GE Reportedly in Talks to Buy France’s Alstom for $13 Billion

London and New York -- General Electric Co. is in talks to buy Alstom SA, the French builder of trains and power plants, people with knowledge of the matter said, in what would be GE’s biggest acquisition ever.

An agreement may be announced as early as next week, said the people, who asked not to be identified because the talks are private. The U.S. company may pay more than $13 billion for Alstom, one of the people said. That would be about 25 percent more than its current market value. Alstom surged as much as 18 percent in Paris trading today, the biggest jump since 2004.

The deal would give the U.S. maker of jet engines and locomotives control of Alstom’s technology for power transmission and power plant maintenance as Europe’s economy starts to revive. A purchase of Alstom, which also sells high- speed TGV trains and rail signals, would be a rare example of a major French company being taken over by a U.S. rival.

“Acquiring Alstom would put an exclamation point on GE’s return to deals,” said Sanford C. Bernstein analyst Steven Winoker. “It is among the best fits we have seen with the GE portfolio for some time.”

GE has been shifting its focus toward units that make jet engines, locomotives and industrial equipment and shrinking the finance division, called GE Capital, which imperiled the company during the global financial crisis. Alstom, based in the Paris suburb of Levallois-Perret, has been selling assets to cut costs and reduce debt.

Shifting Focus

GE Chief Executive Officer Jeffrey Immelt would be able to tap the company’s foreign cash reserves to finance the deal, one of the people said. GE had about $89 billion in cash at the end of last year, including $57 billion held outside the U.S. Large infrastructure contracts increasingly require bidders to put up financing, putting Alstom at a disadvantage.

Fairfield, Connecticut-based GE has the support of Alstom shareholder Bouygues SA, said the people. The French conglomerate owns about 29 percent of Alstom.

“Alstom is not informed of any potential public tender offer for the shares of the company,” it said in an e-mailed statement today. “The group constantly reviews the strategic options of its businesses.” Seth Martin, a spokesman for GE, declined to comment. A Bouygues spokesman said the company supports Alstom and its strategy. He added that Bouygues doesn’t control Alstom, declining to comment further.

Seeking Targets

Alstom shares surged as much as 4.35 euros to 28.69 euros in Paris and were up 13 percent as of 11:17 a.m. Before today, the stock had dropped 20 percent over the past year, making it a cheaper target for GE.

Immelt said this month that GE is looking to make acquisitions in the range of $1 billion to $4 billion and will spend more for targets “that have excellent values, strong synergies, fit our growth strategies and are immediately accretive.”

After years of holding back, large companies are staging a dealmaking comeback in western Europe, with the fastest start to M&A since 2008, before the global financial crisis. The value of takeovers involving companies in the region since the beginning of the year stands at $301 billion, up 20 percent from a year earlier, according to data compiled by Bloomberg.

Protecting Companies

About 640 French companies were acquired by U.S. companies over the last decade for a total of $77 billion, according to data compiled by Bloomberg. Among the biggest deals were the $7.2 billion sale of Danone’s cookies and crackers unit to Kraft Foods Inc. in 2007 and the purchase of Sperian Protection SA by Honeywell International Inc. in 2010 for $1.4 billion.

France’s government can intervene to protect companies it deems to be of national importance from being acquired. In 2005, it passed an anti-takeover decree amid speculation PepsiCo Inc. was planning a bid for Danone.

Alstom is the world leader in turbines for dams, while it lags GE and Siemens AG in gas turbines. It is the third-largest maker of power transmission gear after ABB Ltd. and Siemens, and competes with the German company and Canada’s Bombardier Inc. in the market for trains and other rail equipment.

Alstom CEO Patrick Kron in November outlined plans to sell as much as 2 billion euros in assets including a minority stake in its rail unit by the end of 2014. The company named Bank of America Corp. and Deutsche Bank AG to prepare the rail business deal, people familiar with the matter said in January.

Alstom also is cutting 1,300 jobs, mainly at its information-technology department and boiler units, to reduce costs by as much as 1.5 billion euros by April 2016. The French company is pushing for savings in Europe while investing in partnerships and plants in countries such as China, Russia, Brazil, India and South Africa to tap demand for trains and turbines.

Antitrust Issues

A combination does raise the prospect of European antitrust issues. United Parcel Service Inc., the world’s biggest package-delivery company, scrapped a 5.16 billion euro bid for TNT Express NV last year after European regulators moved to block the deal. GE’s attempt to buy Honeywell International Inc. in 2000 was scuttled as well.

GE and Alstom have already held talks with French government officials about the proposed takeover to preemptively address potential political concerns, one of the people familiar with the situation said.

