June 12 (Bloomberg) -- General Electric Co. plans another round of lobbying meetings with French officials on its $17 billion offer for Alstom SA’s energy assets as Siemens AG weighs a bid with Mitsubishi Heavy Industries Ltd., a person familiar with the matter said.
Steve Bolze, chief executive officer of GE’s power and water unit, and John Flannery, the company’s lead negotiator, are in France for discussions this week and next, said the person, who asked not to be identified because the details are private. GE’s strategy hasn’t changed after Siemens disclosed talks with Mitsubishi yesterday, the person said.
Siemens and Mitsubishi will decide whether to submit a proposal to Alstom’s board of directors by June 16. One option being considered is for Mitsubishi to buy Alstom’s steam turbine and grid business and Munich-based Siemens to get the gas turbine operations, people familiar with the matter said.
GE sees its Alstom offer as more in line with the desires of the French government, which has expressed a preference for a so-called European solution, said the person familiar with GE’s plans. Fairfield, Connecticut-based GE has pledged to create 1,000 new local jobs through its acquisition.
The French government is examining all bids with a view to getting improved offers, and has no preference between the proposals at this stage, a government official said today. Ministers will convene next week to discuss the matter.
“We continue to have constructive discussions about the details of our proposed alliance with Alstom and remain confident,” GE said in a statement to Bloomberg News when asked for comment about the Siemens-Mitsubishi discussions.
French President Francois Hollande is meeting today with Prime Minister Manuel Valls, Industry Minister Arnaud Montebourg and David Azema, the head of the agency that manages the government’s stakes in companies, to discuss the bidding for Alstom, a government official said. France doesn’t favor one proposal over the other, the official said.
GE and Siemens are vying for the government’s backing as French leaders seek guarantees on jobs and the country’s energy independence. GE has made a binding bid to acquire the energy business of Alstom, which is based near Paris and makes turbines and power transmission equipment.
A Siemens-Mitsubishi offer would have to be “pretty enticing” to sway Alstom’s board and the government, said Daniel Holland, an analyst with Morningstar Inc. in Chicago.
“I’m not really convinced yet that splitting up the assets between Siemens and Mitsubishi is really what the company was looking for,” said Holland, who rates GE, Siemens and Alstom as hold. “It’s a development worth paying attention to because it means that Siemens isn’t going away.”
Alstom rose 0.8 percent in Paris trading as of 1:33 p.m. while Siemens was little changed in Frankfurt. GE fell 1 percent in New York yesterday, while Mitsubishi Heavy rose 1.3 percent in Tokyo today.
Siemens has proposed swapping its trainmaking business for Alstom’s energy assets to create two leading European companies in rail and energy. Mitsubishi’s role as part of a Siemens offer could potentially boost the valuation of the German company’s bid and resolve antitrust issues, two people familiar with Siemens’s plans said.
“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 CEO Shunishi Miyanaga said in a statement.
Tokyo-based Mitsubishi Heavy will team up with Hitachi Ltd. to take part in the Alstom bidding with Siemens, the two companies said today.
The plan is a “good thing” for Hitachi, Katsumi Nagasawa, president of Hitachi’s power systems unit, said today in Tokyo. The bid won’t affect Hitachi’s alliance with GE in nuclear energy, he added.
Mitsubishi Heavy and Hitachi may bid 500 billion yen ($4.9 billion) for Alstom’s steam turbine business while Siemens could pay 500 billion yen for Alstom’s gas turbine business, Japan’s Nikkei newspaper reported without attribution.
Montebourg, the French industry minister, had initially favored the proposal by Siemens. He has said GE’s offer is much improved after the U.S. company’s job-creation promise.
GE has said it’s flexible on the terms of its bid, signaling a willingness to make more concessions in negotiations with the French government. CEO Jeffrey Immelt made a rare appearance by a U.S. corporate leader before the National Assembly in May, saying GE would protect jobs and the nation’s industrial base.
The company agreed last month to a French government request to extend the deadline for consideration of the Alstom offer to June 23. French officials asked for the three-week delay while seeking better terms for an acquisition.
While bringing Mitsubishi into the contest is a “creative trick” by Siemens, it is unclear whether that will satisfy France, said Volker Stoll, a Stuttgart-based Landesbank Baden-Wuerttemberg analyst 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.”