GE-Siemens in Alstom bidding war

• 10 years ago (2014-04-29)
• Junior Isles

Europe 1061

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The battle for the acquisition of Alstom SA has stepped up a gear with Munich’s Siemens AG planning a bid to counter General Electric’s attempt to buyout Alstom’s power business.

Siemens will decide on a bid after a board meeting set for Tuesday 29th, and hasn’t yet decided whether to bid for all or part of the French company. Its interest is contingent on the same access to financial information given to GE.

GE’s plan involves severing Alstom’s power business from its high-speed TGV train business and allowing GE to refocus its own plans on manufacturing and producing capital goods.

Siemens’, by contrast, is less settled but most likely will involve swapping some of its rail assets for Alstom’s energy division and thereby creating what French Industry Minister, Arnaud Montebourg, has called two “European champions” in power and rail, respectively.

Insider sources indicate Siemens is willing to match or exceed the financial terms of GE’s offer, which currently stands at around $13 billion for the whole of Alstom, excluding debt.

Alstom, saved from bankruptcy by the state in 2004, has a market value of about €8.3 billion ($11.5 billion) and employs 18 000 in France, meaning the French government feels it has significant interest ensuring any deal secures French energy independence and extracts the best terms from any bidder.

The French government can intervene to protect companies deemed to be of national importance from being acquired, but is currently understood to have no preference over the two competing companies.

Appeasing the French authorities is then a crucial part of a bid from GE or Siemens. GE claims its separation plan would result in fewer job losses because of smaller operational overlaps, while Siemens is considering guarantees on jobs and executive positions according to sources familiar with the deal.

“None of these big players buying Alstom is going to be a smooth ride,” said Simon Toennessen, an analyst at Credit Suisse Group AG. “Siemens is seeing the competitive threat from GE as big enough to consider this step.”