Shedding Assets

Immelt has been shedding assets, including the sale of NBC Universal last year for $16.7 billion, and using some of the cash for acquisitions that fit his vision for the company. The company has made several purchases in the oil and gas industry, including paying $3.3 billion in April 2013 for Lufkin Industries Inc.

Alstom would be GE’s biggest acquisition, according to data compiled by Bloomberg dating back to 1986. The only deal that would have been larger was its attempt more than a decade ago to buy Honeywell for about $53 billion, including the assumption of debt, the data show.

Alstom had to be bailed out by the French government and banks in 2004 after a series of technical flaws in a gas turbine business it had bought from ABB pushed the company close to collapse in 2003.

Copyright 2014 Bloomberg.

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Energy Price Concerns Resonate in EU Talks on 2030 Climate Goals

BRUSSELS -- The European Union should ensure that future climate and energy policies do not undermine the competitiveness of its industry, already weakened by a price gap with the U.S., the bloc’s member states said.

Energy ministers from the EU’s 28 nations had their first debate about 2030 carbon-reduction and renewable energy strategy at their quarterly meeting in Brussels today. It followed yesterday’s gathering of environment ministers, where countries differed over how ambitious Europe’s emissions-cut target should be and how fast new policies should be adopted. The framework for the next decade will next be discussed by EU leaders at their March 20-21 summit.

“We need to make sure we combine our objectives for setting ambitious goals with increasing competitveness of the industry and safeguarding energy supply,” Greek Energy Minister Yannis Maniatis told reporters after the gathering. His country holds the EU rotating presidency through June.

The challenge for the EU is to reconcile its ambition to lead the global fight against climate change with efforts to help the economy regain steam. The bloc should tighten its greenhouse-gas reduction target to 40 percent in 2030 compared with 20 percent in 2020, according to a strategy outlined in January by the European Commission, the EU’s regulatory arm.

Member states, industry, non-governmental organizations and lobbies are divided over the commission’s proposal. Groups including the Climate Action Network and Greenpeace call for stricter targets, while energy-intensive companies including ThyssenKrupp and Tata urge policy makers to avoid carbon costs for manufacturers prone to relocation of production abroad.

Long-Term Debate

“I think we will have to have a very thorough long-term debate about how we can use our state budgets to reduce part of the burden that now lies on the industry,” Germany Economy and Energy Minister Sigmar Gabriel told the meeting today. Germany supports the 40 percent greenhouse-gas target that would be binding on each member state and an EU-wide goal to boost the share of renewable energyto 27 percent.

Hungary, Poland, Czech Republic, Slovakia, Bulgaria and Romania said in a joint statement that the 2030 carbon goal should be set at a “realistic level” and take into account United Nations talks about a global deal to be agreed in 2015. They also said the EU emissions-trading system should remain the core tool for Europe to meets its emission-reduction goal.

“In order to reach this target cost effectively, intra-EU flexibility mechanisms — including innovative financing schemes — should be introduced, especially in the non-ETS sector, as an integral part of the climate and energy policy framework,” the six countries said.

Energy Prices

The agenda of the meeting today also included a discussion on energy prices in Europe after a report by the commission showed that electricity costs in some regions of the bloc are double those in the U.S., the EU’s main trading partner. Regulatory costs, such as taxes, levies and network costs, are the main reason for the increase in European prices, EU Energy Commissioner Guenther Oettinger said today.

“We’ve got to be able to offer our people lower prices and not with so much of a gap compared to our competitors,” he told reporters. “If member states reduce these taxes and levies, this can take pressure off the people who have to pay for energy.”

To help cut costs, member states should also accelerate efforts to implement energy legislation aimed at breaking down national barriers and develop interconnections to end the isolation of some member states from networks, Oettinger said.

Ministers also discussed the situation in Ukraine, where the crisis deepened after Russia’s parliament authorized President Vladimir Putin to send troops into the neighboring country. Ukraine is a transit point for gas accounting for about 16 percent of European demand.

“At this moment, there’s no reason for concern,” Oettinger said. “The gas situation is good. We had a mild winter, we’ve got gas reserves everywhere.”

Copyright 2014 Bloomberg

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Global Climate Talks Need Sense Of Urgency

Next week’s global climate talks in Warsaw, Poland, need to be guided by a new sense of urgency. After more than 20 years of talking about climate change, it’s time for the nations of the world to start putting a meaningful plan in place to fight it.

If all goes well, the U.N. sponsored talks – known as COP 19 (short for the 19th Conference of the Parties to the U.N. Framework Convention on Climate Change) – are expected to lay the groundwork for reaching a long-awaited and much-discussed global climate agreement by 2015, which would then take effect five years later.

