Siemens counters GE bid for Alstom with tie-up plan

Non-binding asset-swap proposal represents dramatic intervention by Siemens

Siemens considers Alstom’s energy assets to have an enterprise value of €10 billion to €11 billion.  Photograph:  Etienne Laurent/EPA

Siemens considers Alstom’s energy assets to have an enterprise value of €10 billion to €11 billion. Photograph: Etienne Laurent/EPA

Mon, Apr 28, 2014, 01:01

The French government has postponed a meeting with General Electric to discuss the US manufacturer’s bid for French rival Alstom’s energy business, saying that it wants time to examine a separate proposal from Germany’s Siemens.

In a letter addressed to Alstom chief executive Patrick Kron over the weekend, Siemens proposed the creation of two new European industrial champions – one in energy under Siemens’s leadership and another in transport, which Alstom would own.

The non-binding asset-swap proposal, a copy of which was obtained by the Financial Times , represents a dramatic intervention by Siemens to prevent its great rival GE securing a much bigger footprint in Europe.

Siemens proposes acquiring Alstom’s thermal power, renewable power and grid divisions.

In return it would inject its high-speed train and locomotive business into Alstom, as well as providing a “significant cash contribution” to Alstom shareholders.

Siemens considers Alstom’s energy assets to have an enterprise value of €10 billion-€11 billion.


Nuclear power assets
The German company promised not to cut jobs in France for at least three years or dispose of meaningful parts of the businesses acquired from Alstom. Siemens also proposed talks on Alstom’s sensitive nuclear power assets, including a possible carve-out “if this is deemed appropriate to secure the best interests of France”.

Siemens declined to comment on the content of the letter but earlier yesterday it issued a brief statement saying it was willing to hold talks with Alstom on “future strategic opportunities”.


Strategic issues
Putting the brakes on any swift deal between GE and Alstom, Mr Montebourg said: “Given the strategic issues for French industry and the economy, the government will not accept any hasty decisions.”

He added that a Siemens-Alstom tie-up could create two “European champions” in transport and power engineering but said that the government now wanted “the time to make a serious examination of the two proposals”.

Mr Montebourg said that while the government would consider all projects, it would need a number of conditions relating to employment, investment and research and development remaining in France as well as the independence of the nuclear industry.

Siemens’s intervention could find favour with the French government, which was reported to have urged the German group to step forward to prevent a jewel of French industrial prowess falling into US hands.

In a separate letter to Mr Immelt, obtained by BFM TV, Mr Montebourg wrote: “We have been surprised to learn that General Electric and Alstom had engaged in advanced discussions . . . without any prior interactions with French government authorities.” – (Copyright The Financial Times Limited 2014)