According to media reports,
General Electric Company
) has made a tender offer worth about $389 million to acquire a
stake in two of Alstom SA's India units. This comes subsequent to
its $16.9 billion bid to buy the French conglomerate's energy
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The proposal will be realized only if General Electric's bid to
buy the French giant's energy unit goes through, as then the U.S.
group will be required to launch a tender offer for Alstom's
Indian businesses in order to conform to local regulations.
Alstom's flagship companies in India, namely Alstom India Ltd.
and Alstom T&D India Ltd., have strong capabilities in
manufacturing, engineering, project management and supply of
products and solutions for transport infrastructure, power
generation and transmission requirements. In case the Alstom's
energy buyout is successful, General Electric will indirectly
gain ownership of Alstom's 75% stake in Alstom T&D and 68.6%
in Alstom India.
Per a regulatory notice submitted to Indian stock exchanges by
the offer manager Credit Suisse, General Electric has presented
an offer to acquire 25% in Alstom T&D India Ltd. from public
shareholders for about $278 million.
A separate filing revealed that General Electric is looking to
buy 26% of Alstom India Ltd. for about $111 million.
Last month, General Electric made a formal $16.9 billion bid to
buy Alstom's power-generation and transmission businesses. A
committee of independent directors is in the process of reviewing
the U.S. conglomerate's proposal. The deal, in tune with General
Electric's corporate strategy to return to its industrial roots,
promises an excellent return on capital, supply chain
efficiencies and deep synergies.
The transaction, if finalized, will be accretive to General
Electric's earnings immediately, and the company expects to
generate over $1.2 billion in annual cost synergies after five
Cash-strapped French engineering group Alstom is considering
General Electric's offer for its energy arm. Should the deal be
finalized, it would set to revive its transport business, aid
repayment of debt and cash returns to shareholders. However,
Alstom remains open to a counteroffer from German company
), which filed a declaration of interest to Alstom's board last
If the deal materializes in General Electric's favor, it would
mark the biggest acquisition ever for the company and
significantly enhance its operations in a recovering Europe.
General Electric currently holds a Zacks Rank #3 (Hold). Some
better-ranked stocks in the industry that are worth considering
Federal Signal Corp.
Noble Group Ltd.
), both carrying a Zacks Rank #1 (Strong Buy).