GE in discussions to buy Alstom

GE is in discussions to pay more than $13 billion for the French builder of trains and power plants, people with knowledge of the matter said yesterday.

An agreement between Fairfield, Connecticut-based GE and Alstom, the builder of high-speed TGV trains, may be announced next week, the people said.

http://www.bloomberg.com/news/2014-04-2 ... -deal.html" onclick="window.open(this.href);return false;

Would allow for US production of next generation high speed rail equipment for Amtrak and California.

Puts GE in the light rail business which might be interesting. Alstom have got their North America business going with Ottawa's order for Citadis Spirit but GE might give it a harder shove.

dowlingm wrote:Puts GE in the light rail business which might be interesting. Alstom have got their North America business going with Ottawa's order for Citadis Spirit but GE might give it a harder shove.

I don't have time to post links but the latest is that General Electric is supposed to primarily want Alstom's power equipment business and will spin off the rail business if they win the bidding war.

Siemens have counter offered and want to swap their rail division to Alstom for Alstom's power equipment unit which would leave Alstom as a "pure play" rail/transit manufacturer..

Ah. The French government is involved. I guess that was coming.

http://online.wsj.com/news/articles/SB1 ... 14936.html" onclick="window.open(this.href);return false;
http://www.forbes.com/sites/jeremybogai ... stom-deal/" onclick="window.open(this.href);return false;

This might seem like a neat(-ish) idea to the French (despite the fact that they turned the Germans away before) but surely the EU Commission will at least raise an eyebrow about the competition implications.

http://www.independent.co.uk/news/busin ... 94732.html" onclick="window.open(this.href);return false;

Two new businesses would be created and presented as Franco-German champions – a sort of energy-industry “Airbus” and train-building “Airbus”.

Ah yes, Airbus, where the French and Germans have jostled for supremacy for decades. That's a *great* precedent.

Pretty clear, as v8interceptor said, from the latest that GE doesn't want Almost's rail business.

More details on the deal - GE buy Alstom's power business, Alstom buy GE signalling business.
http://www.railwaygazette.com/news/sing ... -deal.html" onclick="window.open(this.href);return false;

Alstom and GE would also sign multiple ‘very promising’ collaboration agreements, which could see Alstom service and possibly assemble GE locomotives outside the USA, and would cover R&D, sourcing, manufacturing and commercial support activities in the USA. GE Capital would support financing. Kron said Alstom has ambitions in the US urban and high speed rail sectors, where GE could support the company ‘on a case-by-case basis’. The Transport business would have sales of around €6·2bn, and 28 200 employees.

More details:

“With this deal, GE has further cemented its foothold in the power and energy segment, and management expects significant synergy gains,” says Basu. “Where does this leave Alstom, though? For starters, it’s going to be several billions richer, and there are some big strategic advantages, too. The total deal value after GE revised the offer comes to $10 billion. . . . With this cash influx, Alstom can pay down portion of its debt and increase shareholder returns. . . . This leaves room for Alstom to strengthen its competitive position against peers such as Ansaldo, Siemens, and Bombardier through acquisitions and organic growth.”

“In the post-takeover scenario, Alstom plans to hold on to its high-speed train manufacturing business and buy GE’s signaling business for $809 million,” notes Basu. “This would boost Alstom’s signaling sales by 40% and enable the French conglomerate to surpass Siemens to become the second-largest rail equipment maker in the world. Presently, Bombardier is the world’s top rail equipment maker by sales, followed closely by Siemens, while Alstom holds third place. Aside from its power joint ventures, Alstom will surface as a pure transportation company and an integrated manufacturer of rolling stock, signaling, and controls systems for mass transit systems. According to Bloomberg analysts, this could give the company governance advantages over Bombardier and Siemens. Alstom also gets to form ‘Global Rail Alliance’ with GE, where among other benefits it will get commercial support from GE in the U.S. and other geographies, assemble GE’s diesel locomotives in selected geographies, and service GE’s locomotives outside the U.S.”

http://www.railwayage.com/index.php/com ... channel=57" onclick="window.open(this.href);return false;