Cash-strapped French engineering group Alstom said it would study a $16.9 billion offer from General Electric for its energy arm but left the door open for a rival bid from Germany’s Siemens.
Alstom gave Siemens until the end of May to propose its own deal after the government of President Francois Hollande balked at the U.S. group’s overtures last week, insisting any outcome must safeguard jobs at the one-time champion of French industry, while ensuring the nation’s energy independence.
Yet GE remained ahead in the race to secure assets which would boost its position in producing steam turbines for power stations and technology for electricity grids. Economy Minister Arnaud Montebourg – who was furious when news of the deal emerged last week – softened his tone towards the U.S. group, which he said was “a serious company”.
“We have a good relationship with GE,” Montebourg told a parliamentary committee after Alstom confirmed in a statement it was reviewing the GE offer.
“We are ready to discuss alliances, not an absorption. We prefer an equal alliance,” he said, citing GE’s 40-year-old CFM jet engine venture in France with a unit of Safran as a good example of Franco-U.S. cooperation.
GE said its all-cash offer for Alstom’s thermal power, renewable power and grid businesses – valued at 7.9 times pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) – was based on an enterprise value of $13.5 billion and $3.4 billion of net cash.
Alstom was bailed out by the French state in 2004 and relies heavily on orders from national rail operator SNCF and utility EDF. It employs 18,000 people in France, half of them in the power business, out of 93,000 worldwide.