GE Set To Boost Alstom Bid Rivaling Siemens Mitsubishi

GE Set To Boost Alstom Bid, Rivaling Siemens, Mitsubishi

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 say.

PARIS -- General Electric (IW 500/6) is set to make an improved offer for parts of French power-to-rail group Alstom (IW 1000/169) by the end of the week, informed sources said Wednesday.

The head of GE, Jeff Immelt, will visit Paris on Thursday and Friday 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 (IW 1000/35) and Japanese firm Mitsubishi Heavy Industries (IW 1000/140) 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 signaling business to Alstom's railway activities.

General Electrics's offer of 12.35 billion euros ($17 billion) 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 on Thursday and Friday.

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 2.0 billion euros more.

When the Socialist government learned 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% 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 counteroffer.

France hoped that a Siemens-Alstom tie-up would create a global-scale European group.

Hollande's Policy in Spotlight

Initially, it looked as though Siemens might bid 10.5 billion to 11.0 billion euros for the power business and transfer its rail activities to Alstom.

But Siemens linked up with MHI, and details that emerged Tuesday show that Siemens would pay 3.9 billion euros 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% in Alstom from French group Bouygues, which owns 29.3%, although Bouygues says it wants to retain the entire holding.

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

Siemens has a railway equipment division and has suggested putting this under the control of Alstom to form a leading world rail group. The latest signal from GE suggests that it too is looking to sweeten its offer by bolstering the rump of Alstom that would remain.

Until Alstom, a private stock-market listed company, was rescued with government support about 10 years ago, the French group also had a big shipbuilding division. It is now under financial pressure and says it is not big enough to compete in world markets for power stations, although earlier this year it had put part of its rail business up for sale.

GE and Siemens have both had talks with French President Francois Hollande, for whom the fate of Alstom, a top name in French industry and a strategic supplier to the French power industry, is a hot issue.

Hollande has made rejuvenation of industry a centerpiece of a policy U-turn helping businesses and cutting public spending in an effort to reduce a huge trade deficit and record unemployment.

Copyright Agence France-Presse, 2014

TAGS: The Economy
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