Siemens and Mitsubishi Heavy Industries unveiled Monday the terms of their joint bid for the energy assets of French industrial jewel Alstom, also coveted by US industry giant General Electric.
Siemens said in a statement that it “intends to acquire 100 percent of Alstom’s gas business, including related service contracts, for 3.9 billion euros ($5.3 billion) in cash”.
That is significantly less than a preliminary offer Siemens reportedly put on the table in April: a bid of 10.5 billion to 11 billion euros for Alstom’s energy unit, with its train division in the mix.
The German industrial group announced last week that it was joining forces with MHI to launch a rival offer to a $17-billion bid by GE. The details were finalised in talks on Sunday.
GE on Monday said it would not engage in a “bidding war” and that it was “confident” that its deal proposal for Alstom “is good for Alstom, for France and GE”.
Alstom said in a statement that Monday’s offer will be reviewed by a committee of independent directors “and submitted to the board of Alstom in the coming days”.
The company’s energy unit, which builds generators, turbines and transmission systems, accounts for 70 percent of its business.
Under the plans announced Monday, Japan’s MHI will inject 3.1 billion euros in cash into the company and “become a stable and long-term shareholder of Alstom by offering to acquire up to a 10 percent stake from Bouygues,” the statement said.
MHI would create three joint ventures by acquiring 40 percent of Alstom’s nuclear business and 20 percent each of its grid and hydroelectric business.
“Alstom would remain an independent energy and transport player with a strong brand,” said Siemens chief executive Joe Kaeser.
“Its energy business would be strengthened through the partner MHI and we intend to explore opportunities with Alstom to create a European rail champion for the world market.”
– Industrial jewel –
Alstom is one of France’s biggest private sector employers, with about 18,000 staff nationwide.
Seeking to allay any fears about possible layoffs arising from a deal, GE promised late May to create 1,000 jobs in France.
While Alstom itself has repeatedly said it favours GE’s bid, the US industrial giant’s offer has run into political opposition in France.
The French government views Alstom as a firm of national strategic importance and is concerned about safeguarding jobs as it battles record unemployment and declining industrial competitiveness.
French Prime Minister Manuel Valls said Monday that “the government is very open and has no preference” of bidder.
“For the government, the only thing that matters are jobs, Alstom’s interests and the strategic interests of the country, and it is in this framework that everything must be decided,” he added.
Siemens and MHI’s chief executives will present their joint bid to French President Francois Hollande on Tuesday and then be grilled in the afternoon by the French national assembly.
MHI and Siemens said they aim to “strengthen (Alstom’s) position as a diversified global player in energy and transport and strengthen its financial structure, while remaining a major French listed group”.
The proposal would be “very beneficial for Alstom employees. Furthermore it will foster job creation in France,” the statement said.
MHI chief executive Shunichi Miyanaga said: “I believe our collaboration with Alstom in the turbine business will give birth to another Japan-France alliance with superior technological expertise, which will be able to address the needs of emerging nations.”
“This transaction would further enhance our value chain of electrification by expanding our installed base in gas,” he said.
Siemen’s Kaeser described the offer as a “win-win solution” for all related parties.
After the sale of the energy unit, which includes nuclear energy activities, Alstom would be left with the railway equipment division that manufactures France’s prized TGV high-speed trains.