General Electric has presented a revised proposal for the power and grid business of France’s Alstom to the French government, after French President Francois Hollande told GE and rival Siemens they need to improve their competing offers.
Under the new proposal, General Electric will form three new joint ventures with Alstom, and will sell its signaling business to the firm for an undisclosed price. Alstom’s board is expected to vote on the new proposal before a June 23 deadline.
According to a person close to the situation, the new proposal does not change the economics of GE’s original $17 billion dollar offer for Alstom’s power business, an acquisition GE expects will be accretive to earnings once it is completed. The $19.3 billion offer from Germany’s Siemens and Japan’s Mitsubishi Heavy Industries would have Siemens buying Alstom’s gas turbine business and Mitsubishi taking a minority stake in the company.
The new offer from Fairfield, Connecticut-based GE allows for the two companies to form a 50-50 joint venture that combines their grid businesses. Like the other proposed JV’s it would be based in France. Additionally, they would form a 50-50 joint venture in renewables that would contain Alstom’s offshore wind and hydro businesses, but not GE’s.
The last joint venture would be in the nuclear business. The French government would hold a preferred share in this business, giving it veto power over any projects or issues the government fears could compromise the security and technology of its nuclear plants.
With GE buying Alstom’s power business, the last part of the revised offer aims to strengthen Alstom’s remaining transportation business. A maker of high-speed trains, Alstom would buy GE’s signaling business for an undisclosed price.
When GE’s original offer was announced back in April, there were concerns Alstom’s weaker transportation business might not survive on its own.
To win what would be the biggest deal of CEO Jeff Immelt‘s tenure at GE, the conglomerate has already promised the French government it will create 1,000 new jobs in France.
Immelt will be holding a press briefing later today to discuss the revised offer.