Alstom Accepts 10 Bln Euro GE Bid For Its Energy Unit
Sources said GE is not in exclusive talks with Alstom. The French transport-to-turbines group is also set to receive an offer from its much larger German competitor Siemens AG , which said it had sent a letter to Alstom after its managing and supervisory boards had decided to make an offer.
Alstom is expected to make a statement about the two offers early on Wednesday, before its shares, suspended since late last week, resume trading.
The rival bids have triggered a fierce national debate about the fate of power turbine and train manufacturing in France - both integral to the country's engineering pedigree. The French government has said it favours the Siemens offer, which via an asset swap would create two European sector champions: Siemens in electricity and Alstom in trains.
"Alstom's board has accepted the GE offer, it will be examined by an independent committee," one source close to the talks told Reuters.
"The two groups will not enter into exclusive negotiations. This means Alstom cannot go and look for other offers, but there is nothing to stop it from examining offers it receives without soliciting them," the source added.
Earlier on Tuesday, Germany's Siemens said it would make an offer to Alstom if given four weeks to examine its books and draw up a detailed plan to rival a move by GE.
"The prerequisite is that Alstom agrees to give Siemens access to the company's data room and permission to interview the management during a period of four weeks, to enable Siemens to carry out a suitable due diligence," Siemens said.
It gave no further details of its plans, but at the weekend Siemens approached Alstom with a proposal to exchange part of its train business plus cash for Alstom's power arm. In a short letter, it had outlined its proposal worth $14.5 billion.
In a letter to French President Francois Hollande, published by financial daily Les Echos and authenticated by GE, GE Chief Executive Jeffrey Immelt responded to several of the French government's key concerns about the U.S.-based firm's offer.
Immelt said that if GE were to buy Alstom's energy unit, it would boost employment in France and locate global headquarters for several key businesses in the country, including for grids, hydro power, offshore wind and steam turbines.
GE would also work with the French government, utility EDF and nuclear groupAreva to protect France's strategic nuclear sector and its exports and would be willing to sell Alstom's wind turbine activities to French investors.
GE also offered France a representative for its board, and offered to look into the possibility of a transportation joint-venture with the remaining transport activities of Alstom, which are widely considered to be too small to survive independently.
France's Socialist government has declared that it must have a say in the outcome of the bidding war, as thousands of jobs are at stake and state-owned utility EDF and the national railways are major clients of Alstom.
"There aren't only financial interests at stake in this matter; there are also industrial, social and human interests," Economy Minister Arnaud Montebourg said after a meeting with unions. "The government does indeed intend to defend our country's interests."
Alstom CEO Patrick Kron informed Montebourg of GE's interest last week.
Just over a week before Siemens boss Joe Kaeser presents his future vision for the Munich-based conglomerate, investors in Siemens were sceptical about a potential deal.
A fund manager who declined to be named said: "Until last week, Alstom was seen as dead, and its products were not thought to be competitive."
He said a purchase would be a 180-degree turn and Siemens would need very good arguments to justify it strategically.
Some investors may also be wary of a French-German deal, given problems with previous cross-border tie-ups, such as defence and aerospace company EADS and drugmaker Aventis, which have both been plagued by battles for control.
Many analysts and investors said they believed the Siemens move was primarily defensive.
Industry veterans say Alstom and Siemens have very different corporate cultures, and have competed aggressively against one another for decades.
An industry insider told Reuters that no one at Alstom wants a deal with Siemens because everyone, from the low-level worker to Kron, recalls how Siemens lobbied aggressively against state aid for Alstom when it almost went belly-up in 2004.
Siemens shares closed up 0.6 percent compared with a 1.5 percent rise in shares on the blue-chip DAX index.
(Additional reporting by Arno Schuetze and Sabine Wollrab in Frankfurt, Irene Preisinger in Munich, Benjamin Mallet, Mark John, Geert De Clercq and Gregory Blachier in Paris, Lewis Krauskopf in New York, and Sophie Sassard in London; Writing by Andrew Callus, Mark John, Madeline Chambers and Geert De Clercq; editing by Will Waterman and David Gregorio)
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