Urgent talks over Alstom sell-off

The Alstom plant in Newbold Road
The Alstom plant in Newbold Road

One of Rugby’s biggest employers is set to be sold – triggering speculation over the new owner’s plans for jobs and investment.

Alstom announced on Wednesday that it had received a binding offer from US multinational General Electric (GE) to acquire its energy businesses for £10 billion.

These include the company’s site in Newbold Road, which hosts research, development and testing facilities for a range of power plant products, as well as centres of excellence for steam turbine development, design, retrofit and refurbishment. The plant also specialises in the repair, restoration and service of steam turbines from around the globe.

The 700 employees who work at the site have been assured they will be consulted before any sale goes ahead. The town’s MP, Mark Pawsey, has said he will be seeking “urgent meetings” with Government ministers to discuss the implications of the proposed deal.

In a press statement, Alstom said it had set up a committee of independent directors to “review before the end of May the proposed transaction, taking into consideration all stakeholders’ interests including the French state”.

A company spokesman added: “The information and consultation of Alstom employees’ representative bodies will be conducted before entering into a definitive agreement.”

Should GE’s offer be completed, Alstom says it will use the proceeds to strengthen its transport unit - which makes French high-speed trains - pay down its debt and return cash to its shareholders.

Completion of the transaction is subject to approval by the French government and regulators. Bouygues, Alstom’s biggest shareholder, has indicated it will support the recommendation of Alstom’s board of directors.

Patrick Kron, chairman and chief executive of Alstom, said the energy businesses of Alstom and GE complemented each other and combining them would create a more competitive organisation.

He added: “Alstom’s employees would join a well-known, major global player, with the means to invest in people and technology to support worldwide energy customers over the long term.”

Mark Pawsey MP said: “It appears that a reshaping of the power generation industry in Europe is taking place and it will be important to ensure that the interests of my constituents in Rugby, both employees and pensioners of Alstom, together with the UK as a manufacturing base, are fully taken into account.

“To this end, I have spoken to members of staff, am waiting to speak to the company and will be seeking urgent meetings with ministers.”

GE already has a presence in the town. In 2011 it paid $3.2 billion for a 90 per cent stake in the power conversion business Converteam, which was sold by Alstom in 2006. Now known as GE Power Conversion, this business is based in Boughton Road, Rugby.

Alstom has reserved the right to engage in discussions with other bidders demonstrating a serious interest that could lead to a better offer.

Siemens, the German engineering giant, confirmed on Tuesday that it had decided to submit an alternative offer to Alstom. This was on the premise that it would have permission to examine Alstom’s books and permission to interview senior managers over the next four weeks in order to carry out due diligence.

Alstom confirmed it had a received a declaration of interest from Siemens, and that the Munich-based conglomerate would be given fair access to any information needed to make a rival offer.

Last year Alstom announced it would cut 1,300 jobs worldwide to cut costs and in January it revealed that its full-year profits had been hit by a drop in demand for power plants.

For the first nine months of its 2013/14 financial year (from April 1 to December 31 2013), Alstom’s order intake reached €15.1 billion, a 12 per cent decrease compared to the first nine months of 2012/13.