U.S.-based GE says it has updated its April 26 offer to acquire the power and grid businesses of French conglomerate Alstom. The announcement comes just a few days after Siemens and Mitsubishi Heavy Industries (MHI) made a counter joint bid to acquire the energy assets.
According to GE, the new offer aims to create an energy and transport alliance with Alstom, but the deal's proposed $16.9 billion price tag remains unchanged. GE has been working with the French government for weeks after officials initially rejected the company's bid and called for more job creation under the proposal and ‘a balanced partnership’ rather than a full acquisition.
"Our discussions with the French government over the past seven weeks have been productive," says GE Chairman and CEO Jeff Immelt. "As a result, we have reached agreements with Alstom's management that will create an alliance between our companies in both spirit and practice. The alliance will retain and strengthen France's presence in the energy business and reinforce Alstom Transport. It creates jobs, establishes headquarters decision-making in France and ensures that the Alstom name will endure."
Some details of the new proposal, which GE presented to the French government, include the following:
– Under a so-called energy transition alliance, GE and Alstom will establish two joint ventures that will develop and deliver technology and services under the GE and Alstom brands. The companies will create a JV in renewable energy based in France, consisting of Alstom's offshore wind and hydro businesses, with each company owning 50%. The companies will also create a global grid business based in France by combining their grid assets, each taking a 50% ownership stake in the new business.
– GE and Alstom will also create a 50/50 global nuclear and French steam alliance, which GE says will ensure security and growth of nuclear steam technology for France.
– To further strengthen Alstom Transport, the companies have signed a memorandum of understanding to create a global alliance in transportation. This includes the sale of GE's signaling business to Alstom. The signaling business is a provider of on-board and wayside signaling systems and communications solutions for the global rail industry. In addition, GE says the transport alliance would include multiple collaboration agreements involving services, technology, supply chain, and manufacturing and commercial support in the U.S.
– GE says it has committed to create 1,000 new jobs in France over the next three years, focused in high-value areas such as manufacturing and engineering. This will be enforced through an independent auditor and financial penalties if the goal is not achieved. These jobs will be in addition to Alstom's existing employees in its energy businesses and the commitments Alstom has made for offshore wind in France.
GE's offer is subject to consideration by the Alstom board and expires on June 23. Alstom's board is also set to review the Siemens-MHI proposal.