French High Speed Train (TGV) made by train maker Alstom leaves Munich’s central railway station yesterday. Siemens and Mitsubishi Heavy Industries made a joint bid yesterday to carve up Alstom’s energy unit, challenging a $17bn offer by General Electric Co.
Siemens and Mitsubishi Heavy Industries made a joint bid to carve up Alstom’s energy unit, challenging a $17bn offer by General Electric Co.
Munich-based Siemens is offering €3.9bn ($5.3bn) for the French company’s gas turbines operations while Japan’s Mitsubishi Heavy and partner Hitachi would pay €3.1bn for as much as 10% of Alstom and joint ventures in three energy segments. The offer also proposes creating a transport group by potentially combining some rail assets of Siemens and Alstom, the German company said yesterday.
The bid may put pressure on GE to improve the terms of its offer for Alstom’s energy assets, which excludes the French company’s transport business, as Siemens said the value of its proposal tops GE’s bid by about €1bn. The bidders must convince Alstom shareholders and the French government, which has controlling stakes in two of Alstom’s biggest clients, Electricite de France and rail operator SNCF.
“Our offer is more attractive from a financial, industrial and political perspective,” Siemens Chief Executive Officer Joe Kaeser told journalists in Munich. “It retains the Alstom brand to a significant extent and all-in-all is about abn euros higher.”
GE won’t engage in a bidding war for Alstom, a spokeswoman said yesterday. GE previously has said it’s flexible on the terms of its bid, signalling a willingness to make concessions in negotiations with the French government.
Both Siemens and GE are interested in getting access to Alstom’s installed base of equipment and the lucrative service business that accompanies it. A deal would help Fairfield, Connecticut-based GE overtake Siemens’s steam and gas turbine market share, according to a Societe Generale estimate.
Siemens bid is “a clever way to minimize the risk,” Frankfurt-based Commerzbank analyst Ingo-Martin Schachel, who rates Siemens hold, said by phone. “The joint venture structure will help solve some of the political concerns in France. The Siemens offer should certainly be considered realistically by Alstom shareholders.”
Siemens today also pledged to create 1,000 additional jobs in France, matching a similar promise from GE last month.
Siemens CEO Kaeser and Mitsubishi Heavy CEO Shunichi Miyanaga are scheduled to speak at the economics affairs committee of France’s National Assembly today. GE CEO Jeffrey Immelt made a rare appearance by a US corporate leader before the same committee in May, saying GE would protect jobs and the nation’s industrial base.
“We have made progress in our discussions with the French government, including expanded alliances in the energy businesses with French investors as well as a global partnership with Alstom on transport,” Deirdre Latour, a spokeswoman for GE, said on Sunday. “Alstom will remain a vibrant player in the energy and transportation industries.”
GE last month extended its deadline for Alstom to decide whether to accept its offer to June 23 after Siemens demanded an equal opportunity to decide whether and how to bid.
Siemens said today it would only be able to discuss a potential combination of its train assets with Alstom’s business in that area once the potential energy transaction is completed to preclude antitrust complications.