General Electric looks set to win prized Alstom energy deal

The bidding war for Alstom’s energy assets appears to be over, and General Electric is the winner.

The long-running bidding war to take control of French industrial giant Alstom’s energy assets has ended – and General Electric (GE) is the winner.

On 22 June, BBC News reported that Alstom’s board had voted unanimously to accept an offer from the US firm worth as much as $16.8 billion (£9.9 billion). Although it still needs to be approved by both Alstom’s employee representatives and regulatory bodies, it certainly looks as though the bid will go through.

Even the French government has got involved to clear the path for the deal, after it emerged this morning that Paris has agreed to buy 20 per cent of Alstom from major shareholder Bouygues.

The government’s option to purchase the shares will last for 20 months and start as soon as the GE-Alstom deal has been completed – a move expected early next year.

That had been one of the major conditions set on the deal by the government, after concerns were raised that a buy-out from a major US company could lose France one of its key strategic companies as well as hundreds of jobs.

Speaking to France 2 television, Reuters reports that economy minister Arnaud Montebourg said the move would help the nation “organise ourselves in the face of globalisation”.

“It builds alliances rather than allowing France to become a giant shopping centre for foreign corporations to come and prey on our companies,” he said.

Alstom will now become mostly a train company, since GE plans to sell its own railway business to the French firm. Most of its energy assets will pass to the US company, though some key projects will now take the form of joint ventures between the two businesses.

GE’s offer now looks very different to the simple transaction it initially tabled, as successive concessions to both the government and Alstom’s board have led to a much more complex deal. In fact, it looks much closer to the complicated setup proposed by the rival bidders of Siemens and Mitsubishi Heavy Industries, which included a number of joint ventures from the start.

At one point it was suspected the German-Japanese deal would have an advantage because it allowed more French control. By purchasing its own stake in the company, Paris has found a way to keep some of that control without losing the benefits of a GE takeover.

< Top image: Clicsouris/Global Panorama >