General Electric will seek to avoid a bidding war with Siemens and Mitsubishi Heavy Industries over Alstom by talking with the French government about jobs.
The German and Japanese firms submitted a joint bid for parts of the French company’s business yesterday, challenging an earlier bid from GE, but a person close to the American firm told Reuters it is talking to the French government about potentially changing non-price terms of the bid.
GE had offered €12.4bn (£7.3bn) for all of Alstom's energy arm, but the rival bid would see Siemen’s take full control of Alstom’s gas business, while MHI would create three joint ventures with the French firm by investing in its steam and nuclear, grid and hydro businesses as well as offering to become a long-term shareholder by buying up to a 10 per cent stake from Bouygues.
The joint offer announced yesterday includes €7bn in cash, which sources familiar with the matter said would make the rival bid worth more than €1bn more than GE's, taking into account the value of the parts of the power businesses that would remain under Alstom's control.
"This move would be a win-win solution for all related parties. Alstom would remain an independent energy and transport player with a strong brand. Its energy business would be strengthened through the partner MHI and we intend to explore opportunities with Alstom to create a European rail champion for the world market", said Joe Kaeser, president and CEO of Siemens.
President and CEO of MHI Shunichi Miyanaga pointed to the firm’s successful nuclear energy alliance with French company Areva saying: “I believe our collaboration with Alstom in the turbine business will give birth to another Japan-France alliance with superior technological expertise”.
GE has said it will not be drawn into a bidding war, but it is talking to the French government about jobs, bringing in new French investors to the power unit and providing access to nuclear steam turbine technology and some kind of deal to strengthen the transport businesses, according to the person who is familiar with the discussions.
The source said "there is flexibility" around those four areas and that "the talks are ongoing".
The talks are focused on nuclear technology associated with the French company's steam turbine business. The source said GE would work with the French government and the industry to make sure that Areva, the French nuclear power giant, had access to that technology.
GE is also open to French investment for the power business of Alstom, with those investments coming either from private or public entities, the source added. The talks would be looking at "the potential of some sort of tie up" with GE's signal unit with Alstom's transport business.
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.
