GE in talks to buy Alstom

[WatcherZero]

http://www.telegraph.co.uk/finance/...Electric-in-talks-to-buy-Alstom-for-13bn.html

http://uk.reuters.com/article/2014/...SS&feedName=americasPrivateEquityNews&rpc=401

(Reuters) - General Electric Co (GE.N) is in talks to buy French turbine and train maker Alstom SA (ALSO.PA) for about $13 billion, Bloomberg reported, citing people with knowledge of the matter.

General Electric are in talks (denied) that they will aquire Alstom for $13bn (current stock market price $10.37bn) and apparently have the support of Alstoms biggest shareholder Bouygues (29%) with a deal be announced possibly as soon as next week.

Alstom has been suffering recently from the decline in the electricty market (it makes turbine equipment) and its shares have slipped 20% during the last 12 months with concerns over its cashflow.

GE are on a big acquistion splurge as they are trying to shift the business away from relying on its bank and financial sectors and back to manufacturing.

 

[jopsuk]

it would be interesting as to whether they would maintain Alstom Rail as a separate business unit or fully integrate it with GE's existing rail business

 

[merlodlliw]

it would be interesting as to whether they would maintain Alstom Rail as a separate business unit or fully integrate it with GE's existing rail business

I would presume the Chester depot servicing 175s & others will remain as now,but under a different division.

 

[LNW-GW Joint]

Plus ca change - except this time it's a different GE!

GE Transportation hasn't got much of a presence in Europe, so there is not much overlap.
They also have an ERTMS signalling solution, but I don't know if it has any European installations.

Going back through the mergers and acquisitions, the "Thom" in the original Alsthom was Elihu Thomson, born in Manchester but eventually to give his name to the Thomson-Houston company, one of the founders of American GE.

 

[Mikey C]

It would be quite a shock for the French to allow such a prestigious French company to be taken over by an America company, the TGV manufacturer being owned by the Yanks, Sacre Bleu!

 

[gordonthemoron]

SNCF will have to start buying ICEs

 

[DownSouth]

More likely Bombardier high speed sets - a company based in Germany but with majority French-Canadian shareholders would be a little more palatable than one based and owned in Germany.

 

[AndrewP]

Interesting.

Bouygues will still have rail interests after this sale - they own Colas.

 

[eisenach]

It would be quite a shock for the French to allow such a prestigious French company to be taken over by an America company, the TGV manufacturer being owned by the Yanks, Sacre Bleu!

The proposed takeover was given a brief mention on France 2 television news last night.
Given the current campaigns to buy French made stuff, I can't see it going down very well with the government. And after the fiasco surrounding Vivendi's sale of the SFR mobile phone network, Bouygues isn't exactly flavour of the month, either; even less so if it supports this !

Edit: Just found this on the Guardian website:

"A political storm is brewing in France over the future of engineering giant Alstom, following reports of a takeover bid from US conglomerate General Electric.

France's economy minister Arnaud Montebourg voiced the government's "patriotic concern" about the possible loss of the French turbine and train maker.

In an interview with Le Monde he said

Alstom is the symbol of our industrial power and French ingenuity. The government expresses patriotic concern and watchfulness with regard to Alstom. This high concern is focused on the serious risk of losing a major decision centre, on the desire and the necessity of reinforcing our industrial base....

This is why the government is working on other solutions and contingencies than those forseen - and without having been informed by Alstom.

France's stock market regulator has suspended Alstom shares this morning pending an announcement from the company. Meanwhile the president of General Electric has been summoned to meet prime minister Manuel Valls.

The Guardian's Gwyn Topham has the background on how the takeover bid came about.

Alstom's energy businesses – which include building coal, gas and nuclear plants, as well as power grids – accounted for more than 70% of its €20bn (£16.5bn) global revenues last year, but the unit has struggled as Europe's economic weakness led to a slump in orders. The group announced last year it would cut 1,300 jobs and put assets up for sale, including a minority stake in its transport business."

 

[LNW-GW Joint]

Apparently Le Figaro thinks that GE wants the power division but not transportation - maybe more rationalisation is on the way.

Just think of all those long-running court cases when GE (US) objected to GEC (UK) branding and products - all pointless now.
The news coverage seems to have forgotten that Alstom is the last resting place for one-time major British brands like English Electric, AEI and GEC.

 

[al.currie93]

This would be a major blow to the French... not sure what I wan't to happen with it. Mind you, the French Govt. apparently prevented the sale of Danone to PepsiCo by drafting a law and declaring that "Yoghurt was a strategic national resource," and the company could not be sold as a result... Link here

http://en.wikipedia.org/wiki/Groupe_Danone#Protecting_Danone

Maybe Alstom will have a similar law made for them :P

Apparently Le Figaro thinks that GE wants the power division but not transportation - maybe more rationalisation is on the way.

