Eduard Biller Simon Foucher GE / Alstom Merger Eduard Biller Simon Foucher

1 2 3 4 Inhaltfolie Companies overview Strategy Vortrag Inhaltfolie 1 Companies overview 2 Strategy 3 Merger Story & Roadblocks 4 Aftermath

General Electric Power and Water GE Capital Oil and Gas Transportation Aviation Healthcare Appliance and Lighting

General Electric Current Assets Cash And Cash Equivalents 91,666 90,208 Short Term Investments 39,438 47,907 Net Receivables 98,903 257,148 Inventory 18,704 17,689 Total Current Assets 248,711 412,952 Long Term Investments 26,574 - Property Plant and Equipment 59,402 72,687 Goodwill 62,184 76,553 Intangible Assets 13,668 14,156 Other Assets 200,387 69,460 Deferred Long Term Asset Charges 2,541 Total Assets 610,926 648,349

General Electric Combination of the different departments + problems of 07

Vortrag

Total Group Year ended Variation Actual Figures (in € million)   31 March '15 31 March '14 14/15 Goodwill € 688 € 5,269 € (4,581) Intangible Assets € 444 € 2,053 € (1,609) PPE € 656 € 2,968 € (2,312) Associates and non-consolidated investments € 363 € 705 € (342) Other non-current assets € 473 € 510 € (37) Deferred taxes € 732 € 1,647 € (915) Non-current assets € 3,356 € 13,152 € (9,796) Working capital assets € 6,802 € 14,506 € (7,704) Marketable securities and other financial assets € 61 € 26 € 35 Cash and cash equivalents € 1,599 € 2,276 € (677) Current Assets € 8,462 € 16,808 € (8,346) Assets held for sale € 21,415 € 293 € 21,122 Assets € 33,233 € 30,253 € 2,980 Equity (Group share and minorities) € 4,224 € 5,109 € (885) Provisions (non-current and current) € 1,314 € 1,901 € (587) Accrued pension and other employee benefits € 461 € 1,525 € (1,064) Financial debt (current and non-current) € 5,186 € 5,704 € (518) € 11 € 176 € (165) Working capital liabilities (excl. Provisions) € 6,864 € 15,838 € (8,974) Liabilities related to assets held for sale € 15,173 € - Liabilities

Combination of both companies Not possible since divesture in GE Capital

Acquisition Timeline

Alstom stock never fully recovered from the recession

Start 2014: Pessimistic outlook Alstom Cuts Margin and Cash Flow Outlook as Demand Falls Plans to sell $2.7B billion in assets Including minority stake in Rail

Apr 2014: Industrial sector showing strength Alstom to Sell Steam Parts Unit for 1B$ S&P 500 Climbs to Record as Treasuries Fall, Oil Tumbles

April : Early rumors of GE bid 24th:Public news that GE and Alstom discussing potential deal 13B€ Transition; largest GE acquisition Bouygues (29% shareholder of Alstom) on board

April: Followed by rumors of competitive bids 27th: News of alternative bid from Siemens Exchange for part of its rail transport arm plus a cash offer as good as GE's 30th: GE confirms12.4B€ (17B$) bid for Alstom SA’s energy business

May: Government steps in 5th: French government states that it will not back GE’s bid GE must improve bid and combine two companies’ rail businesses; lobbies Siemens to participate in auction 7th: Siemens CEO says he won't be forced into a white knight bid for Alstom

May: Government Insists 14th: France issues decree nicknamed "décret Alstom" Power of the state to veto takeover of "strategic interests" (energy, water, transport, teleco, health) 22nd: GE extends bid to allow discussions with the government

June: Competition becomes official 16th: Siemens &Mitsubishi submit a competing proposal Siemens acquire Alstom's gas turbine activities for 3.9B€ MHI to form JV with Alstom , acquiring stakes in power for 3.1B€

June: Bidding heats up 19th: GE revised its bid, same price, but with a lower cash transaction value. Form a 50:50 JV combining in renewable and electric grid business and another JV in steam turbine and nuclear power. GE to sell its rail signaling business to Alstom

June: Bidding heats up 20th: Siemens and MHI modified their offer MHI increasing its stake to 3.9B€ (+800M€ from 3.1B€) Siemens increases offer to 4.3B€ (+400M€ from 3.9B€) Economy minister stated he would block both bids & French government was now backing the GE offer

June: GE Wins 21st: Alstom board met and backed GE's revised bid 22nd: French government agreed terms with Bouygues Taking a 20% stake in Alstom from Bouygues shares at a 2–5% discount on a value of a minimum of ≈€35

Dec: Almost final approvals 19th: Shareholders approved the transaction by 99.2% Bouygues under pressure to make a deal witg government due to regulation issues in the teleco sector

EU Steps in early 2015 the EU Competition Commission began an examination process Deal leaves only Siemens as GE’s main rival in Europe Concerns of stifling innovation price rises

Sep 2015: Final regulatory approvals 8th European Union and US DOJ approved the deal Subject to divestiture of Alstom's gas turbine manufacturing and parts Closing targeted in Q4 2015

This Monday 2015: Deal closes Completion of the transaction follows regulatory approval in over 20 countries Changes in the deal structure (price adjustments for remedies, net cash at close & forex); the purchase price is €9.7B ($10.6B) GE also announced completed sale of rail signaling business to Alsom for $800M

Aftermath

Expected Merger afterwards

Strategic advantages Empowers the following divisions: Thermal Energy (complementary Steam/Gas) Windpower: Combination of onshore/offshore Hydro power: No presennce, but Altsom has a leading role Services: complementary position Electricity transmission: complementary in products and solutions Grid (complementary) Transportation (will be taken over as well)

References