GE GE said today it has
updated its April 26 offer to acquire the Power and Grid
businesses of Alstom (ALO.PA) in connection with discussions
with Alstom management and the French government on jobs,
decision-making in France, access to nuclear steam turbine
technology, and support for Alstom Transport. GE's valuation
for Alstom remains unchanged.
GE Chairman and CEO Jeff Immelt said: “Our discussions with the
French government over the past seven weeks have been
productive. As a result, we have reached agreements with
Alstom's management that will create an alliance between our
companies in both spirit and practice. The alliance will retain
and strengthen France's presence in the energy business and
reinforce Alstom Transport. It creates jobs, establishes
headquarters decision-making in France and ensures that the
Alstom name will endure.
“This proposed alliance also preserves the value of this deal
for GE investors,” Immelt said. “Our synergies remain intact. It
is immediately accretive to our earnings, furthers the
transition of our portfolio towards industrial businesses, and
broadens our product and service offerings for customers.”
Details of the proposed alliance, which GE presented today to
the French government, are below:
1. Create an Alliance for the Energy Transition
GE and Alstom will establish two 50/50 joint ventures to
strengthen France's and Alstom's presence in energy and support
its energy transition. The JVs will develop and deliver advanced
technology and services to customers around the world, under the
GE and Alstom brands:
· Grid: GE and Alstom will create a global Grid business
based in France by combining their Grid assets, each taking a
50% ownership stake in the new business.
· Renewables: GE and Alstom will create a joint venture
in renewable energy based in France, consisting of Alstom's
Offshore Wind and Hydro businesses, with each company owning
50%.
2. Create Global Nuclear & French Steam Alliance
GE and Alstom will create a Global Nuclear and French Steam
Alliance to assure security and growth of nuclear steam
technology for France. This will include:
· Alstom's production and servicing of equipment for
nuclear power plants, and development and sales of new nuclear
equipment around the world.
· Alstom's steam turbine equipment and servicing for
applications in France.
The alliance will be 50/50 between GE and Alstom, with the
French government holding a preferred share giving it veto and
other governance rights over issues related to security and
technology of nuclear plants.
In addition, the intellectual property related to Alstom's
Arabelle nuclear steam turbine technology will be transferred to
a special purpose vehicle wholly owned by the French government,
which will allow the government to license the technology to
third parties if GE were not to supply Arabelle technology to an
EDF/Areva nuclear project. GE has also made a long-term
commitment to ongoing development of the Arabelle technology and
servicing of the EDF installed nuclear base.
3. Strengthen Alstom Transport
To further strengthen Alstom Transport, GE and Alstom have
signed a memorandum of understanding to create a global alliance
in Transportation. This includes:
· The sale of GE's signaling business to Alstom. GE's
signaling business is a leading provider of on-board and wayside
signaling systems and communications solutions for the global
rail industry.
· Multiple collaboration agreements involving services,
technology, supply chain and manufacturing and commercial
support in the U.S.
This alliance will make Alstom stronger through GE's breadth in
freight and in North America, complementing Alstom's worldwide
positions notably in passenger transportation.
4. Create High-Value Jobs for France
GE has committed to create 1,000 new jobs in France over the
next three years, focused in high-value areas such as
manufacturing and engineering. This will be enforced through an
independent auditor and financial penalties if the goal is not
achieved. These jobs will be in addition to Alstom's existing
employees in its energy businesses and the commitments Alstom
has made for offshore wind in France.
5. France Has Global Champions in Energy and Transport
The GE-Alstom energy businesses will have headquarters and
leadership teams for four global businesses in France: Grid
(which will include GE's present Grid business), Offshore Wind,
Hydroelectric, and Steam Turbines. This is in addition to GE's
European Power headquarters, which has been in Belfort since
1999. In addition, Alstom's Transport business will be enhanced
by the addition of GE's signaling business. The Alstom brand
will continue through its Transport business and in the energy
industry.
GE's offer is subject to consideration by the Alstom board. GE's
offer expires on June 23.
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