Siemens, MHI make Alstom play

Siemens and Mitsubishi Heavy Industries (MHI) have confirmed their bid for parts of the energy-related assets of Alstom in a €7bn ($9.5bn) series of proposed deals that would leave the latter’s wind-power and grid operations under their current ownership “for the time being”.

As expected, Siemens proposes buying 100% of Alstom’s gas business in a €3.9bn deal.

Japan’s MHI will offer to create three joint ventures with Alstom in steam and nuclear, grid and hydro, injecting a total of €3.1bn for minority stakes in each.

"For the time being, the grid and wind business will stay in the Alstom perimeter", Christophe Reille from Footprint Consultants, an external PR agency for Mitsubishi in Paris, told Recharge.

Siemens officials weren't immediately available for comment, but the company had made clear that it is mostly interested in Alstom's gas turbine business, which would complement Siemens' own activities in the area best.

Siemens has a dominant market position in Europe in both offshore wind turbines and grids, and could encounter competition issues if taking over those parts of Alstom.

The joint approach is the long-expected counter offer to a $17bn bid from GE of the US, which has been supported by Alstom’s board.

As part of the offer, MHI would buy 40% of Alstom's steam and nuclear business, 20% of its grid business and 20% of its hydro business.

MHI also intends to become a long-term shareholder of Alstom by offering to acquire a up to 10% stake from current shareholder Buygues SA.

The MHI-Alstom alliance would enable the creation of more than 1,000 jobs in France.

Siemens under the deal would acquire all of Alstom's gas business, and offers a three-year job guarantee in France and Germany for the transferred business.

Jobs are a very sensitive issue in crisis-ridden France that could help sway the wary French government in favour of whichever bid gives the best job guarantees.

The German company also intends to explore with Alstom possibilities to create a joint "mobility champion." Siemens has earlier indicated that it may cede some of its rail business to Alstom if that were to help the deal to go through.

Under the deal, Alstom would remain listed in France and focussed on most of its current activities, Siemens and MHI stress.

"This move would be a win-win solution for all related parties. Alstom would remain an independent energy and transport player with a strong brand," says Siemens chief executive Joe Kaeser.

"Its energy business would be strengthened through the partner MHI and we intend to explore opportunities with Alstom to create a European rail champion for the world market."

Kaeser according to the Süddeutsche Zeitung newspaper is scheduled to explain the bid tomorrow in front of the industry committee of the French parliament.

Alstom said that an ad hoc committee of independent company directors, chaired by board member Jean-Martin Folz, met today in the presence of chief executive Patrick Kron with senior officers of Siemens and MHI, who presented the terms of the proposal.

"This proposal will be reviewed by the ad hoc committee and submitted to the Board of Directors of Alstom in the coming days," Alstom said.