General Electric Company (NYSE:GE)’s offer to buy the Power and Grid businesses of the France based transport and energy infrastructure manufacturer, Alstom, has been recommended by the latter’s Board, General Electric said in a statement.
General Electric Company (NYSE:GE) was informed yesterday that Alstom’s board Members have unanimously agreed to recommend shareholders to vode in favor of the proposed offer. The next part of the deal involves a consultation with the Works Councils and the approval from the company’s shareholders, in addition to regulatory approvals. The deal is expected to be completed next year.
General Electric Company (NYSE:GE) seeks to acquire the Power and Grid business units of Alstom in a $16.9 billion (12.35 billion euros) deal, which includes $13.5 billion (9.9 billion euros) as enterprise value and the remaining $3.4 billion (2.5 billion euros) as cash. The all cash agreement values Alstom’s Renewable, Thermal and Grid businesses at 7.9 times pro forma before EDITDA.
General Electric Company (NYSE:GE) and Alstom have planned to form three joint ventures according to the terms of the agreement. The first of which is the Grid unit which will be formed from the combined assets of both the companies. The second will be the Renewables unit which will integrate Alstom’s Off-shore Wind business division and its Hydro business unit. The last would be the Global Nuclear and French Steam and will combine Alstom’s manufacturing and servicing of nuclear power facilities’ equipment with the company’s steam turbine equipment in France.
Alstom will invest approximately $3.5 billion (2.6 billion euros) in cash in the joint ventures. With this investment from Alstom, General Electric Company (NYSE:GE)’s gross cash pay- out for the deal will be worth $10 billion (7.3 billion euros).
Apart from the joint ventures, General Electric Company (NYSE:GE) has additionally agreed to spin off its Signaling business to Alstom in a $825 million (602 euros) transaction. The companies also seek to take up several other collaborative agreements together in the future, which will include manufacturing, supply chain, technology, services and commercial support in the U.S.
James Melcher‘s hedge fund Balestra initiated a position in General Electric Company (NYSE:GE) in the first quarter of 2014 and now owns 1.38 million shares worth $35.59 million. Talara Capital Management, led by David Zusman raised its stake in General Electric during the same period by 41% to 282,100 shares.