Alstom energy assets ignite heavyweight bidding war

A number of big companies are competing to take over French firm Alstom’s energy assets.

Alstom is one of France’s top industrial companies, so the idea of a foreign takeover was always going to be sensitive for both the government and large sections of the public. But as the fierce bidding war to acquire it has heated up, even president François Hollande has found himself getting more closely involved.

The French government is expected to decide on its preferred bidder at some point this weekend, and executives at the company have until Monday to decide between the competing bids of US firm General Electric (GE) and the joint bid of German giant Siemens and Japan’s Mitsubishi Heavy Industries.

As the deadline gets ever closer, both bids have been re-evaluating and revising their offers in an increasingly complex web of joint ventures and proposed business structures.

GE, on 19 June, made a number of significant concessions on its own bid to alleviate Paris’ fears that France could lose one of its major strategic companies. Though the cash element stayed the same, what the company did do was suggest new joint ventures between Alstom and GE.

Instead of taking over the firm’s energy assets outright, it now plans to set up joint ventures with Alstom in grid equipment, renewable energy and steam turbine technology that is used heavily in nuclear power plants. Then, it has suggested selling its own rail signalling business back to Alstom, meaning that the firm would become more focused on trains.

The big benefit of the bid for the government would be that Alstom retains some level of control over its operations – until now, that has been the sticking point which has handed the Siemens-Mitsubishi bid an advantage. The promise of job creation is also likely to be welcome.

But Siemens and Mitsubishi responded on 20 June by increasing their offer again, raising the value of Alstom’s energy division to €14.6 billion (£11.7 billion), as well as upping the cash element by a further €1.2 billion to €8.2 billion. That’s still much higher than GE’s €12.4 billion cash bid, and the German and Japanese groups have also made changes to simplify the transaction.

Siemens chief executive Joe Kaeser and his opposite number at GE, Jeffrey Immelt, are both in Paris trying to win over politicians, unions and the Alstom board alike. Whoever wins the war for Alstom, it’s likely the government and public will have as much as a say as the firm itself.

< Top image: AlexNL/Global Panorama >