GE is in talks with France to refine guarantees on jobs, planned investments and access to nuclear technology under its $17billion bid for Alstom energy assets ahead of a June 23 offer deadline, people familiar with the matter said.
The negotiations are intended to help set GE’s plan apart from Siemens proposal, said the people, who asked not to be identified because details are private. The measures include an independent audit to back up GE’s vow to create 1,000 industrial jobs in France as part of an Alstom deal, one person said.
While GE does not intend to increase the cash component of its offer, the US company is willing to continue discussions with the government on several topics, including ensuring that French interests retain access to nuclear technology and a possible GE-Alstom partnership in railroad signaling, the people said. GE also is willing to make commitments for future spending on France-based operations, one person said.
France’s role is pivotal as political leaders seek concessions on issues such as local employment and the country’s energy independence.
GE’s team “had good, constructive meetings with the French government again,” the Fairfield, Connecticut-based company said. “We are making progress and are very confident in our proposal.”
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, and Siemens unveiled details of a joint bid with Mitsubishi Heavy Industries for Alstom’s energy operations on June 16.
The Siemens-Mitsubishi proposal values those assets at 14.2billion euros ($19.3billion), topping GE’s valuation, Siemens said in a presentation in Paris on Tuesdau. Chief executive Joe Kaeser told France’s National Assembly yesterday that the Munich-based company would also safeguard jobs and local investments.
Siemens is offering 3.9billion euros for Alstom’s gas turbines, while Japan’s Mitsubishi and partner Hitachi Ltd. would pay 3.1billion 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 900million euros.
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 does not 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.
“Splitting gas and steam turbines may not be viable.”
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