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Alstom Picks GE Bid for Power Operations

PARIS (The Deal) -- France's Alstom has agreed to sell its power unit to General Electric (GE - Get Report) for an enterprise value of 11.4 billion ($15.5 billion), before returning cash to the buyer in exchange for stakes in a handful of joint ventures and GE's train signaling unit.

The decision ends months of wrangling that GE pitted against a partnership of Siemens and Mitsubishi Heavy Industries and, at times, the French state. The French government on Friday gave its blessing to a revised GE offer after rejecting two earlier bids for failing to protect the country's strategic interests and Alstom's French workers.

Under the terms of the deal, GE will pay an initial 12.35 billion, excluding adjustments for cash and debt, for Alstom's generator manufacturing unit, renewable power operations and power grid operations. Paris-based Alstom will then pay 2.5 billion to re-acquire 50% stakes three joint ventures covering the the grid, renewable energy, and nuclear and steam turbine operations.

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The deal values the Alstom assets at 7.9 times their Ebitda for 2014, according to GE, or 13.8 times Ebit for 2014, according to Alstom.

"For GE, the overall economics of the deal remain intact," CEO Jeff Immelt said in a statement. "This transaction remains accretive in year one."

Alstom will also buy GE's train signaling operations, for an enterprise value of about 600 million, boosting its signaling sales by about 40%, or $500 million, and gaining access to the North American market. The companies will also explore opportunities to work together to bring Alstom's high-speed trains to the U.S. market.

"The original offer [from GE] is maintained but with the investments in the JVs and the purchase of the signaling business," Alstom CEO Patrick Kron told a conference to announce the deal on Monday morning. "The board voted 13-0 in favor of the GE offer."

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