Just think of all those long-running court cases when GE (US) objected to GEC (UK) branding and products - all pointless now.
The news coverage seems to have forgotten that Alstom is the last resting place for one-time major British brands like English Electric, AEI and GEC.

Have you got a link to some information on that court case? I didn't know about that and it sounds interesting

 

[WatcherZero]

Actually already been done, French government stepped in to keep Alstom french last time it was in financial trouble.

 

[LNW-GW Joint]

Have you got a link to some information on that court case? I didn't know about that and it sounds interesting

Nothing comes to hand at the moment, but this is the Wiki entry for GEC. http://en.wikipedia.org/wiki/General_Electric_Company_plc
It shows GEC took over several US companies over the years, and GE always objected to them using the "confusing" GEC brand in the US.
It was probably one of the reasons they rebranded from "GEC" to "Marconi".

As an ex-English Electric guy I'm ambivalent about such things...
And wouldn't things have been different if GEC had merged its transportation arm with Siemens rather than Alsthom around 1990.

 

[daikilo]

And let us not forget that they were once a joint company with American Houston in Thomson-Houston and in the late 20th century with British GEC in GEC Alstholm, a 50:50 JV.

Also, note that American GE and French Snecma have been married for decades in the CFM International aero-engine consortium, a 50:50 JV.

This time I see again a joint venture (or set of) more than an outright take-over, but maybe only for certain activities.

 

[fgwrich]

Apparently Le Figaro thinks that GE wants the power division but not transportation - maybe more rationalisation is on the way.

Just think of all those long-running court cases when GE (US) objected to GEC (UK) branding and products - all pointless now.
The news coverage seems to have forgotten that Alstom is the last resting place for one-time major British brands like English Electric, AEI and GEC.

Sounds very much like Rolls Royce Power Systems buy out of Daimler AGs shares in MTU (50/50), ironically bringing a German company into the hands of the British. But given that MTU Friedrichshafens main business's are in Marine Engineering (Marine Propulsion & Turbine systems - Where RR already has a large presence) and Rail Propulsion, I can see more homogenisation in the Marine application side of the business and RR strengthening the Rail side to rival that of Cummins and potentially similar Progress Rail Services Corp, owned by Catapillar Inc.

As for Alstom, it'll be interesting to see how this pans out, given the way many of our business have gone over the years, and that whilst the French have a certain amount of patriotism in liking to keep French Businesses French, can the bank of government keep bailing out Alstom Transportation given what seems to be Alstom's dwindling newer rolling stock order book (IIRC, the AGV project was at one point bankrolled by the French Government, only to see one operator use 25 AGVs). But of course it's not only the French who are affected in this, but also the UK staff of the Preston facility amongst others.

 

[Mikey C]

Nothing comes to hand at the moment, but this is the Wiki entry for GEC. http://en.wikipedia.org/wiki/General_Electric_Company_plc
It shows GEC took over several US companies over the years, and GE always objected to them using the "confusing" GEC brand in the US.
It was probably one of the reasons they rebranded from "GEC" to "Marconi".

As an ex-English Electric guy I'm ambivalent about such things...
And wouldn't things have been different if GEC had merged its transportation arm with Siemens rather than Alsthom around 1990.

And wouldn't things have been different if the Junipers and Coradias had been more reliable when first introduced, thus giving Siemens (and then Hitachi) the chance to muscle in on the UK market!

 

[eisenach]

A much longer report on France 2 tonight, with the main thrust being, as mentioned earlier in this thread, GE's interest in the power / turbine part of the business, with the "transportation" (horrible word !) part being of much less interest and likely to be sold off. Siemens was mentioned.
Arnaud Montebourg is on the case.

 

[daikilo]

A much longer report on France 2 tonight, with the main thrust being, as mentioned earlier in this thread, GE's interest in the power / turbine part of the business, with the "transportation" (horrible word !) part being of much less interest and likely to be sold off. Siemens was mentioned.
Arnaud Montebourg is on the case.

Well, would that mean Alstom would disappear completely. Seems unlikely to me given synergies between Alstom and Siemens. with Bombardier in trouble I still favour my 50% JV scenario for the energy part.

 

[danielnez1]

Nothing comes to hand at the moment, but this is the Wiki entry for GEC. http://en.wikipedia.org/wiki/General_Electric_Company_plc
It shows GEC took over several US companies over the years, and GE always objected to them using the "confusing" GEC brand in the US.
It was probably one of the reasons they rebranded from "GEC" to "Marconi".

As an ex-English Electric guy I'm ambivalent about such things...
And wouldn't things have been different if GEC had merged its transportation arm with Siemens rather than Alsthom around 1990.

In the late 80's through to around 2001 GE and GEC had a joint venture called "General Domestic Appliances" who owned the Hotpoint brand and also made appliances under the GE name. GE and Marconi sold their shares in GDA to Indesit around 2001.

