Germany’s Siemens (NYSE: SI) and Japan’s Mitsubishi Heavy Industries officially announced a joint offer that includes a cash element of 9 billion euros ($12.2 billion) to purchase France-based Alstom’s turbine businesses.
The joint offer counters a bid made by U.S.-based General Electric (NYSE: GE) to purchase Alstom’s power unit for $17 billion. The Siemens-MHI bid would allow Siemens to acquire 100 percent of Alstom’s gas turbines business for $12.2 billion. In addition, MHI plans to create three joint ventures by acquiring 40 percent of Alstom's Steam and Nuclear business; 20 percent of Alstom's Grid business; and 20 percent of its Hydro business. MHI will then inject 3.1 billion euros ($4.2 billion) in cash into Alstom Euro. As a result, Alstom would remain in control of its nuclear, transmission and renewables business units.
Both companies say the transaction will add jobs, and Siemens intends to offer a job guarantee for the transferred gas business employees for three years in France and Germany after the deal closes.
"We have been in successful alliance with the French company, Areva, within the nuclear power field. I believe our collaboration with Alstom in the turbine business will give birth to another Japan-France alliance with superior technological expertise, which will be able to address the needs of emerging nations," said Shunichi Miyanaga, president and CEO of Mitsubishi Heavy Industries. "In thermal power generation, utilization of high-efficiency combustion technology of globally abundant low-grade coal is poised to grow. In environment, with respect to measures addressing particulate matter (PM) 2.5, significant technological synergies are expected. Investment in grid would better position MHI for the possible power deregulation as well as the separation of power generation from transmission/distribution."
Alstom had endorsed GE’s offer that was made back in April, but the French government wanted to give Siemens time to make a bid. GE said in Bloomberg that they would not engage in a bidding war with Siemens and MHI, and does not intend to increase its $17 billion bid.