GE eases ahead in race for Alstom power assets
By James Regan and Benjamin Mallet
PARIS (Reuters) - Cash-strapped French engineering group Alstom said on Wednesday it would explore a $16.9 billion offer from General Electric for its energy arm while leaving the door open to a rival bid from Germany's Siemens.
Alstom gave Siemens until the end of May to propose its own deal after the government of President Francois Hollande balked at the U.S. group's overtures last week, insisting any outcome must safeguard jobs at the one-time champion of French industry, while ensuring the nation's energy independence.
But GE led the race to secure assets which would boost its position in producing steam turbines for power stations and technology for electricity grids. Economy Minister Arnaud Montebourg - furious when news of the deal emerged last week - softened his tone towards GE, calling it a "a serious company".
"We have a good relationship with GE," Montebourg told a parliamentary committee after Alstom confirmed in a statement it was reviewing the GE offer.
"We are ready to discuss alliances, not an absorption. We prefer an equal alliance," he said, citing GE's 40-year-old CFM jet engine venture in France with a unit of Safran as a good example of Franco-U.S. cooperation.
Reuters reported on Tuesday that GE Chief Executive Jeff Immelt had relied on the success of the engine supplier, whose existence dates back to a deal between the late presidents Georges Pompidou and Richard Nixon, as a possible trump card in presenting the bid.
GE said its all-cash offer for Alstom's thermal power, renewable power and grid businesses - valued at 7.9 times pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) - was based on an enterprise value of $13.5 billion and $3.4 billion of net cash.
In a slide presentation, GE said it would fund the deal with $9.5 billion in cash and $4 billion in debt and that the accord, if it went through, would complete the allocation set aside for merger and acquisition activity this year. Continued...