General Electric is preparing to offer fresh concessions to the French government as it attempts to win approval for its $16.9bn bid for Alstom and head off a rival offer from Siemens and Mitsubishi Heavy Industries.
The US industrial conglomerate will bolster existing commitments it has made to protect French jobs with an offer to give Paris the option of having increased French investment in parts of the company if its deal was approved, according to people familiar with GE.
News of GE’s plan to sweeten its promises to the Élysée came just hours after Siemens and Mitsubishi on Monday unveiled their own joint bid for parts of the French industrial champion, including €7bn in cash.
GE has already ruled out improving the financial terms of its offer and entering into a bidding war.
The Siemens-Mitsubishi offer is more complex than GE’s bid and attempts to win over the Alstom board and the French state by setting up joint ventures and the possibility of creating a “European mobility champion”.
Siemens is offering €3.9bn for Alstom’s gas turbines business, while Japan’s Mitsubishi Heavy and partner Hitachi would inject €3.1bn and merge their operations with Alstom in three other energy areas.
Siemens and Mitsubishi have an uphill struggle this week to explain the merits of the bid to Alstom’s board, which has already accepted the GE bid and faces a break-up fee of 1.5 per cent of the purchase value if another offer is accepted.
The deal proposes that Mitsubishi create three joint ventures by acquiring 40 per cent of Alstom’s steam and nuclear business, 20 per cent of its grid business and 20 per cent of its hydro business in a “broad industrial alliance”.
Mitsubishi is also offering to acquire up to a 10 per cent stake in Alstom itself from Bouygues, the company’s largest shareholder. The alliance would enable the creation of more than 1,000 jobs in France, the company said.
Siemens said it would take all of Alstom’s gas business, including related service contracts, for €3.9bn in cash. It said it also “intends to study diligently in good faith” solutions to create a European champion in transport by combining assets.
Siemens said it intends to offer a job guarantee for three years in France and Germany for the transferred business after the closure of the transaction. GE already said it would create 1,000 new jobs in France within three years of its deal.
People close to Siemens and Mitsubishi acknowledge that Alstom’s board, and chief executive Patrick Kron in particular, remain inclined towards the GE offer, although they are lobbying to change the board’s position this week.
Michel Sapin, the finance minister, said on Sunday that he did not have “any preference” for a bidder, but that the government would defend jobs and investment, using new powers allowing the state to block foreign takeovers in sectors deemed strategic.
“Mitsubishi forming an alliance with Siemens improves Siemens’ offer,” Mr Sapin said in an interview broadcast simultaneously on Europe 1 radio and iTele. “I think that GE is also going to improve its offer.”
Alstom, which makes France’s TGV high-speed trains and was bailed out by the state a decade ago, has until June 23 to make a final choice on which offer to accept.
Joe Kaeser, Siemens’ chief executive. and Shunichi Miyanaga, MHI’s chief, will present the plan to President François Hollande on Tuesday morning and to France’s lower house of parliament on Tuesday afternoon, according to the parliamentary press office.
Their case will contain a thinly disguised appeal to French concerns about a GE takeover of Alstom’s top assets. “Our concept preserves Alstom almost as it is,” a senior Siemens executive said. “There is no dismantling and no bloodbath, but a concentration on growth. This is not about the money, it is about a long-term partnership, preserving a French icon.”
In a clear attempt to woo support from the French government, MHI said it had proposed that the state take a matching stake in Alstom. “We hope and we asked for participation by the government. We would be very happy to have such a situation,” said a senior MHI official.
Both MHI and Siemens insisted that their joint bid represented “significantly higher” financial value than the GE offer, suggesting it amounted to a premium of around €1bn to the rival bid on a “like for like” basis.