Siemens AG and its partners improved their offer for Alstom SA, raising the stakes in the takeover battle with General Electric Co (GE) for the French maker of high-speed trains and power equipment.
Siemens and Mitsubishi Heavy Industries Ltd (MHI) raised the cash component for Alstom by 1.2 billion euros (US$1.63 billion) to 8.2 billion euros, while the valuation of Alstom’s energy assets was increased by 400 million euros to 14.6 billion euros, according to a statement from Munich-based Siemens yesterday.
The revised offer, aimed to take complexity out of the bid, came hours before GE chief executive Jeffrey Immelt was to meet French President Francois Hollande in an attempt to clinch a deal. GE improved its own proposal for Alstom, as the US conglomerate seeks to close what would be its biggest purchase yet, while Siemens is trying to avoid its main competitor bulking up in its own backyard.
Photo: AFP
“After extensive discussions with all stakeholders over the past days MHI and Siemens reviewed their proposal with regards to reducing complexity, strengthening execution and narrowing risk exposure,” Siemens said.
In a letter submitted to Alstom yesterday specifying the proposed transaction, the Siemens-led group reiterated that it plans to keep Alstom largely intact and help create jobs, as it seeks to woo the French government, which is involved in the bidding process.
Offers of alliances and the opportunity for Alstom to become a railway-equipment leader are at the center of the battle to win over both the government and the company. Both proposals highlight strengthening Alstom to soften the blow of taking out a company that is deemed strategically important and has benefited from state support in the past.
Under the new proposal, Mitsubishi would offer to buy 40 percent of Alstom’s grid, steam and renewables units instead of 20 percent, using a single holding company rather than the three joint venture structure originally proposed. Siemens would offer to create a rail-signaling joint venture with Alstom.
GE and Alstom signed a memorandum of understanding to create a global alliance in transportation that would let the French company expand in North America and add freight clients. The deal includes the sale of GE’s rail-signaling business to Alstom and agreements in services, technology, supply chain, manufacturing and commercial support. Alstom’s business of making TGV high-speed trains is not part of GE’s planned acquisition.
After weeks of behind-the-scenes negotiations, the competition for Alstom has gained pace as a deadline approaches on Monday.
Siemens chief executive officer Joe Kaeser was in Paris this week to lay out his revised proposal, followed by the trip to the French capital by Immelt.
Kaeser enlisted the support of Mitsubishi Heavy and Hitachi, betting the three-way approach would help each side pry away the most attractive pieces of Alstom. That plan has made his bid look more complicated than GE’s overture and prompted Kaeser to revisit his concept within days.
GE on Thursday refined its bid for Alstom SA’s energy assets by adding alliances in rail and nuclear technology. The original US$17 billion offer is to be pared, as GE sells its rail-signaling operations to Alstom, which in turn will keep a stake in joint ventures being formed in power grids and renewables, Immelt said yesterday in Paris, without giving a figure. GE and Alstom also are to create a nuclear-energy partnership.
The revised GE plan, which does not change the valuation on Alstom’s energy assets, seeks to appease French politicians demanding job guarantees and concessions on energy independence. Immelt’s lobbying of French officials and union leaders underscored the urgency GE attaches to its biggest-ever deal.
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