activities and its Energy alliances with GE. Mitsubishi Heavy Industries (MHI) would acquire a 40% stake in Alstom's combined steam, grid, and hydroelectric power business through a single company, for €3.9 billion.
In Renewable Energy, each company would hold a 50% stake in Alstom's offshore wind and hydroelectric energy businesses. Following the completion of the Energy Transaction, Alstom and GE would establish joint ventures in Grid (energy transmission) and Renewable Energy.
The resources from this operation would be used to strengthen the Transportation business, invest in Energy alliances, repay debt, and provide a cash return to shareholders.
In a separate development, Siemens could propose a 50/50 joint venture with Alstom in Mobility Infrastructure and Signaling. Siemens would acquire Alstom's gas business for an equity value of €4.3 billion, €400 million above the initial proposal.
In Grid, each company would hold a 50% stake in a global business combining Alstom's Grid and GE Digital Energy. Alstom and GE would also create a 50/50 alliance between Global Nuclear and French Steam, which would include the production and maintenance of the 'Arabelle' steam turbine equipment for nuclear power plants.
Siemens and Mitsubishi Heavy Industries involved their respective energy sector divisions and relevant corporate stakeholders in the improved takeover proposal of Alstom's energy divisions.
Alstom will host a conference call with analysts and investors on Monday, June 23, 2014, at 8:30 AM (CET), which can be accessed live on Alstom's website. The conclusion of the transaction with GE is subject to consultations with the councils of the companies and regulatory authorizations, including approval by the French Foreign Investment Department.
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