An Alstom power plant in Az Zour, Kuwait. (Courtesy of Alstom)
After a two-month takeover quest, veteran French M&A lawyer Jean-Pierre Martel of Orrick, Herrington & Sutcliffe advised the board of engineering giant Alstom as it recommended this past weekend that the company accept General Electric’s $17 billion bid for its energy business.
The deal, which pending an array of shareholder and regulatory approvals is expected to close next year, has yielded roles for nearly a dozen Am Law 100, Global 100 and French firms. It’s also the second notable transaction announced this week by GE, as the Fairfield, Conn.-based conglomerate has tapped a trio of Scandinavian firms to advise on the $950 million sale of its GE Money Bank consumer finance unit to Spain’s Banco Santander.
But GE’s main focus over the past few weeks has been on winning over skeptical French authorities, which in May sought to block an Alstom acquisition, in an effort to close the largest transaction in its history. The deal was sealed over the weekend after Alstom’s board approved GE’s bid and Bouygues, a Paris-based construction and industrial group, agreed to sell its 20 percent stake in Alstom to the French government. As part of the deal with GE, Alstom has also agreed to purchase the latter’s rail signaling operations for about $825 million.
“It started as a fairly simple transaction,” says Martel, the lawyer hired by Alstom’s board in late April and a founding partner of Rambaud Martel, which merged with Orrick’s Paris office in January 2006. “But when the French government became involved, things got more complicated.”
Martel, who once advised a predecessor to Alstom but never did work for the company itself, notes that the relatively clear interests of those at the negotiating table offset what would have otherwise been a straightforward transaction. While GE wanted control of Alstom’s energy unit, the French government wanted assurances that jobs would be preserved and its national security interests protected. (Alstom, which makes turbines used in nuclear reactors, employs about 18,000 people in France.)
Orrick’s Paris office, which operates under the name Orrick Rambaud Martel, took the lead advising Alstom’s board with a Martel-led team that includes M&A partner Etienne Boursican, antitrust partner Michel Roseau, energy and infrastructure partner Jean-Luc Champy, senior counsel Noël Chahid-Nouraï, corporate consultant Alain Pietrancosta and associates Quirec de Kersauson, Cécile Laboureix and Diane Lamarche. (Orrick recently added Pietrancosta from Magic Circle firm Freshfields Bruckhaus Deringer.)
Alstom, whose group general counsel is Keith Carr, turned to an outside legal team led by Weil, Gotshal & Manges, Hogan Lovells and Cabinet Bompoint, a small Paris-based shop set up last year by former Sullivan & Cromwell corporate partner Dominique Bompoint.
David Aknin, a Paris-based corporate partner at Weil who joined the firm a decade ago from Magic Circle firm Linklaters, is leading a team advising Alstom that includes corporate partner Arthur Baudry d’Asson, Paris office founder and senior M&A partner Claude Serra and associates Guillaume Bonnard, James Harvey and Alexandra Stoicescu. Weil also advised GE Aviation Systems in late May on the $70 million sale of its hydraulic actuation business.
Jacques Derenne, head of the European antitrust and economic regulations practice at Hogan Lovells in Brussels, is leading a team from his firm also advising Alstom on regulatory matters related to the sale of its energy unit to GE. A longtime Hogan Lovells client, The Am Law Daily first reported in May how Alstom brought in the firm for the deal with GE, whose chairman and CEO Jeffrey Immelt is the brother of Hogan Lovells global litigation and arbitration cohead Stephen Immelt. (Stephen Immelt will become Hogan Lovells’ sole global CEO on July 1.)
As it happens, Hogan Lovells also had a role earlier this year advising another company that later threw itself into the bidding for Alstom. In May, Hogan Lovells advised Japan’s Mitsubishi Heavy Industries on its acquisition from German industrial giant Siemens of a majority stake in VAI Metals Technologies, a metallurgical joint venture between both companies.
Siemens and Mitsubishi Heavy both held talks with the French government before putting forth a joint $9.5 billion bid earlier this month for Alstom. That led GE to tweak its initial offer for Alstom in order to win the support of the French state, which ultimately gave its backing to GE after the company agreed to three joint ventures involving the target’s renewable energy, steam turbine and nuclear units. Linklaters, which represented Siemens on the sale of VAI Metals to Mitsubishi Heavy last month, advised both companies on their joint bid for Alstom. (Linklaters also counseled a British private equity firm earlier this year on its $1 billion acquisition of Alstom’s thermal power division, according to our previous reports.)
