PARIS, FRANCE, June 19, 2014 - GE (NYSE: GE) said today it has updated its April 30 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.
GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. For more information, visit the company's website at www.ge.com.
Caution Concerning Forward-Looking Statements:
This document contains “forward-looking statements” - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; potential market disruptions or other impacts arising in the United States or Europe from developments in sovereign debt situations; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding and on our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC’s ability to pay dividends to GE at the planned level; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, power generation, oil and gas production, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing announced transactions and integrating acquired businesses; our ability to complete the staged exit from our North American Retail Finance business or the proposed transactions and alliances with Alstom; the impact of potential information technology or data security breaches; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.
GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.
GE Corporate, Senior Director External Communications
+1 646 682 5621