Siemens tables e14.2bn for Alstom

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Francois de Beaupuy and Alex Webb Paris

Siemens’s joint bid with Mitsubishi Heavy Industries (MHI) for Alstom’s energy operations trumped a competing offer from General Electric (GE), the German manufacturer said as it tried to win the backing of the board and France.

The Siemens-Mitsubishi offer valued Alstom’s energy assets at e14.2 billion (R206.3bn), compared with GE’s e12.35bn valuation for those operations, Siemens said in a presentation in Paris yesterday.

But President François Hollande’s government responded by saying it expected betteroffers from both firms.

“The talks between the state and the different companies are going to continue this week,” a source in Hollande’s office said after the meeting with Siemens chief executive Joe Kaeser and MHI chief executive Shunichi Miyanaga.

“The offers must be improved,” the source said.

Siemens' Kaeser, outlining his offer with MHI to reporters across town in Paris, said he saw no reason to discuss improving an offer which was already the better one on the table.

“Why would a superior offer be improved if it is superior already? There is no reason for us to discuss that question at this time,” he told a joint news conference with Miyanaga.

The joint proposal opens the race for the French manufacturer and puts pressure on GE to sweeten its offer for Alstom’s energy assets.

GE chief executive Jeffrey Immelt unveiled his bid seven weeks ago, as he tries to build a bridgehead in Europe and win business away from Munich-based Siemens, the region’s biggest engineering company.

Siemens chief executive Joe Kaeser made a counter-offer on Monday, seeking to carve up the French manufacturer’s energy and transportation assets with Mitsubishi Heavy Industries and Hitachi.

Siemens is offering e3.9bn for Alstom’s gas turbines, while Japan’s Mitsubishi Heavy and partner Hitachi would pay e3.1bn for stakes in the steam-turbine, power-grid and hydro businesses. Mitsubishi also offered to buy as much as 10 percent of Alstom, a stake valued at about e900 million.

The German manufacturer would also be willing to combine its entire rail business with Alstom’s to create a new leading European company in that market, Siemens chairman Gerhard Cromme said in Paris yesterday.

While Alstom helped broker the GE plan and has supported the US company, Siemens has sought to play up its appeal with governments in France and Germany, which are keen to back the creation of leading European companies in fields such as energy and transportation. The French government owns controlling stakes in two of Alstom’s biggest clients, the national power company and the state rail operator.

GE would not engage in a bidding war for Alstom, spokeswoman Deirdre Latour said on Monday. GE has said it was flexible on the terms of its bid, signalling a willingness to make concessions in negotiations with Paris. Siemens pledged to create 1 000 additional jobs in France, matching a similar promise from GE.

While Kaeser said his plan would keep large parts of Alstom intact and create jobs, enlisting the support of the two Japanese manufacturers complicates his proposal.

“It’s not a simple decision,” said Ingo-Martin Schachel, an analyst at Commerzbank in Frankfurt who advises investors to hold Siemens shares. “While Siemens’s offer might seem more attractive financially, it is also more complex.”

Immelt made a rare appearance by a US corporate leader before the same committee last month, saying he would protect jobs and the nation’s industrial base. – Bloomberg

Additional reporting by Reuters


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