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[June 22, 2014]
Alstom's board accepts GE's offer for power business
(EFE Ingles Via Acquire Media NewsEdge) Paris, Jun 22 (EFE).- The board of French industrial company Alstom has accepted U.S.-based General Electric's offer for its power and grid businesses with the strict conditions imposed by the French government.
Alstom's board of directors voted unanimously on Saturday to approve deal with GE.
"We will now move to the next phase of the Alstom alliance. We look forward to working with the Alstom team to make a globally competitive power and grid enterprise. We also look forward to working with the French government, employees and shareholders of Alstom. As we have said, this is good for France, GE and Alstom," GE chairman and CEO Jeff Immelt said in a statement.
The French government on Friday backed GE's offer for Alstom's power business, although with strict conditions on maintaining investment and jobs in France.
Economy Minister Arnaud Montebourg made the announcement after he and President François Hollande met with top executives of GE and of Germany's Siemens and Japan's Mitsubishi Heavy Industries, which had made a rival bid.
"For GE, the overall economics of the deal remain intact," Immelt said. "This transaction remains accretive in year one." The French government will become the leading shareholder in Alstom by acquiring a 20 percent stake in the power-generation and rail-transport company from Paris-based industrial group Bouygues, and thus guarantee that jobs and investment stay in France, Montebourg said.
Alstom and GE will create three joint ventures in the nuclear energy, power grid and renewables sectors, Montebourg, part of the governing Socialist Party's most interventionist wing, said.
GE's offer valued the French multinational's energy business at 12.35 billion euros ($16.7 billion).
The alliance will create a global leader in the energy, renewables and transport sectors, French Prime Minister Manuel Valls said.
The French government had encouraged Siemens, which later allied with Mitsubishi, to enter the bidding to drive up the price of Alstom's energy business.
That forced GE to not only increase its initial offer but also back away from a plan to absorb Alstom's energy business and instead settle for 50-50 joint ventures to house the French company's power-grid, renewables and nuclear assets.
Paris also worked to force GE to accept its conditions on retaining jobs, investments and the company's headquarters in France.
In addition to becoming Alstom's leading shareholder, the government will have veto power over the group's decisions and control over the appointment of half of the board of the new joint ventures, as well as its chairman.
GE also must pledge to retain the group's current staff and create 1,000 additional jobs under threat of a financial penalty in the event of non-compliance, Montebourg said.
The deal was sealed a month after France's Socialist government passed a decree giving the state the power to block takeovers by foreign groups in strategic sectors. EFE lmpg/hv (c) 2014 EFE News Services (U.S.) Inc.
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