Power play

17 June 2014 By Pierre Briançon

The German group and Mitsubishi Heavy proposed to buy some of the French company’s energy assets. Compared to GE’s friendly 11.4 bln euro bid, there’s less cash, less industrial sense, and more complexity. So this is still a Plan B. But it’s credible and politically astute.

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Siemens of Germany and Japan’s Mitsubishi Heavy Industries made a joint proposal to buy and invest in Alstom businesses. The pitch, which includes 7 billion euros ($9.5 billion) of cash, aims to derail a wider, 12.4 billion euro deal by the French group to to sell its energy business to General Electric.

Under the proposal, made on June 16, Siemens would buy Alstom’s gas turbine business for 3.9 billion euros in cash. MHI would pay 3.1 billion euros for a 40 percent stake in the company’s steam and nuclear turbines business, plus 20 percent stakes in Alstom’s grid and hydro units. MHI also aims to buy up to 10 percent of Alstom from Bouygues, the French group’s largest shareholder.

The duo said MHI’s investment would “enable the creation” of more than 1,000 jobs in France, while Siemens said it planned to offer a job guarantee for three years for transferred staff. Siemens also held out the prospect of future talks to create a European rail champion.

Siemens Chief Executive Joe Kaeser said the joint proposal “all-in-all is about a billion euros higher” in value terms than GE’s offer, Bloomberg reported.

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