General Electric Co. doesn’t intend to increase its $17 billion bid for Alstom SA’s energy assets in response to a competing offer led by Siemens AG.
“GE will not engage in a bidding war,” spokeswoman Deirdre Latour said in a telephone interview after Siemens announced a joint proposal with Mitsubishi Heavy Industries Ltd. today.
Siemens is offering 3.9 billion euros ($5.3 billion) for Alstom’s gas turbines, while Japan’s Mitsubishi and partner Hitachi Ltd. would pay 3.1 billion euros for stakes in the steam-turbine, power-grid and hydro businesses, they said today. Mitsubishi also offered to buy as much as 10 percent of Alstom, a stake valued at about 900 million euros, while Siemens will explore options to combine its rail assets with Alstom’s.
GE and Siemens have competed for support from the government, which is seeking to extract from bidders the best guarantees on jobs and energy independence. French Finance Minister Michel Sapin called for additional concessions yesterday, saying, “We’re not finished with improvements, on both sides.”
Alstom, which has a deadline of June 23 to consider alternative proposals, said a committee of independent board members will examine the Siemens offer in the coming days.
GE shares fell 0.8 percent to $26.82 at the close in New York.
Munich-based Siemens said the value of its proposal tops GE’s bid by about 1 billion euros. “Our offer is more attractive from a financial, industrial and political perspective,” Siemens Chief Executive Officer Joe Kaeser told journalists.
Kaeser and Mitsubishi Heavy CEO Shunichi Miyanaga are scheduled to speak at the economics affairs committee of France’s National Assembly tomorrow.
“There’s a lot less clarity and simplicity” in the Siemens proposal, which could run into regulatory hurdles, said Nicholas Heymann, a New York-based analyst at William Blair & Co. who rates GE, Siemens and Alstom market perform. “I can’t imagine this is going to be enough to move the needle.”
GE, based in Fairfield, Connecticut, has made a binding offer to acquire Alstom’s energy business, which makes turbines and power transmission equipment. The proposal does not include the French company’s transport business making high-speed TGV trains.
GE remains confident that its offer is more in line with French wishes as negotiators for the U.S. company meet today and tomorrow with government officials, a person familiar with the matter said last week. Steve Bolze, chief executive officer of GE’s power and water unit, and John Flannery, the company’s lead negotiator, are in France for the talks.
The company also has turned its attention to building public support, in part through advertisements in French media highlighting its pledges to create 1,000 new local industrial jobs. In its ads, the company touts its proposed “alliance” with Alstom, using the tagline, “Tomorrow is made in France.”
The U.S. manufacturer has pledged to keep Alstom’s nuclear operations in the country to allay French government concerns regarding steam turbines and services for nuclear plants, a key issue for power company Electricite de France SA and atomic-reactor maker Areva SA.