Alstom shares jump on report of $13 billion GE bid

Thu Apr 24, 2014 3:12pm EDT
 
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By Natalie Huet and Benjamin Mallet

PARIS (Reuters) - Shares of Alstom (ALSO.PA: Quote) jumped more than 14 percent on Thursday after a report that U.S. conglomerate General Electric (GE.N: Quote) was in talks to buy the struggling French turbine and train maker for about $13 billion.

The companies may announce the deal as early as next week, Bloomberg cited people with knowledge of the matter as saying late on Wednesday.

If confirmed, a takeover offer from a foreign company would raise concern among politicians and unions in France, where Alstom employs around 18,000 staff, or 20 percent of its global workforce.

The group was bailed out by the French state a decade ago and has strongly relied on orders from national rail operator SNCF and utility EDF (EDF.PA: Quote).

A deal could hand GE control of Alstom's high-speed TGV trains and rail-signal technology, and has the support of Bouygues (BOUY.PA: Quote), Alstom's biggest shareholder with a 29 percent stake, the report said.

However, one person familiar with the industry said GE's ultimate aim might be to buy Alstom's power business rather than its rail arm - a deal that would leave its transport business as a separate publicly listed company in Paris. A report in the French Le Figaro newspaper also said the power division was GE's main target.

GE has said it wants to increase the earnings contribution of its core industrial manufacturing business to 70 percent from 55. Acquiring Alstom could cement its leadership as a provider of large infrastructure equipment to customers around the world.

"Alstom is levered to those themes in which GE believes," Sanford Bernstein analyst Steve Winoker said in a research note. "GE would essentially be 'doubling down' on power generation, transmission, distribution and transportation."   Continued...

 
The logo of French power and transport engineering company Alstom is pictured on a wall of the company's plant in Reichshoffen near Haguenau, North Eastern France, January 21, 2014. REUTERS/Vincent Kessler