GE Said to Refine Jobs, Nuclear Plans in Alstom DealRichard Clough, Francois de Beaupuy and Jeffrey McCracken
General Electric Co. is in talks with France to refine guarantees on jobs, planned investments and access to nuclear technology under its $17 billion bid for Alstom SA’s energy assets ahead of a June 23 offer deadline, people familiar with the matter said.
The negotiations are intended to help set GE’s plan apart from Siemens AG’s proposal, said the people, who asked not to be identified because details are private. The measures include an independent audit to back up GE’s vow to create 1,000 industrial jobs in France as part of an Alstom deal, one person said.
While GE doesn’t intend to increase the cash component of its offer, the U.S. company is willing to continue discussions with the government on several topics, including ensuring that French interests retain access to nuclear technology and a possible GE-Alstom partnership in railroad signaling, the people said. GE also is willing to make commitments for future spending on France-based operations, one person said.
France’s role is pivotal as political leaders seek concessions on issues such as local employment and the country’s energy independence. Steve Bolze, chief executive officer of GE’s power and water unit, and the lead negotiator, John Flannery, are in France for meetings this week, one person said.
GE’s team “had good, constructive meetings with the French government again,” the Fairfield, Connecticut-based company said yesterday in an e-mailed statement. “We are making progress and are very confident in our proposal.”
Alstom’s board has given preliminary approval to GE’s bid. The French company said it would consider other offers before the June 23 deadline, and Siemens unveiled details of a joint bid with Mitsubishi Heavy Industries Ltd. for Alstom’s energy operations on June 16.
The Siemens-Mitsubishi proposal values those assets at 14.2 billion euros ($19.3 billion), topping GE’s valuation, Siemens said in a presentation in Paris yesterday. CEO Joe Kaeser told France’s National Assembly yesterday that the Munich-based company would also safeguard jobs and local investments.
Siemens is offering 3.9 billion euros for Alstom’s gas turbines, while Japan’s Mitsubishi and partner Hitachi Ltd. would pay 3.1 billion euros for stakes in the steam-turbine, power-grid and hydro businesses. Mitsubishi also offered to buy as much as 10 percent of Alstom, a stake valued at about 900 million euros.
Siemens shares dropped 0.1 percent to 99 euros in Frankfurt as of 9:45 a.m while Alstom gained 0.2 percent to 29.04 euros in Paris. GE rose 0.2 percent to $26.87 at the close yesterday in New York. The stock has slid 4.1 percent this year, trailing the
5.1 percent advance for the Standard & Poor’s 500 Index.
GE has made a binding offer to acquire Alstom’s energy business, which makes turbines and power transmission equipment. The proposal doesn’t include the French company’s transport business making high-speed TGV trains. GE CEO Jeffrey Immelt said last month that GE also would consider selling its rail signaling unit to Alstom.
Alstom’s initial assessment of the Siemens plan is that it’s too complicated, requiring a mix of cash and assets and the creation of joint ventures and the separation of existing operations, two people familiar with the matter have said. The French company doesn’t view a separation of the gas and steam turbines business as workable, said the people.
“It is both highly complex in structure and likely to be immensely more so from an operating standpoint,” Nicholas Heymann, a New York-based analyst at William Blair & Co., said in a report yesterday. “Splitting gas and steam turbines may not be viable.”