General Electric Co. (GE) said it’s flexible on the terms of its $17 billion bid for Alstom SA (ALO)’s energy business, signaling a willingness to make more concessions in negotiations with the French government.
GE “feels good about the direction” of the talks, Vice Chairman John Rice said in an interview in Rio de Janeiro today, one day after Chief Executive Officer Jeffrey Immelt promised President Francois Hollande the company will create 1,000 jobs in France. “We are still discussing different aspects of our proposal, the French government is working on how it sees the nature of the deal and we are prepared to be flexible.”
Immelt this week made a rare appearance by a U.S. CEO before France’s National Assembly, saying his bid would protect jobs and the nation’s industrial base. Immelt’s personal appeal to political leaders highlighted the importance attached to Alstom by both GE and the French government, which is seeking to extract from bidders the best guarantees on jobs and energy independence.
The government, which had openly advocated a tie-up of Alstom’s energy business with Germany’s Siemens AG (SIE) and previously called GE’s offer unacceptable, yesterday said GE’s plans are now more precise and strengthened.
Alstom’s board is expected to consider bids, including a possible offer from Siemens, by June 23. Siemens has said it plans to present an official offer by June 16.
Rice said he does not anticipate a bidding war for Alstom, based in the Paris suburb of Levallois-Perret. “There is not a lot of time to go back and forth with bids and still have the government fully evaluate and do its due diligence.”
GE plans to acquire Alstom’s energy business, which makes turbines and power transmission equipment. The proposal does not include Alstom’s transport unit, the maker of high-speed TGV trains that accounts for less than 30 percent of sales. Siemens has proposed swapping its trainmaking business for Alstom’s energy assets to create two leading European companies in rail and energy.
GE could cede control of its signaling business to Alstom’s rail unit to help it compete with Siemens, Canada’s Bombardier Inc. (BBD/B), and Italy’s Ansaldo STS, Immelt said this week. Rice said today GE is still working out the details of a proposed partnership or sale of the unit. The company is willing to consider “a bunch of different ideas” on partnerships or other concessions.
The U.S. manufacturer has also pledged to keep Alstom’s nuclear operations in the country to allay French government concerns regarding steam turbines and services for nuclear plants, a key issue for power company Electricite de France SA and atomic-reactor maker Areva SA. (AREVA)
GE is in early stage talks with state-controlled Areva and other French companies about asset sales or partnerships, people familiar with the matter said in mid-May.
Fairfield, Connecticut-based GE is “on a good path” to finalize the deal by the end of June, Rice said, and he expects the acquisition to close early next year.