Siemens AG is in talks with Mitsubishi Heavy Industries Ltd. about a joint bid to buy Alstom SA’s energy business and counter a $17 billion offer by General Electric Co.
Mitsubishi Heavy and Siemens will decide on whether to submit a joint proposal to Alstom’s board of directors by June 16, the two companies said in a statement on Wednesday, confirming an earlier report by Bloomberg News. The companies didn’t give further details.
One option being discussed is for Mitsubishi Heavy to buy Alstom’s steam turbine and grid business and Siemens to get the gas turbine operations, people familiar with the matter said earlier on Wednesday, asking not to be identified because the matter is not public. Mitsubishi’s role as part of any Siemens offer could potentially boost the valuation of the German company’s bid and resolve antitrust issues, two of the people said.
Both Siemens and GE have been trying to get the backing of the French government which is seeking to extract the best guarantees from any bidder for jobs and the country’s energy independence. GE already made a binding bid to acquire Alstom’s energy business, which makes turbines and power transmission equipment, including for Deepwater Wind LLC’s 30-megawatt Block Island Wind Farm project.
A joint bid with Mitsubishi Heavy “seems to be a creative trick from Siemens, but it’s debatable whether it matches the French government’s thinking,” said Stuttgart-based Landesbank Baden-Wuerttemberg analyst Volker Stoll, who recommends buying Siemens shares. “Alstom would be completely torn apart, but it does demonstrate which parts of the business Siemens is really interested in.”
Alstom shares were down 0.3 percent as of 1:05 p.m. in Paris trading while Siemens dropped 1.5 percent in Frankfurt.
“We firmly believe that we can substantially contribute to a partnership solution for Alstom which will create value for all parties involved, including the country of France,” Mitsubishi Heavy Industries CEO Shunishi Miyanaga said in a statement.