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20.06.14

GE makes rail signalling offer to land Alstom bid

General Electric Co. (GE) has refined its bid to acquire Alstom’s energy assets by adding joint ventures in rail and nuclear technology. This is in a bid to head-off a counter proposal led by Siemens, while attempting to court favour with the French government.

The original $17bn offer for the energy assets still stands, but GE has also offered to sell its rail signalling operations to Alstom.

Currently, GE's rail signalling business revenue is estimated at €600m, compared to the €1.4bn revenues of Alstom's signalling business.

A statement from GE added: “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 signalling business, which is a leading provider of on-board and wayside signalling systems, to Alstom”.

According to GE, the alliance will make Alstom stronger through GE’s breadth in freight and in North America, complementing Alstom’s worldwide positions notably in passenger transportation.

Jeff Immelt, GE chairman and CEO, 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 has been reported that the rival bid from Siemens and Mitsubishi Heavy Industries (MHI) has also been adjusted. Under the new proposals, Mitsubishi would offer to buy 40% of Alstom’s grid and renewable units instead of 20%, and Siemens would offer to create a rail-signalling joint venture with Alstom.

Alstom has stated: “The Board of Directors of Alstom will be convened no later than Monday, June 23, to review and resolve upon the updated offer of GE and the proposal of Siemens and MHI. In the meantime, Alstom does not intend to communicate further on the ongoing process.”

More on the background to this story here.

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