GE/Siemens battle over Alstom not over yet
Three days after submitting its offer. Siemens responds to GE’s offer reshaping that was presented yesterday. The battle goes on.
The battle for Alstom is going through new developments as the Siemens-Mitsubishi alliance does not want to concede defeat. According to Renew.biz, the German-Japanese proposal was sweetened yesterday by €1.2B to reach €8.2. The companies have also put forward a simplified deal structure under which MHI will take a straightforward 40% stake in Alstom’s combined steam, grid and hydro business for €3.9bn. Siemens has increased its offer for Alstom’s gas business to €4.3bn.
More importantly for the French government, the wind turbine business will remain with Alstom.
This is a very swift response to the French government rejection yesterday of the deal that was proposed by Siemens, less than 24 hours after it was presented. With this new offer less complex than the previous one Siemens is back in the race with more evidence of strong interest for Alstom.
At the same time GE CEO’s Jeff Immelt also reshaped its offer. GE’s new approach does not include any more cash than before but turns Alstom’s grid, nuclear and renewable businesses into 50/50 joint ventures in an attempt to easy French government’s concern about independence. In particular, GE offers the French government a veto and other rights over issues related to security and technology of nuclear plants – a vital point in France, which relies heavily on nuclear energy, according to Reuters, and protects some sensitive nuclear technology.
One strong point of the Siemens-Mitsubishi offer is that it boosts Alstom’s valuation more than €1.8B compared to GE’s proposal. In other words, Siemens and Mitsubishi are ready to offer a 15% premium over GE’s proposal. Will this be enough to convince shareholders, the workers Unions and the French government?