The Alstom deal turning into confusion: will Hitachi spoil the broth?
Hitachi wants to join the Siemens/Mitsubishi joined bid announced yesterday
One day after Siemens and Mitsubishi announced their intention to submit a joined bid for Alstom, Hitachi announced that they want to join the fray.
Bloomberg reported earlier that one option being discussed was for Mitsubishi to bid for Alstom’s steam turbine and power grid businesses while Siemens would acquire its gas turbine operations. Steam turbines are used in coal and nuclear power plants while gas turbines go into gas powered plants.
The weakness of this proposition is that Alstom’s energy business would end up being dismantled and the issue of France’s guarantees regarding Alstom’s nuclear business would remain unsolved.
Other aspects of this bid are unknown, the price Siemens intends to offer in particular. Another one is Siemens and Mitsubishi’s intention to keep some power of decision for the energy business in France. On the other hand, Mitsubishi’s participation can be seen as a way for Siemens to bring some guarantee on maintaining jobs because the parts of Alstom’s business that interest Mitsubishi are the ones that are the more redundant with Siemens’ business. Siemens and Mitsubishi know each other very well because they have been partners for a very long time. They first partnered in 1890. It is arguably the oldest global strategic partnership in history for two companies that are still in business.
Hitachi seems very unhappy about this turn and may spoil the broth. “Mitsubishi Heavy is our partner. We want to work together with them,” Katsumi Nagasawa, head of Hitachi’s power systems group, told a briefing on Hitachi’s business on Thursday. He said the joint Siemens-Mitsubishi Heavy bid was “great news”. Hitachi and Mitsubishi merged their thermal power businesses at the start of this year and this is enough for Hitachi to claim participation in this deal.
This situation may look very confusing to the French government and to Alstom’s board that still officially favors GE’s proposal. GE’s offer is open until June 23rd. Tomorrow, the French government may give us an indication of where it stands.