GE set to boost Alstom bid, rivalling Siemens, Mitsubishi

June 19, 2014 - 10:23:42 am

PARIS: General Electric is set to make an improved offer for parts of French power-to-rail group Alstom by the end of the week, informed sources said yesterday.

The head of GE, Jeff Immelt, will visit Paris today and tomorrow to meet with government officials, the sources said, even though GE has declared it will not enter a bidding war with rivals Siemens and Mitsubishi.

But on Tuesday, as the German engineering group Siemens and Japanese firm Mitsubishi Heavy Industries laid out details of their offers for parts of Alstom, General Electric stepped up its campaign and indicated that it was ready to transfer its signalling business to Alstom’s railway activities.

General Electrics’s offer of €12.35bn for all of Alstom’s power-generation business, is valid until Monday. The sources said that Immelt would meet the French government, and Alstom’s customers and trade unions, today and tomorrow.

GE has already sweetened its bid with an offer to create 1,000 jobs in France, and is running media advertisements explaining that it has been doing business in France for 100 years. But Siemens and Mitsubishi Heavy Industries say that the terms of their offers combined are worth nearly €2bn more. When the Socialist government learnt that the board of Alstom, which also makes railway equipment and the French TGV high-speed train, was in advanced talks to sell the 70-percent of its business involved in power generation to GE, it objected that jobs and decision-making could be lost and encouraged Siemens to make a counter offer. France hoped that a Siemens-Alstom tie-up would create a global-scale European group.

Initially, it looked as though Siemens might bid €10.5bn-€11bn for the power business and transfer its rail activities to Alstom.

But Siemens linked up with MHI, and the details which emerged on Tuesday show that Siemens would pay €3.9bn to buy the gas turbine business, and MHI would be a minority shareholder in three joint ventures with Alstom. One of these would cover steam turbines used in nuclear power stations.

MHI would also buy a stake of 10 percent in Alstom from French group Bouygues which owns 29.3 percent, although Bouygues says it wants to retain the entire holding.

Analysts were sceptical, saying that the Siemens-MHI terms would break up Alstom, was unduly complex, and would leave MHI as both a partner for and rival to Alstom. AFP