Workers assemble power nozzles for use in turbine units inside the GE power and water plant, operated by General Electric Co, in Veresgyhaz, Hungary. Mitsubishi Heavy and Siemens will decide whether to submit a joint proposal to Alstom’s board of directors about a joint bid to buy Alstom’s energy business and counter a $17bn offer by GE by June 16, the two companies said in a statement yesterday.
Siemens is in talks with Mitsubishi Heavy Industries about a joint bid to buy Alstom’s energy business and counter a $17bn offer by General Electric Co.
Japan’s Mitsubishi Heavy and Munich-based Siemens will decide whether to submit a joint proposal to Alstom’s board of directors by June 16, the two companies said in a statement yesterday, confirming an earlier report by Bloomberg News. The companies didn’t give further details.
One option being discussed is for Mitsubishi Heavy to buy Alstom’s steam turbine and grid business and Siemens to get the gas turbine operations, people familiar with the matter said earlier today, asking not to be identified because the matter is not public. Mitsubishi’s role as part of any Siemens offer could potentially boost the valuation of the German company’s bid and resolve antitrust issues, two of the people said.
Both Siemens and GE have been trying to get the backing of the French government which is seeking to extract the best guarantees from any bidder for jobs and the country’s energy independence. GE already made a binding bid to acquire the energy business of Alstom, which is based near Paris and makes turbines and power transmission equipment.
A joint bid with Mitsubishi Heavy “seems to be a creative trick from Siemens, but it’s debatable whether it matches the French government’s thinking,” said Stuttgart-based Landesbank Baden-Wuerttemberg analyst Volker Stoll, who recommends buying Siemens shares. “Alstom would be completely torn apart, but it does demonstrate which parts of the business Siemens is really interested in.”
Alstom shares were down 0.3% as of 1:05 pm in Paris trading while Siemens dropped 1.5% in Frankfurt.
“We firmly believe that we can substantially contribute to a partnership solution for Alstom which will create value for all parties involved, including the country of France,” Mitsubishi Heavy Industries Chief Executive Officer Shunishi Miyanaga said in a statement.
Siemens has proposed swapping its train making business for Alstom’s energy assets to create two leading European companies in rail and energy. The German company still plans to give its train assets to Alstom as part of the deal, the people said today.
French Industry Minister Arnaud Montebourg had initially favoured the proposal by Siemens. He has since acknowledged that GE’s offer is much improved after the US company promised to create 1,000 French jobs.
GE has said it’s flexible on the terms of its bid, signalling a willingness to make more concessions in negotiations with the French government. GE CEO Jeffrey Immelt last month made a rare appearance by a US CEO before France’s National Assembly, saying his bid would protect jobs and the nation’s industrial base.
Siemens’s plan to buy Alstom’s energy assets comes as the German company is cutting jobs to slash about 1bn euros in costs. That angered German unions after Siemens CEO Joe Kaeser promised the French government that he would guarantee local jobs there for three years. German union representatives at Siemens last month said such a deal would only be acceptable if the two companies guarantee no job cuts at the units.
Siemens is already entering a joint venture with Mitsubishi Heavy after agreeing to sell a 51% stake in its metals technologies business to the Japanese company.
“I do look forward to working together with Mitsubishi Heavy to create a long-term oriented solution for Alstom, Mitsubishi Heavy and Siemens,” Kaeser said yesterday. Mitsubishi Heavy also has ties with the French energy industry. French nuclear reactor maker Areva SA has a joint-venture with the Japanese company which designs and markets mid-sized nuclear reactors.