Immelt met with the French economy minister Arnaud Montebourg and affirmed him that upon closing of the deal that GE would not cut any French jobs. This wasn't enough. Montebourg wants Alstom back on its feet and independent from any deal.
He says he wants France to create "two European and world champions in the fields of energy and transport." And I don't' believe he sees a future with GE in that scenario. For GE, things have just gotten harder with Siemens having joined forces with Mitsubishi Heavy.
Three weeks ago, while speaking to investors, Jeff Immelt said, "We wouldn't have started [the bid the Alstom] if we didn't think we could finish." He added, "It's a deal that's executable. It's a deal we're experienced in."
Investors need to hope he's right. In the most recent quarter, the company posted 14% revenue growth in both aviation and power/water segments, its two largest industrial businesses. This is while GE's oil and gas division posted revenue gains of 27%.GE wants to leverage these gains by increasing its exposure in untapped markets. Alstom's power business will help GE achieve this objective and then some. And when you combine Alstom with GE's return to an industrial focus, these shares, which are still down 35% from their 2007 high, are a bargain. At around $27 per share, these shares are a sure bet to $35, assuming that GE can grow its revenue at a long-term rate of 4% to 5%. This is also assuming a return to the low teens in free cash flow margins. Investors should hope that this deal gets done and Immelt is able to close. Read More: IBM Sees the Cloud's Silver Lining Expanding Big Blue Horizons Why Apple's Overseas Tax Probe Is a Black Eye on U.S. Lawmakers Prospect Capital Wins Surprise Concession From SEC At the time of publication, the author held no position in any of the stocks mentioned. Follow @Richard_WSPB This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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