Alstom shares surged Thursday despite the French turbine and train maker denying a report that General Electric Company (NYSE:GE) is in talks to buy the company for about $13 billion.
Alstom’s shares initially rose about 17% on the Paris exchange, even after the French builder of trains and power plants issued a statement that it was not aware of any takeover offer.
Earlier planned to sell assets
Aaron Kirchfeld, Matthew Campbell and Jeffrey McCracken of Bloomberg point out Alstom CEO Patrick Kron in November unveiled plans to sell as much as 2 billion euros in assets including a minority stake in its rail unit by the end of 2014.
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The Bloomberg report also highlights that about 640 French companies were acquired by U.S. companies over the last decade for a total of $77 billion.
The Bloomberg report indicated an agreement between Alstom and General Electric Company (NYSE:GE) might be announced as early as next week and the U.S. company may pay over $13 billion for Alstom, representing 25% premium to the current market value.
Exclamation point to GE’s return to deals
The deal would give General Electric Company (NYSE:GE) control of Alstom’s technology for power transmission and power plant maintenance as Europe’s economy showing signs of revival. Citing Sanford C. Bernstein analyst Steven Winoker, the Bloomberg report notes that acquiring Alstom would put an exclamation point on General Electric Company (NYSE:GE)’s return to deals. The analyst feels the deal would be among the best fits they have seen with the GE portfolio for some time.
Earlier this month, Alstom said it would sell part of its thermal power business to private equity firm Triton Partners for $1 billion. The company has also been considering a spinoff of its rail unit to help raise cash at a time when large orders have turned scarce.
David Jolly of Dealbook points out France’s current economy minister, Arnaud Montebourg, has made a name for himself in a series of highly public disputes with foreign investors, and it seems unlikely that he will be able to remain on the sidelines if a General Electric Company (NYSE:GE) offer is forthcoming.
Alstom, in its press release Thursday morning said it constantly reviewed the strategic options of its businesses and plans to communicate its annual results on May 7, as scheduled. Denying the General Electric Company (NYSE:GE) deal, the French industrial company said that it has not been informed of any potential public offer on its shares.