While the French government’s role as kingmaker in the Alstom sweepstakes has not been without controversy as the deal between Alstom and GE evolved over the past two months into more of a formal alliance between the two rather than an outright takeover, Orrick’s Martel says that GE can still get all of what it wants within three years if Alstom agrees to sell its remaining joint venture stakes.
“It’s an interesting debate that could take months or years before [there’s any finality] to the conversation,” says Martel, when asked whether the involvement of the French government complicated matters for his client. “Alstom was always very clear about what it wanted to do. In the end it was necessary to have a compromise.”
Martel says that he expects the deal to be signed in October, after councils of Alstom workers have the time to evaluate the merits of the transaction—Reuters reported this week that many workers were relieved that GE prevailed over the rival bid by Siemens and Mitsubishi Heavy—and an array of other regulatory and shareholder approvals. The deal likely won’t be finalized until early 2015.
The French government is not expected to approve the transaction until it completes its purchase of a 20 percent stake in Alstom from Bouygues, which is being advised by leading French firm Darrois Villey Maillot Brochier. The stake will give the French state the ability to block any future Alstom-related moves by GM of which it does not approve.
A legal team from Cleary Gottlieb Steen & Hamilton led by M&A partners Pierre-Yves Chabert and Fabrice Baumgartner, antitrust partner François-Charles Laprévote and associates Idris Hebbat, Guillaume Le Masson and Severine Schrameck took the lead for the French government on the deal. (Chabert was named an American Lawyer Dealmaker of the Year in 2007 for his role advising Mittal Steel on its steel industry megamerger with rival Arcelor.)
GE, which can now proceed with its plans to take full control of Alstom’s energy equipment unit that services natural gas and coal power plants throughout Europe, had its own robust team of legal advisers.
Leading French firm Bredin Prat and Magic Circle alliance partner Slaughter and May are serving as lead deal counsel to GE. M&A partner Frances Murphy and associate Amy Hutchings are leading a London-based team from Slaughter and May, while Bredin Prat, whose Paris headquarters Le Monde reports was the site of deal talks between GE, Alstom and the French government, fielded a team led by M&A partner Olivier Assant, tax partner Julien Gayral, finance partner Samuel Pariente, corporate counsel Florence Haas and associates Jerome Cordier and Antoine Le Bihan. As noted by The Am Law Daily last month, Arnold & Porter and Skadden, Arps, Slate, Meagher & Flom are handling antitrust and regulatory matters for GE.
GE general counsel Brackett Denniston III, a former Goodwin Procter partner who took over as head of the company’s massive in-house legal department in 2004, is leading an in-house team working on that deal that includes European general counsel Hendrik Bourgeois; general counsel for European transactions Benedict O’Halloran; general counsel for transportation Thomas LaFrance; general counsel for power generation Michael Gregory Jr.; general counsel for energy management Tara Plimpton; senior counsel Jim Waterbury and Karan Bhatia; senior transactions counsel Kevin Randall; and associate general counsel Deborah Lloyd.
GE Capital, the Norwalk, Conn.-based financial services of GE, announced Monday the $950 million sale of its Scandinavian consumer finance business to Banco Santander. Swedish firm Mannheimer Swartling, Norway’s Thommessen and Denmark’s Gorrissen Federspiel are advising that unit, known as GE Money Bank, on its proposed sale to Spain’s largest lender.
Alexander Dimitrief serves as general counsel for GE Capital, while Ann-Sophie Hesser is Nordic general counsel for GE Money Bank. Other in-house GE lawyers working on the Banco Santander deal include senior M&A counsel Evelyn McAdam; senior counsel for IT, sourcing and operations Iris Schwartz; antitrust senior counsel Kaarli Eichhorn; IP senior counsel Sean Merrill and Cecilia Vega; corporate treasury counsel Myoung Rhee; and GE Capital International general counsel Andrew Bull.
Legal counsel to Banco Santander, which is one of the eurozone’s biggest banks, were not immediately available by the time of this story. The Spanish lender’s acquisition of GE Money Bank is expected to close in the second half of this year.
As for France, the country’s struggling economy was found by a key market analysis report this week to be holding back the overall economic performance of the eurozone. The French government will sell at least 3.1 percent of its holdings in gas utility GDF Suez to fund its purchase of a 20 percent stake in Alstom.