PARIS - After nearly two years or negotiations and jumping through political hoops, French conglomerate Alstom has sealed the sale of its energy division to General Electric, and is now back to being a purely rail transport group.
In a statement released in Paris on Monday (Nov 2), Alstom said it sold its power generation and grid businesses to GE for around €12.4 billion (S$18.9 billion).
Some €700 million of the proceeds will be used to acquire GE's train signalling operations. And €2.4 billion will be used to reinvest in three energy-related joint ventures with the American conglomerate.
Mr Patrick Kron, chairman and chief executive of Alstom, said: "We managed to secure a win-win deal with General Electric, which protects the interests of employees and customers in the energy businesses, while reinforcing Alstom's positioning in the transport industry. Alstom today holds leadership positions in a globally growing rail market and will rely on a solid financial base to support its growth strategy."
Alstom plans to return up to €3.7 billion of the sales proceeds to shareholders. Directors are meeting on Wednesday (Nov 4) to propose a public share buyback offer followed by a capital reduction through cancellation of shares.
This will be subject to shareholders' approval at a general meeting before year-end.
After completion of the transaction, Alstom will be deleveraged and will rely on its "strong balance sheet", the company said.
It has not been an easy journey since Alstom first broached the sale of its struggling energy division early last year.
The French government has had to approve the sale and European Union regulators had to be convinced that the deal did not breach anti-trust rules.
On Monday, Alstom said its rail business is bolstered by the acquisition of GE's signalling operations.
Recent contracts it has clinched include metros for Sydney, Kochi, Riyadh and Paris. It will also provide signalling solutions for Toronto greater area and Denmark, tram systems for Rio de Janeiro, Lusail in Qatar, for Sydney as well as suburban trains for South Africa.
Most of these projects are tied to long-term maintenance contracts.
Alstom has also expressed interest in bidding for the planned Kuala Lumpur-Singapore high-speed rail project.