Abby L. Harvey
GHG Monitor
6/20/2014
Companies competing for Alstom’s energy business don’t just have the Alstom Board of Directors to appease, but also the French Government, as became clear this week when the government sent back offers deemed insufficient. Early this week Alstom received a joint proposal from Siemens and Mitsubishi Heavy Industries for a stake in the company’s energy business. Shortly thereafter General Electric submitted a revised offer further fueling the bidding war. The offers come as the June 23 binding deadline for the original GE offer looms. The Siemens/Mitsubishi offer values Alstom’s power technology division at $19.3 billion, $2.4 billion more than GE’s offer.
Sealing the deal will not be as simple as an agreement between Alstom and one of its suitors however. The French Government, following the original GE proposal, issued a decree giving the government the power to veto acquisitions of national importance. Alstom’s business is extensive, including a sizable carbon capture and storage division producing state-of-the-art carbon mitigation technologies which have been implemented at a number of CCS pilot and demonstration projects around the world.
Siemens Says It’s Made a “Sound” Offer
During a June 17 press conference Joe Kaeser, Siemens CEO, said the Siemens/Mitsubishi proposal was better for all parties involved. “We made a proposal which is sound, which addresses the shareholder interest by valuation, which addresses the national interests and the interests of the employees about sustainability and industrial construct and which also addresses the social aspects on creating jobs in the country.” The Siemens/Mitsubishi offer includes $5.3 billion for Siemens to buy Alstom’s gas-turbine business and $4.2 billion from Mitsubishi for a minority share in Alstom’s energy business. “We proposed the minor share because we do want Alstom to remain as an independent company, a French company. To do so, it is better for us not to obtain majority share,” Shunichi Miyanaga, President and CEO of Mitsubishi Heavy Industries said at the June 17 press conference. Further, the Siemens/Mitsubishi offer would create 1000 French jobs and an additional 1,000 apprentices.
Following the announcement of the proposal, the French government stated that both the Siemens/Mitsubishi and the GE offers must be improved. Kaeser was unfazed by the request saying, “Why would the superior offer improve if it is superior already?”
New GE Offer Would Create ‘Alliance’ With Alstom
GE released an updated offer later in the week which retains France’s presence in Alstom’s energy business and creates 1,000 French jobs over three years, according to a release. “Our discussions with the French government over the past seven weeks have been productive. As a result, we have reached agreements with Alstom’s management that will create an alliance between our companies in both spirit and practice. The alliance will retain and strengthen France’s presence in the energy business and reinforce Alstom Transport. It creates jobs, establishes headquarters decision-making in France and ensures that the Alstom name will endure,” GE Chairman and CEO Jeff Immelt said in the release. The offer would keep the GE-Alstom energy business headquarters in France as well as leadership teams in four global businesses: grid, offshore wind, hydroelectric and steam turbines.
