Industrial giant General Electric has updated its offer to acquire Alstom in an effort to appease the French government.
GE first made a pitch for the engineering conglomerate in April, though French officials have been reluctant to approve any deal without guarantees from potential buyers that jobs would largely remain in France.
General Electric’s (NYSE: GE) modified bid would create three new joint ventures to be held equally by GE and Alstom, including one for Alstom’s hydroelectric power and wind units; another for Alstom’s nuclear and steam power operations; and the last for Alstom’s grid business.
“Our discussions with the French government over the past seven weeks have been productive,” GE Chairman and CEO Jeff Immelt said. “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 deal would also see GE sell its rail signaling business to Alstom, lowering the US$17 billion price the company had offered for Alstom (LSE: ALO) in its original offer. GE officials said the new price is still being determined, but that the underlying valuation of the assets will remain the same.
“This proposed alliance also preserves the value of this deal for GE investors,” Immelt said. “Our synergies remain intact. It is immediately accretive to our earnings, furthers the transition of our portfolio towards industrial businesses, and broadens our product and service offerings for customers.”
The company has committed to creating 1,000 new jobs in France over the next three years, GE said, with a focus in “high value areas such as manufacturing and engineering”. The job creation initiative will be enforced through an independent auditor, with financial penalties if not achieved.
General Electric’s revision follows a $12.2 billion joint proposal announced earlier this week by Siemens and Mitsubishi Heavy Industries.
HydroWorld.com reported in May that Alstom’s hydropower branch had a strong performance through Fiscal Year 2013/14, posting a 40% increase in orders over the previous fiscal year.
Alstom is one of France’s largest private sector employers, with 18,000 staff. The company reportedly has a market value of about $11.5 billion.
GE has set a deadline of June 23 for Alstom’s board to accept its offer.