By Anthony Capkun
May 1, 2014 – GE and Alstom announced that GE has submitted a binding offer to acquire the Thermal, Renewables (“Power”) and Grid businesses of Alstom, consisting of $13.5 billion “enterprise value” and $3.4 billion of net cash, totalling $16.9 billion.
“Power & Water is one of our higher growth and margin industrial segments, and is core to the future of GE,” said Jeff Immelt, GE chair and CEO. “Alstom’s businesses are very complementary in technology, operations and geography to our power and grid businesses. We expect a collaborative and prompt integration that will yield efficiencies in supply chain, service infrastructure, commercial reach and new product development.”
The Alstom board has positively received GE’s offer and has appointed a committee of independent directors to review the transaction by June 2. Should this review conclude positively, an exclusivity period beginning no later than June 2 will be granted, and the next steps will include Works Councils consultation, Alstom shareholder approval in a shareholder meeting and customary regulatory approvals.
It is not a done deal, however. While expected to close in 2015, Alstom’s board is permitted to consider unsolicited alternative proposals for the acquisition of Alstom, or of the Power and Grid businesses.
“The proposed transaction would allow Alstom to develop its Transport business as a stand-alone company, with a strong balance sheet to capitalize on opportunities in the dynamic rail transport market,” said Alstom’s chair and CEO Patrick Kron.
Alstom’s Power business provides equipment and services for integrated power plant solutions for a variety of energy sources, including steam, hydro, coal, gas, nuclear steam, wind and other forms of renewable energy. The Grid business offers transmission & distribution solutions to support the build-out of the power grid in emerging economies and replacement of aging electrical infrastructure.