General Electric Company
) has seemingly entered into a bidding war for the coveted French
industrial giant Alstom - currently in the cross-hairs of German
engineering firm Siemens and Japan's Mitsubishi Heavy Industries.
Countering General Electric's $16.9 billion bid to buy Alstom's
energy assets, Siemens and Mitsubishi are expected to submit a
joint offer, which includes a cash element of around $12.3 billion,
for Alstom's turbines business today, according to a
report. The bid is likely to heighten the political and industrial
scuffle for the creator of famed French high-speed TGV trains, with
each side vying for the French Government's patronage.
Siemens first came into the Alstom fray when General Electric
submitted a formal offer to acquire the French conglomerate's
Thermal, Power and Grid businesses (See:
Siemens Jumps on Alstom Bandwagon with GE
General Electric has shown notable flexibility in the melee till
date, willing to make concessions in its negotiations with the
French government. Showing its determination to conserve the
nation's industrial foothold and protect jobs, the company has
pledged to create 1,000 new jobs in France within a span of 3
years, if the Alstom deal goes through.
Responding to a request by the French government, General Electric
had extended the deadline for consideration of its proposal by
Alstom's board to Jun 23. Meanwhile, the French officials seek
better proposals for Alstom's assets.
Siemens & Mitsubishi
, Siemens and Mitsubishi are jointly considering a move wherein
Siemens would acquire Alstom's gas turbines business, and the
Japanese group would infuse cash and industrial assets into a joint
venture in steam turbines.
Media reports say that Mitsubishi wants to acquire a 10% stake in
Alstom, and subsequently collaborate with it in building steam
turbines, and cooperate in its wind and hydro-energy activities as
also reported that Siemens intends to propose merging of its rail
operations with that of Alstom. The suggested deal has potential
synergies as it would integrate Siemens's Germany-based ICE
high-speed trains with Alstom's TGV network, creating a European
champion in train construction and rail engineering.
Siemens had initially planned to swap its rail assets for the
French conglomerate's energy division, reportedly winning the
approval of the French industry minister Arnaud Montebourg.
The French Socialist government is not favoring either bidder,
citing safeguarding of jobs and preservation of the nation's
industrial competitiveness to be its primary concerns. France is
currently struggling with record unemployment, and conserving the
18,000-strong workforce of Alstom remains a priority for the
While both contenders are vying for the government's backing,
Finance Minister Michel Sapin said he is looking to General
Electric to further sweeten the deal. The government, through a new
decree, has extended its powers to block foreign takeovers in
sectors having a strategic importance.
Some sources opine that the Siemens-Mitsubishi deal would break up
Alstom's power business, counteracting the government's aim to
preserve Alstom's size and scale. On the other hand, the structure
would allow Siemens to avoid European Union antitrust regulations
that would otherwise have created roadblocks for the deal.
General Electric currently holds a Zacks Rank #3 (Hold). Some
better-ranked stocks in the industry include
Icahn Enterprises, L.P.
Noble Group Limited
), each sporting a Zacks Rank #1 (Strong Buy).
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