NEW YORK (TheStreet) -- The French government gave General Electric (GE - Get Report) approval for GE's $16.9 billion bid to acquire Alstom (ALSMY). The ultimate decision now lies with the Alstom board to approve of the deal, which is expected on Monday.
GE announced Thursday it has improved upon its April 30 bid of $16.9 billion to acquire Alstom's Thermal, Renewables, and Grid businesses. The offer includes a $13.5 billion (9.9 billion euro) enterprise value and $3.4 billion (2.5 billion euro) of net cash.
Earlier this week GE has had to fend off rival bids from Mitsubishi Heavy industries and Siemens (SI). Mitsubishi Heavy Industries and Hitachi were prepared to offer $4.2 billion dollars to merge with Alstom, while Siemens went in with a bid of $5.3 billion for Alstom's gas turbines division.
Discussions involving GE, the French government and Alstom's management had taken place this week, covering subjects such as jobs, nuclear steam turbine technology and assistance for Alstom Transport.
Jeff Immelt, GE's CEO and Chairman, revealed that negotiations with the French government were "productive" and that GE had "reached agreements with Alstom's management that will create an alliance between our companies in both spirit and practice."
Some of the main areas covered in the partnership agreement would involve the creation of two combined enterprises aimed at enhancing both France's and Alstom's position in the energy industry and assist its shift to the energy business.
One of the two products that will be developed under the combined enterprises includes "a global Grid business based in France," which will use Grid resources from both companies who will each own a 50% stake in the new venture. The second business that GE and Alstom would form involves a renewable energy enterprise also based in France, which will be made up of Alstom's Offshore Wind and Hydro businesses. Both GE and Alstom would also own 50% of the new company.
In addition to the Grid and Renewables ventures, GE has planned to team up with Alstom to create a Global Nuclear and French Steam Alliance. This venture will include Alstom getting involved in producing and providing service to equipment for nuclear power plants and steam turbines, as well as building and selling new nuclear machinery worldwide.
The GE-Alstom alliance will also focus on four global businesses, which will include GE's present Grid division, Offshore Wind, Hydroelectric, and Steam Turbines. Each will have headquarters and leadership teams based in France.
Immelt emphasized that for GE the partnership "is immediately accretive to our earnings, furthers the transition of our portfolio towards industrial businesses, and broadens our product and service offerings for customers."
At the time of publication the author had no position in any of the stocks mentioned.
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