Coincidentally, GE purchased all of the GEC trademarks when GEC changed its name to Marconi.

 

[SpacePhoenix]

Would they move the manufacturing of trains out of France if they do by Alstom?

 

[Cletus]

Siemens wants to discuss 'opportunities' with Alstom
http://www.bbc.co.uk/news/business-27177762

Germany's Siemens wants to talk to France's Alstom about "strategic opportunities" raising the prospect of a takeover tussle for the French firm.

Siemens contacted the board of Alstom to "signal its willingness to discuss future strategic opportunities".

It follows reports that General Electric (GE) wants to buy Alstom, the maker of TGV high-speed trains.

GE boss Jeff Immelt is due in Paris on Sunday to meet senior French politicians, reports say.

Shares in Alstom jumped 11% on Thursday after a report said that GE was prepared to pay $13bn for the French firm.

Neither company has formally acknowledged takeover talks, but French politicians have expressed concern over the prospect of a foreign firm buying Alstom, which is one of the nation's biggest engineering companies.

France's economy minister Arnaud Montebourg has been particularly outspoken on the subject.

Last week he pledged to protect French national interests and said he would study "other solutions and scenarios" for Alstom.

It is thought Mr Immelt will meet him and possibly French Prime Minister Manuel Valls on Sunday, to address concerns about a possible takeover.

Alstom is one of France's biggest private-sector employers, with 18,000 staff across the country.

As well as making trains and signalling equipment it also makes turbines for the power industry.

 

[Mikey C]

A much longer report on France 2 tonight, with the main thrust being, as mentioned earlier in this thread, GE's interest in the power / turbine part of the business, with the "transportation" (horrible word !) part being of much less interest and likely to be sold off. Siemens was mentioned.
Arnaud Montebourg is on the case.

GE's main rail business is diesel locomotives, so the Alstom transport business wouldn't be of particular interest

As Siemens and Alstom dominate High speed rail in Europe there might be monopoly issues? The TGV is such a national status symbol for France that I'm sure the French government will want to keep that part of the business in French hands.

 

[WatcherZero]

General Electric Chairman now postponed Sunday trip to France, French ministers have dug in and ordered that the talks be slowed down to properly consider the rammifications, Siemens say they are preparing a counteroffer.

 

[LNW-GW Joint]

General Electric Chairman now postponed Sunday trip to France, French ministers have dug in and ordered that the talks be slowed down to properly consider the rammifications, Siemens say they are preparing a counteroffer.

It seems that Siemens also wants the turbine business, and would pool its trains division with Alstom.
This might not turn out too well for the rail side.
http://www.bbc.co.uk/news/business-27177762
http://www.theguardian.com/business/2014/apr/27/general-electric-faces-rival-bid-siemens-alstom
http://www.telegraph.co.uk/finance/...o-derail-General-Electric-bid-for-Alstom.html
http://www.independent.co.uk/news/b...al-electric-takeover-speculation-9281986.html

 

[WatcherZero]

The thought of Siemens surrendering its rail business to Alstom will im sure not impress many. Taking a rail business thats thought of as the height of management efficency and putting it under the management of one that isnt thought much higher of than Ansaldobreda.

 

[gordonthemoron]

I trust that any Alstom/Siemens transportation merger would fall foul of EU competition rules

 

[LNW-GW Joint]

I trust that any Alstom/Siemens transportation merger would fall foul of EU competition rules

Siemens says it wants to merge "half" of its trains business with Alstom's.
Which half would that be? High-speed or commuter? Velaro+AGV or Desiro+X'trapolis?
Would the signalling bit be part of it or not (I would think not, as it's very likely profitable)?
Both companies have interests across Europe, not just Germany and France (eg the Alstom Pendolino factory in Italy).

 

[WatcherZero]

I thought what they were proposing was a merger, joint shareholding of a unified rail division under Alstom management and a Turbine division under Siemens management.

 

[LNW-GW Joint]

I thought what they were proposing was a merger, joint shareholding of a unified rail division under Alstom management and a Turbine division under Siemens management.

From the FT: http://www.ft.com/cms/s/0/2d8d4360-cdee-11e3-9dfd-00144feabdc0.html#ixzz30CPCFzjP
Siemens says it would put its high-speed trains and locomotive units into the Alstom operation, in return for Alstom's thermal, renewable and grid power units.
That would leave commuter trains with Siemens.

 

[DownSouth]

GE's main rail business is diesel locomotives, so the Alstom transport business wouldn't be of particular interest

It would be a good opportunity for them to diversify by continuing to operate Alstom's transport businesses mostly as they are currently. It would also present an opportunity to develop the Prima 2 design into something they can use to break back into the north-eastern US passenger market that Bombardier and Siemens have been dominating with European designs for quite some time now.