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Business

Mitsubishi-Siemens bid for Alstom could stymie GE offer

© Photo: AFP

Text by FRANCE 24

Latest update : 2014-06-12

Japanese firm Mitsubishi Heavy Industries and Germany's Siemens are to bid nearly $10 billion (7.39 billion euros) for assets belonging to the energy division of French engineering giant Alstom, according to a Thursday report in a Japanese newspaper.

Japan's leading Nikkei business daily said that the joint offer would amount to one trillion yen, a move that could stymie General Electric's $17 billion bid for Alstom's energy business made in April.

The smaller bid price was tied to the Japanese-German plan to buy just Alstom's gas and steam turbine business rather the wider energy group eyed by GE, the Nikkei said.

The report, which did not cite sources, came after Siemens and Mitsubishi confirmed Wednesday they were working on a possible joint bid for some of Alstom’s assets.

"Mitsubishi Heavy Industries (MHI) and Siemens today announced that they have joined forces in evaluating a potential proposal for certain assets of the French multinational conglomerate Alstom in order to strengthen the future position of Alstom, MHI and Siemens," they said in a statement.

The two groups would decide on the submission of a proposal to Alstom's board of directors "by June 16," the statement said.

In an apparent response to the Nikkei report, Mitsubishi issued another statement on Thursday that said no final decision had been made as it was still studying the possible deal, including an offering price and other details.

According to Nikkei daily, the bid would see Mitsubishi purchase Alstom’s steam turbine business while Siemens would buy its gas turbines assets.

Hitachi could join bid

Hitachi, which merged its thermal power generation systems business with Mitsubishi in February, could also be involved in the bid, said the report.

The company would set up a new joint unit to incorporate the Alstom acquisition, said the Nikkei, with Mitsubishi owning 65 percent and Hitachi 35 percent.

A spokesman for Hitachi said it was aware that Mitsubishi and Siemens were considering joining forces to bid for the Alstom assets.

Hitachi was "not in a position to make a comment" on the Nikkei report, he said, adding that the firm would "continue to cooperate with Mitsubishi Heavy as a partner in the thermal power business".

Mitsubishi Heavy is Japan’s largest heavy machinery maker with $32 billion in annual revenue. It produces ships, engines, nuclear power plants and arms for Japan’s defense ministry.

GE has been vying with Siemens for Alstom’s energy business, which builds generators, turbines and transmission systems.

The unit accounts for 70 percent of Alstom's business, and would leave behind the railway equipment division that manufactures France's prized TGV high-speed trains.

Though Alstom’s board has suggested it favours GE’s bid, the French government has sought to prevent the sale to the US multinational, seeing it as a threat to French energy security and jobs.

Alstom told AFP on Wednesday it "still has not received any firm offer" from Siemens, while GE's proposal remains on the table until June 23.

Last month the French government passed a new law that would allow it to veto unwanted foreign takeovers of major French companies, including the GE-Alstom deal.

Alstom is one of France's biggest private sector employers with about 18,000 staff nationwide.

(FRANCE 24 with AFP, AP)

Date created : 2014-06-12

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