A possible bid by Mitsubishi Heavy Industries Ltd for the turbine businesses of French engineering firm Alstom SA is part of Japan’s effort to carve out a share of the lucrative global energy infrastructure business.
Mitsubishi and German rival Siemens AG said on Wednesday they are considering a joint bid for parts of Alstom and will decide by Monday next week whether to pitch it to Alstom’s board.
Mitsubishi Heavy is Japan’s largest heavy machinery maker with US$32 billion in annual revenue. It produces ships, engines, nuclear power plants and arms for the Japanese Ministry of Defense.
Reports indicate Siemens and Mitsubishi Heavy have separate plans for the assets they would acquire under the joint bid.
The Nikkei reported yesterday that Mitsubishi Heavy and Hitachi Ltd, which merged their thermal power generation systems businesses in February, would set up a new joint unit to incorporate the Alstom acquisition. Mitsubishi Heavy would own 65 percent and Hitachi 35 percent, the same ratio both hold in their combined business, Mitsubishi Hitachi Power Systems Ltd.
Mitsubishi Heavy chief executive Shunishi Miyanaga said his firm can “substantially contribute to a partnership solution for Alstom which will create value for all parties involved, including the country of France.”
The report put the value of the potential acquisitions by Siemens and the Japanese companies at ￥1 trillion (US$9.8 billion).
It said Mitsubishi Heavy would purchase Alstom’s steam turbine business, while Siemens would buy its gas turbines assets. However, Mitsubishi Heavy issued a statement saying that details of the acquisition were still under discussion.
Alstom has favored a US$17 billion bid from US company General Electric Co, but the French government has been resistant to the deal and it has sought rival offers.
Alstom’s board is to make a decision by June 23.
Mitsubishi Heavy, founded in 1884, employs more than 80,500 people. It and Hitachi have led Japan’s effort to gain an edge in the energy systems industry dominated by General Electric and Siemens.
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