Alstom is considering the proposed acquisition of its energy activities, which include thermal power, renewable power and grid sectors, as well as corporate and shared services, by General Electric (GE).
Alstom has received a binding offer from GE to acquire its energy activities and the company has decided to set up a committee of independent directors to review the proposed transaction before the end of May 2014.
The committee of independent directors will be led by Jean-Martin Folz. Alstom chairman and CEO Patrick Kron and the committee will liaise with representatives of the French State to consider their views.
In the fiscal year 2012/13, Altom’s Energy activities registered €14.8bn in sales. The proposed price is a fixed price representing an equity value of €12.35bn and an enterprise value of €11.4bn.
If the proposed offer from GE is approved and completed, Alstom would refocus on its transport activities. The transaction would be subject to merger control and other regulatory clearances.
According to Alstom, the company 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.
If the board concludes positively, the information and consultation of Alstom employees’ representative bodies will be conducted before entering into a definitive agreement. Final approval of the transaction will be submitted to the shareholders.
Bouygues, a 29% shareholder of Alstom, has committed not to sell its shares until this approval and has indicated that it will support the recommendation of the Alstom board of directors.
Regarding an alternative transaction, the Alstom’s board has also reviewed Siemens’ declaration of interest. Siemens will have a fair access to information needed to make, should it decide to do so, a binding offer. Siemens’ declaration of interest will be reviewed in light of Alstom’s corporate interest and the interest of all stakeholders, in accordance with the commitments made.
Kron said that the combination of the very complementary Energy businesses of Alstom and GE would create a more competitive entity to better service customer needs.
Kron said, "Alstom’s employees would join a well-known, major global player, with the means to invest in people and technology to support worldwide energy customers over the long term.
"The proposed transaction would allow Alstom to develop its Transport business as a standalone company, with a strong balance sheet to capitalise on opportunities in the dynamic rail transport market."