But if the past is any indication, it’s hard to get your hopes up. What will be the process and timeline for cutting greenhouse gas emissions worldwide? How do you enforce any agreement? And who pays what to whom in the way of financial aid, recognizing the economic dilemmas faced today by most developing nations? These are extraordinarily difficult questions with no easy answers.

And to compound the problem, let’s not forget one other thing: the United States never ratified the 1997 Kyoto accord. So, yes, this is going to be a long, tough row to hoe.

But what choice do we have? Global warming shows no sign of abating. According to the U.S. Global Change Research Project, the temperature in the U.S. has increased by 2 degrees in the last 50 years. In the last century, sea levels have risen roughly 7 inches after not having changed noticeably in the previous 2,000 years. And scientists say there is more carbon dioxide in the atmosphere today than at any point in the last 800,000 years.

This is not, as the Flat Earth Society would lead you to believe, a debate between clean energy and a robust economy. Today, we can have both – and solar, along with other renewable energy sources, are showing how to make this possible.

But you would never know it by listening to the rants of nay-sayers, who have called plans to fight climate change everything from “sheer fantasy” to “massive self-sacrifice.”

From an environmental perspective, few things threaten our nation’s future prosperity more than climate change. That’s why it was so encouraging to see President Obama launch his Global Climate Change Initiative earlier this year.

This is a watershed moment in our nation’s history. Today, climate change is a real and growing threat to America and the rest of the world. It’s indisputable. Sea levels are rising. Artic ice is disappearing. We’re experiencing more intense and unpredictable storms. And droughts plague the world.

Clearly, climate change threatens our economy, our future progress, our health and safety, and even our way of life. Every day, the Earth suffers a little more from human neglect. We can’t wish this problem away, and pointing fingers won’t solve it, either.

America’s solar energy industry is uniquely poised to help. Today, solar is one of the fastest-growing sources of new energy in the United States. More than 30 utility-scale, clean energy solar projects are under construction, putting thousands of electricians, steelworkers and laborers to work and helping to reduce carbon emissions from power plants. These facilities, along with rooftop solar on homes, businesses and schools, will generate electricity for generations to come.

There is now more than 9,400 megawatts (MW) of cumulative solar electric capacity installed in the U.S. – enough to power more than 1.5 million American homes. In the first quarter of 2013, more than 48 percent of all new electricity added to the grid was solar, while through the first half of this year, solar ranked third among all fuel sources when it comes to new capacity.

In addition, SEIA recently released a comprehensive new report outlining ways to create 50,250 new American jobs and save more than $61 billion in future energy costs by expanding the use of innovative and cost-effective solar heating and cooling (SHC) systems across the nation.

Today, solar employs nearly 120,000 Americans at more than 6,100 companies, most of which are small businesses spread across the United States, making solar one of the fastest-growing industries in America. Part of this amazing growth is attributed to the fact that the cost of a solar system has dropped by nearly 40 percent over the past two years, making solar more affordable – and more popular – than ever. And as solar continues to scale up, costs will continue to come down.

Yet the debate about climate change isn’t simply about money. It’s also about our legacy, as a people. Abraham Lincoln said it best: “You cannot escape the responsibility of tomorrow by evading it today.”

It’s time for the nations of the world to understand that.

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

Rhone Resch is the President and CEO of the Solar Energy Industries Association (SEIA), the national trade association for the solar energy industry representing over 1,000 companies that manufacture, develop and install solar systems of...

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Oil falls talks stall under $99 as the U.S. debt

Singapore - oil prices fell under $99 per barrel Monday in Asia amid investor concern that the absence of an agreement among US Lawmakers to lift the country's debt has a standard and could damage the global economy.

Benchmark oil for September delivery below 95 cents to $98,92 been a barrel at noon Singapore in electronic trading on the New York Mercantile Exchange. Crude oil rose 74 cents to $99,87 on Friday to rules.

In London, Brent crude slipped 68 cents to $117.99 a barrel on the ICE Futures Exchange.

Talks ground to a halt advised 2 looms at the weekend as an Aug. deadline for the Congress, the Government to increase debt limit to $14.3 trillion. Without action until this date, the Ministry of finance will be to pay all their bills that cause that a debt default and undermine the world economy could.

Republican and democratic leaders plan, expenses and liabilities of Government proposals to present later Monday.

"We believe that a temporary solution for last-minute deal is reached to avoid worst case results," Bank said BofA Merrill Lynch in a report. "But it will not provide a credible long term fiscal solution or rating agency concerns lift."

Bank of America said, rating agencies probably will until the end of the U.S. credit rating to AA from AAA.

1.7 Cents $3.13 in other NYMEX trading in September contracts, heating oil rose won a gallon during gasoline 2.1 cents to $3.08 per gallon. Natural gas of futures for August delivery advanced 1.1 cents to $4.41 per 1000 cubic feet.

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