General Electric offers to buy Alstom's energy businesses for EUR 12.35 billion - French giant's Board of Directors to review bid by June 23

General Electric (GE) has submitted a binding offer to acquire part of the Alstom company whose Board of Directors will be considering the proposed transaction by 23 June 2014, people at the Alstom HQ confirmed to eKapija. The scope of the transaction includes the Thermal Power, Renewable Power and Grid Sectors, as well as corporate and shared services.

With 65,000 employees, these businesses registered €14.8Bn in sales in fiscal year 2012/13. The proposed price is a fixed price representing an Equity Value of €12.35Bn and an Enterprise Value of €11.4bn, or 12.2x FY13 EBIT, said people at Alstom.

Should this offer be approved and completed, Alstom would refocus on its Transport activities, for which it is a global leader. Alstom would use the sale proceeds to strengthen its Transport business and give it the means of an ambitious development, pay down its debt and return cash to its shareholders, Alstom said in a release.

The Board of Directors of Alstom, acknowledging unanimously the strategic and industrial merits of this offer and having noted the publicly announced undertakings by GE, has decided to set up a committee of independent directors, led by Jean-Martin Folz, to review before the end of May the proposed transaction, taking into consideration all stakeholders interests including the French State. Patrick Kron and the committee will liaise with the representatives of the French State to consider their views.

- At the request of the French government, we have agreed, in consultation with Alstom, to extend the deadline for consideration by the Alstom board of our proposal until June 23. We have done so to facilitate ongoing discussions with the government. The industrial project we have presented is good for Alstom, for France and for GE, and our discussions have continued to be constructive - General Electric said in a release on Thursday (21 May 2014).

Should the Board conclude positively, the information and consultation of Alstom employees’ representative bodies will be conducted before entering into a definitive agreement.

Completion of the transaction would be subject to merger control and other regulatory clearances. In accordance with the AFEP-Medef code, the final approval of the transaction will be submitted to the shareholders. Bouygues, a 29% shareholder of Alstom, has committed not to sell its shares until this approval and has indicated that it will support the recommendation of the Alstom Board of Directors, Alstom's release reads.

In the context of this binding offer, Alstom may not solicit offers from third parties for the acquisition of all or part of its Energy business. It has however reserved the right to respond to unsolicited offers for its entire Energy business and engage in discussions with bidders demonstrating a serious interest that could lead to a superior offer for Alstom. If, after having recommended GE’s offer, following its review, the Board of directors were to support another transaction, Alstom would owe GE a break-up fee equal to 1.5% of the purchase price, the release says.

The Board also reviewed a declaration of interest received from Siemens, regarding an alternative transaction.

- Siemens will have a fair access to information needed to make, should it decide to do so, a binding offer. This declaration will be reviewed in light of Alstom’s corporate interest and the interest of all stakeholders, in accordance with the commitments made - said people at Alstom.