Alstom To Review GE Offer For Energy Business

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France's Alstom said on Wednesday it would review a binding offer from General Electric for its energy business by the end of May but left the door open for a competing bid from Germany's Siemens.

The decision to give Siemens more time came after President Francois Hollande's government balked at GE's initial overtures last week and insisted any outcome must safeguard jobs at the cash-strapped group, once a champion of French industry, while ensuring France's energy independence.

GE said its offer for Alstom's thermal power, renewable power and grid businesses totaled $16.9 billion, including enterprise value of $13.5 billion and $3.4 billion of net cash.

'Alstom would use the sale proceeds to strengthen its transport business and give it the means of an ambitious development, pay down its debt and return cash to its shareholders,' Alstom said in a statement.

'Should this offer be approved and completed, Alstom would refocus on its transport activities, for which it is a global leader,' it said, referring to activities which include production of 'TGV' high-speed trains.

GE Chief Executive Jeff Immelt said talks with the French government on his company's offer had been 'productive' and expressed confidence that it would go through.

'We think we've got a good deal and it's going to be executed,' Immelt told reporters in Paris.

'We have had good, productive two-way dialogue this week' with the French government, Immelt said. 'We think net employment in France will grow around the Alstom assets.'

Alstom said its board had also reviewed a declaration of interest from Siemens on an alternative deal and that the German company would have access to information needed to make a binding offer.

It added that 29 percent shareholder Bouygues had committed not to sell its shares until the deal had won final approval of shareholders.

The agreement means Alstom cannot solicit offers from third parties to purchase all or part of its energy business but can respond to unsolicited offers for the entire energy arm. If it recommends GE's offer, Alstom would pay a break-up fee of 1.5 percent of the purchase price if it then backs another offer.

Siemens said separately that it had decided to make an offer provided it was given access to Alstom's data room, as well as 'permission to interview the management during a period of four weeks, to enable Siemens to carry out a suitable due diligence'.

The leaders of both companies discussed their competing proposals on Monday with Hollande, who has said the government will place a priority on preserving jobs at one of the country's key industrial firms.

GE said on Wednesday that the takeover would boost its earnings immediately, predicting an additional 8-10 cents of earnings per share by 2016, with approximately 75 percent of operating earnings coming from GE Industrial.

The U.S. group predicted that the integration would lead to efficiencies in supply chain, service infrastructure, commercial reach and new product development to generate more than $1.2 billion in annual cost savings by year five.

Alstom said its board recognized 'unanimously the strategic and industrial merits of this offer' and had decided to set up a committee of independent directors to review the proposed transaction before the end of May, taking into consideration all stakeholders interests including the French state.