(Adds Immelt's missing first name in paragraph 8)
* France agrees Alstom stake option with Bouygues
* Agreement clears way for GE-Alstom deal
* Stock to be lent free, option discount 2-5 pct -Bouygues
By Benjamin Mallet and Laurence Frost
PARIS, June 22 France won an option to buy 20
percent of Alstom from construction group Bouygues on
Sunday, in an eleventh-hour deal clearing the way for the agreed
sale of Alstom's energy business to General Electric.
The government had backed the tie-up on condition that it
first secured the Alstom stake from Paris-based Bouygues
- leaving less than three days to negotiate an
agreement before GE's formal offer expires on Monday.
Ministers are determined to maintain influence over a
complex deal that parks some Alstom assets deemed strategically
important to France within GE-controlled joint ventures.
"This is a way of organising ourselves in the face of
globalisation," Economy Minister Arnaud Montebourg told France 2
television after announcing the option agreement.
"It builds alliances rather than allowing France to become a
giant shopping centre for foreign corporations to come and prey
on our companies," he said.
GE and rival bidder Siemens - later joined by
Mitsubishi Heavy Industries - had both revised their
offers as France sought guarantees on jobs and sensitive
The U.S. group's 7.3 billion euro ($9.9 billion) cash outlay
brings Alstom shareholders a smaller windfall than envisaged at
first, with a narrower perimeter of activities sold outright.
Despite the concessions, granted in response to French
concerns, the revised plan "remains accretive in year one", GE
chief Jeff Immelt said on Saturday.
Alstom said the same day its board had unanimously approved
the deal, which values the business at 12.35 billion euros.
Under its terms, GE is to buy most Alstom energy assets
including gas and steam turbines for power plants, while selling
its own rail signalling division for $800 million to reinforce
Alstom's transport offering, which includes TGV trains.
The tie-up also establishes joint ventures in France to
house Alstom's power grid and renewable energy businesses, while
sensitive nuclear turbines are placed under government control.
In an interview with France's Journal du Dimanche, Alstom
chief Patrick Kron said he would bow out in favour of a new
management team after an unspecified transition period.
The deal with GE draws a line under a two-month battle for
Alstom that had become heavily politicised as soon as the first
reports of a tie-up plan appeared in April.
Luc Chatel, the centre-right party's acting head, described
the accord negotiated by Montebourg as a "lose-lose deal" on
Sunday and questioned the use of public funds.
"There was an (earlier) offer on the table that would have
avoided a public investment," Chatel said.
The option deal with Bouygues ends a stand-off that followed
Montebourg's surprise declaration on Friday that the government
would pay only "market price" for its Alstom stock. The shares
closed at 28 euros the same day.
Raising the pressure in a weekend newspaper interview,
Montebourg said that "gifts to (CEO) Marin Bouygues are out of
But Bouygues balked at the strong-arm tactics, sources close
to the talks said, holding out for a price closer to 34 euros -
a premium of 380 million euros or 21 percent over the holding's
1.73 billion market capitalisation
Under the compromise, Bouygues will lend Alstom stock
commanding 20 percent of voting rights to the French government
and surrender its two board seats, allowing the state to
exercise an immediate role as the group's main shareholder.
For 20 months, the government will then have an option to
purchase up to 20 percent of Alstom from Bouygues - which
currently holds 29.3 percent - with a 2-5 percent discount, at
any point when the market price is 35 euros or more.
If the government has not acquired 20 percent of Alstom by
the end of that period, either from Bouygues or the market, it
can purchase up to 15 percent from Bouygues with a similar
mark-down, whatever the quoted share price.
The loan of Alstom stock will be free of charge to the
government, a Bouygues spokesman said, declining to comment on
financial terms for the accompanying purchase option.
Subject to regulatory and shareholder approval, the
GE-Alstom deal is scheduled to close in early 2015.
($1 = 0.7366 Euros)
(Additional reporting by Gilles Guillaume, Ingrid Melander,
Jean-Baptiste Vey, Marion Douet and Mark John; Editing by Mark
Potter and Eric Walsh)