By Dow Jones Business News,
June 24, 2014, 02:07:00 PM EDT
By Geraldine Amiel
PARIS--The French government announced Tuesday the sale of a 3.1% stake in energy group GDF Suez SA, with an option to
sell as much as 3.6%, as part of an effort to raise cash and help pay for a controlling stake in engineering giant
"The proceeds of the sale could be used to finance the entry of the state into Alstom's capital equity, as announced
by the economy minister," Arnaud Montebourg, the French finance and economy ministries said in a joint statement.
The government plans to acquire a 20% stake in Alstom to gain more control over the company's strategy, as it is to
merge its energy business with that of General Electric Co. The government initially opposed a deal with GE but signed
off after the U.S. group made a series of concessions.
Entering Alstom's capital as its largest shareholder was one of the conditions to clear the way for the long-awaited
The government thus entered a weekend of intense negotiations with Alstom's current largest shareholder Bouygues SA to
acquire that stake, arguing over the price. The government was intent to pay 28 euros a share while Bouygues, which is
seeking to raise cash to finance a restructuring at its telecom unit, wants a significant premium.
A deal was finally reached Monday through which Bouygues will lend the voting rights related to a 20% stake in Alstom,
over 20 months, granting an option to the government to buy the shares during the period, either directly from the
French conglomerate or on the market.
Mr. Montebourg said over the weekend that the government could pay for the stake with the proceeds from the sales of
stakes in companies such as Aeroports de Paris SA, Airbus Group NV and Safran SA, yet never mentioned other companies
such as GDF Suez SA in which the French state owns shares. The minister also said then that the state has EUR2.7 billion
in its coffers.
Based on Tuesday's closing price at the Paris Stock Exchange, the sale of the GDF Suez stake could raise between
EUR1.56 billion and EUR1.79 billion ($2.12 billion to $2.43 billion), according to Wall Street Journal calculations.
The sale will be conducted through accelerated institutional booking.
On Saturday, Alstom's board said it had officially accepted GE's sweetened offer for its power-equipment unit. The
U.S. company on Friday changed its $17 billion initial offer for the whole of Alstom's power business to make it more
palatable to the French government, which has been reluctant to let the industrial jewel fall into U.S. hands and
potentially threaten French jobs.
Alstom would sell its gas-turbine business, the largest part of the power-equipment unit, to the U.S. company and
house the French part of its steam and nuclear turbines, renewable-energy activities and grid equipment in 50-50 joint
ventures with GE.
Write to Geraldine Amiel at email@example.com
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