Siemens' Alstom offer 'beats GE's'

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Paris - German industrial group Siemens and Japanese firm Mitsubishi valued the energy division of French group Alstom at 14.2 billion euros on Tuesday, after presenting their rival offer for the business.

This is nearly 2.0 billion euros ($2.7 billion) more than a bid by US giant General Electric.

But analysts said the German-Japanese offer outlined on Monday and presented to French President Francois Hollande on Tuesday was too complex and would break up Alstom.

The chief executive of Siemens, Joe Kaeser, told a press conference after the two groups had met Hollande that their offer was more competitive.

Alstom, which builds power-generation systems and railway equipment including the TGV high-speed train, says it is not strong enough in the world market for power stations and it is suffering from weak demand in Europe.

It wants to focus on its rail operations, although earlier this year it put part of them up for sale.

When the advanced state of negotiations by the Alstom board to sell the power division to GE became known, the French government objected, fearing a loss of jobs and loss of decision-making.

The government encouraged a counter offer by Siemens which has huge power interests and also has big rail activities.

However, Siemens also said on Tuesday it wanted to create a “champion” European railway equipment group by putting its rail activities into a joint operation headed by Alstom.

The president of the Siemens supervisory board, Gehrard Cromme laid out this part of his interest in the tie-up with Alstom in remarks after the meeting with President Francois Hollande.

Cromme and the chief executive of Japanese group Mitsubishi Heavy Industries had met Hollande to explain their proposals for acquiring parts of Alstom.

General Electric has made a firm offer to buy the power division of Alstom which accounts for about 70 percent of Alstom's activities.

Shares in Alstom were showing a fall of 1.33 percent to 28.94

euros, with analysts saying that investors were disappointed with the joint offer by Siemens Mitsubishi on Monday.

Investors had expected the two firms to make a block bid to compete with terms offered by GE, but instead interpreted the Siemens-MHI offer as a complex attempt to break up Alstom.

Under the terms, Siemens offered to pay 3.9 billion euros for Alstom's gas turbine business.

MHI wuld buy from French conglomerate Bouygues up to 10 percent of Alstom, offering to create three joint businesses in the areas of steam turbines, hydraulic turbines, and electricity networks.

MHI would also inject 3.1 billion euros.

At brokers Aurel BGC, analysts commented: “We are sceptical. MHI would not contribute assets and is proposing a complex solution which would result in the Japanese company holding different stakes in various activities of the energy division, while remaining a competitor to Alstom.”

Aurel BGC also commented that Bouygues had said after the closing of stock trading on Monday that it was not interested in selling Alstom shares and wanted to remain a long-term investor.

General Electric has offered 12.35 billion euros for Alstom energy division, and has offered to create 1,000 jobs in France, but has also said that it will not enter a bidding war.

The GE bid had the merit of being “clear and coherent,” Aurel BGC commented, while the “MHI-Siemens offer has been conceived to seduce the government and not the French group.”

Sapa-AFP


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