News Column

Alstom Board Chooses GE Offer

June 21, 2014

PARIS--(BUSINESS WIRE)-- GE (NYSE: GE) was informed today that the Alstom Board of Directors has unanimously decided to positively recommend GE’s offer to acquire the Power and Grid businesses of Alstom. With this decision, the transaction will proceed with Works Councils consultation, customary regulatory approvals and Alstom shareholder approval. The deal is expected to close in 2015.

GE Chairman and CEO Jeff Immelt said, “We will now move to the next phase of the Alstom alliance. We look forward to working with the Alstom team to make a globally competitive power and grid enterprise. We also look forward to working with the French government, employees and shareholders of Alstom. As we have said, this is good for France, GE and Alstom.

“For GE, the overall economics of the deal remain intact,” Immelt said. “This transaction remains accretive in year one.”

The French State has confirmed that, subject to execution of definitive agreements for the various alliances between GE, Alstom and the State, including the Global Nuclear & French Steam Alliance, and the State entering into an agreement to purchase shares in Alstom, it will grant the required foreign investment authorization.

Transaction Details

GE’s offer to acquire the Power and Grid businesses of Alstom remains unchanged at $13.5 billion (€9.9 billion) enterprise value and $3.4 billion (€2.5 billion) of net cash, totaling $16.9 billion (€12.35 billion). The all-cash transaction is valued at 7.9 times pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of Alstom’s Thermal, Renewables, and Grid business units.

Once closed, GE and Alstom would form three joint ventures:

  • Grid: the combined Grid assets of GE and Alstom
  • Renewables: Alstom’s Off-shore Wind and Hydro businesses
  • Global Nuclear and French Steam: Alstom’s production and servicing of equipment for nuclear power plants, and development and sales of new nuclear equipment around the world; and Alstom’s steam turbine equipment and servicing for applications in France.

    The cumulative cash investment by Alstom in the joint ventures would be about $3.5 billion (€2.6 billion) and is valued at a higher multiple (pro forma EBITDA) than GE’s purchase price multiple. Including this purchase by Alstom, GE’s total net cash outlay for the transaction is $10 billion (€7.3 billion).

    The terms of these alliances include usual shareholders agreements with standard governance and liquidity rights.

    In addition to the joint ventures, GE has signed a memorandum of understanding to sell its Signaling business to Alstom for approximately $825 million (€602) and to enter into multiple collaboration agreements involving services, technology, supply chain, manufacturing, and commercial support in the U.S.

    GE maintains its synergies target of $1.2 billion annually by year five. GE expects the deal to be accretive to earnings in the first year. The joint ventures will lower GE’s projected earnings from the transaction by approximately $0.01-$0.02 per year.

    About GE

    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. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. 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

    Media Contact:

    Seth Martin, 203-572-3567

    seth.martin@ge.com

    or

    HAVAS -- France

    Anton Molina +33 1 58 47 83 86

    anton.molina@havasww.com

    or

    StÉphanie Elbaz +33 1 58 47 97 73

    stephanie.elbaz@havasww.com

    or

    Investor Contact:

    Matt Cribbins, 203-373-2424

    matthewg.cribbins@ge.com


    Source: GE


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