General Electric Co. agreed to a French government request to extend by three weeks the deadline for its planned $17 billion purchase of Alstom SA energy units.
The Fairfield, Connecticut-based company had been asked to delay consideration of its offer until June 23 as French officials seek better terms. GE conceded, saying yesterday it intends “to facilitate ongoing discussions.”
The French government said in a separate statement that the extension will allow it to work with the companies to address its concerns, adding that it’s in everyone’s interest to work “efficiently and rapidly” to find a solution.
French President Francois Hollande and Economy Minister Arnaud Montebourg have been vocal in calling on GE to improve its offer. Hollande has said GE’s bid is “not acceptable” and asked the company to improve jobs guarantees, while Montebourg has publicly stated a preference for a proposal from Siemens AG. Montebourg last week signed into effect a decree giving the government the power to block some foreign takeovers, including deals in the energy industry.
“The industrial project we have presented is good for Alstom, for France and for GE, and our discussions have continued to be constructive,” GE said in a statement. “We view this extension positively.”
GE yesterday rose 0.1 percent to $26.51 at the close in New York. Alstom today dropped 1.3 percent to 28.36 euros in Paris as of 11:12 a.m. while Siemens rose 0.6 percent to 95.82 euros in Frankfurt.
GE Chief Executive Officer Jeffrey Immelt said May 21 at an industry conference that he is confident the U.S. company can complete the acquisition, which he expects to close next year.
Earlier this week, Alstom CEO Patrick Kron called on the French government to back GE’s bid. The offer meets government concerns about France’s energy independence, local decision making and potential job cuts as there are almost no overlaps between the companies’ operations, Kron told France’s National Assembly.
The offer from Munich-based Siemens would swap most of its train business for Alstom’s energy assets, forming two leading European energy and rail companies.
In an effort to appease the French government, GE is in early-stage talks with state-controlled nuclear group Areva SA and other French companies about asset sales or partnerships, people familiar with the matter said last week.
“They’re going to be willing to try to be facilitative with regards to working with the French government in a way that will not detract from the merit, integrity or value of the initial proposal,” said Nicholas Heymann, a New York-based analyst at William Blair & Co. who rates GE’s stock market perform.
Alstom had previously said it would review GE’s offer by June 2.
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