General Electric Co. (GE) clinched its biggest acquisition ever, the $17 billion purchase of Alstom SA (ALO)’s energy assets, after the resolution of the French government’s last condition for the deal.

Chief Executive Officer Jeffrey Immelt, approaching 13 years on the job, prevailed over a bid from Siemens AG (SIE) and initial French opposition. Buying Alstom’s gas-turbine operations and creating joint ventures in the steam turbine, renewable energy and electrical-transmission businesses will help his push to return GE to its industrial roots.

“If this was hearts, Jeff shot the moon,” said Nicholas Heymann, an analyst at William Blair & Co. in New York. “He got 90 percent of what he was shooting for, but he also made sure the business wasn’t locked and inaccessible for life between the company’s principal competitors.”

The final hurdle was yesterday’s agreement by Alstom shareholder Bouygues SA (EN) to sell a 20 percent stake to the French state. Concerned that Alstom’s divestitures would imperil French energy independence, Economy Minister Arnaud Montebourg set the stock deal as a non-negotiable demand on June 20.

Adding Alstom’s energy units will help Immelt, 58, tilt Fairfield, Connecticut-based GE back toward manufacturing after finance arm GE Capital put the parent company at risk as credit dried up during the 2008-09 financial crisis.

Immelt’s Dealmaking

Immelt has been making acquisitions in aviation, including a $4.3 billion deal for Avio SpA’s aerospace business in 2012, and oil and gas. In March, GE filed for an initial public offering for its North American consumer-lending unit, now called Synchrony Financial, as a first step toward exiting the business through a split-off transaction next year. That’s when GE also projects to close on the Alstom asset acquisition.

“It is consistent with them moving toward their industrial core and trying to reduce the role of finance in the business,” said Peter Jankovskis, co-chief investment officer for Lisle, Illinois-based OakBrook Investments LLC, whose $3.2 billion under management included 1.28 million GE shares as of March 31. “From that standpoint it is a positive move.”

Alstom will retain its transport business, which makes the TGV high-speed trains, and also buy GE’s rail-signaling operations for 602 million euros ($825 million).

“The state has succeeded in keeping Alstom French,” Montebourg said last week, echoing a theme in the government’s efforts to inject itself into the GE transaction. Earlier, he publicly favored a competing offer from Munich-based Siemens as part of a so-called European solution.

Personal Campaign

Immelt’s personal involvement included a rare appearance by a U.S. CEO before France’s National Assembly and meetings with President Francois Hollande, most recently on June 20, as he sought to reassure local political leaders.

Alstom CEO Patrick Kron said today that he and Immelt will visit a plant of the French company in Belfort tomorrow.

The event will be a town-hall style forum for workers to ask questions, a person familiar with the matter said. GE shot video in Belfort, where the U.S. company and Alstom have operations, to build French public support as the deal came together, the person said. The event has been planned for several weeks as a celebration on the assumption that GE would seal the purchase, the person said.

Reputation, Capital

“It’s their biggest acquisition,” Mark Luschini, chief investment strategist for Janney Montgomery Scott LLC, which manages about $65 billion, said in an interview before the final approval was announced. “They’re obviously committing a lot of their reputation and capital on seeing this through.”

GE’s shares have struggled during Immelt’s tenure, which began four days before the Sept. 11 terrorist attacks in 2001. The stock slid 32 percent on Immelt’s watch through June 20, to $26.97, while the Standard & Poor’s 500 Index gained 81 percent.

Siemens today dropped 0.9 percent in Frankfurt trading as of 10:01 a.m. while Alstom was little changed in Paris.

Based in the Paris suburb of Levallois-Perret, Alstom built France’s power grid as well as the generators that produce most of the nation’s electricity. That history has helped cement its status as a local industrial icon, and spurred the government’s pursuit of an equity stake.

Final Negotiations

Alstom’s board agreed to GE’s purchase on June 21, even as the government and Paris-based Bouygues, a construction company, negotiated final share-sale terms. Bouygues said yesterday that its accord with the state would let the French government, or an entity of its choice, buy as much as 20 percent of Alstom.

Bouygues’s current stake is about 29 percent, which the French builder values at 34 euros per share. France will buy its stake “at the market price with a standard discount, on condition that this price is higher or equal to the equivalent of a theoretical adjusted price of 35 euros per share,” Bouygues said. Alstom closed June 20 at 28 euros in Paris.

The government may buy some shares on the market, Montebourg said on BFMTV today. GE also agreed to pay a fine of 50,000 euros for each job it fails to create as part of its pledge to add 1,000 new positions in France within three years, he said. GE’s concessions to appease French political leaders also include the alliances in nuclear technology and rail.

(Source: Bloomberg)