GE Said to Refine Jobs, Nuclear Plans in Alstom Deal Talks

Jun 17, 2014 4:25 pm ET

(Updates with closing share price in ninth paragraph.)

June 17 (Bloomberg) -- General Electric Co. is in talks with France to refine guarantees on jobs, planned investments and access to nuclear technology to distinguish its $17 billion bid for Alstom SA’s energy assets from Siemens AG’s offer, people familiar with the matter said.

The measures include a promise for an independent audit to ensure GE honors a pledge to create 1,000 industrial jobs in France as part of an Alstom deal, said one of the people, who asked not to be identified because the details are private. GE also is willing to make commitments for future spending on France-based operations, one person said.

While GE doesn’t intend to increase the cash component of its offer, the U.S. company is willing to continue discussions with government officials about the terms in several areas, including ensuring that French interests retain access to nuclear technology and a possible GE-Alstom partnership in railroad signaling, the people said.

France’s role is pivotal as political leaders seek concessions on issues such as local employment and the country’s energy independence. Steve Bolze, chief executive officer of GE’s power and water unit, and John Flannery, GE’s lead negotiator, are in France for meetings today, one person said.

GE’s team “had good, constructive meetings with the French government again today,” the Fairfield, Connecticut-based company said in an e-mailed statement. “We are making progress and are very confident in our proposal.”

Siemens’s Pitch

Siemens CEO Joe Kaeser addressed France’s National Assembly today, telling lawmakers that the Munich-based company would also safeguard jobs and local investments, a day after revealing details of a joint bid with Mitsubishi Heavy Industries Ltd. for Alstom’s energy operations.

The Siemens-Mitsubishi proposal values those assets at 14.2 billion euros ($19.3 billion), topping GE’s valuation, Siemens said in a presentation in Paris today.

Siemens is offering 3.9 billion euros for Alstom’s gas turbines, while Japan’s Mitsubishi and partner Hitachi Ltd. would pay 3.1 billion euros for stakes in the steam-turbine, power-grid and hydro businesses. Mitsubishi also offered to buy as much as 10 percent of Alstom, a stake valued at about 900 million euros.

GE rose 0.2 percent to $26.87 at the close in New York. The stock has slid 4.1 percent this year, trailing the 5.1 percent advance for the Standard & Poor’s 500 Index.

Binding Offer

The company has made a binding offer to acquire Alstom’s energy business, which makes turbines and power transmission equipment. The proposal doesn’t include the French company’s transport business making high-speed TGV trains. GE CEO Jeffrey Immelt said last month that GE also would consider selling its rail signaling unit to Alstom.

Alstom’s board has given preliminary approval to GE’s bid. The French company said it would consider other offers before the June 23 deadline.

Alstom’s initial assessment of the Siemens plan is that it’s too complicated, requiring a mix of cash and assets and the creation of joint ventures and the separation of existing operations, two people familiar with the matter have said. The French company doesn’t view a separation of the gas and steam turbines business as workable, said the people.

“It is both highly complex in structure and likely to be immensely more so from an operating standpoint,” Nicholas Heymann, a New York-based analyst at William Blair & Co., said in a report today. “Splitting gas and steam turbines may not be viable.”

--With assistance from Alex Webb in Munich.