Alstom Board Embraces GE's $17 Billion Bid

Updated from 10:17 a.m. EDT with current stock quotes and additional information.

NEW YORK (TheStreet) -- The board of Alstom voiced preliminary approval of General Electric's (GE) $17 billion offer that would allow GE to take over the French company's energy business.

The $17 billion total values the Alstom's components at an enterprise value of $13.5 billion plus cash of $2.5 billion. According to the company, French industrial group Bouyges, a 29% stakeholder in Alstom, has said it would support the board's decision.

In a press release posted on its Web site, GE said the all-cash deal is valued at 7.9 times earnings from the acquired properties and will be immediately accretive to its bottom line, adding 8 cents to 10 cents a share to the company's earnings in fiscal 2016.

The all-cash transaction is valued at 7.9 times pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of Alstom's Thermal, Renewables, and Grid business units. GE expects the acquisition to be accretive to earnings in the first year; it is expected to add $.08-$.10 of earnings in 2016; and approximately 75% of operating earnings is expected to come from GE Industrial by 2016.

Alstom's board is supportive and has formed a committee of independent directors to review the transaction by June 2.

CEO Jeff Immelt noted in the press release that power and water are one of the company's highest growth and margin industrial segments and are key to GE's future. "This is a strategic transaction that furthers GE's portfolio strategy," he said.

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