Siemens intervenes in General Electric’s bid to acquire Alstom
The French government has postponed a meeting with General Electric to discuss the US manufacturer’s bid for French rival Alstom’s energy business, saying that it wants time to examine a separate offer from Germany’s Siemens. Arnaud Montebourg, industry minister, had been planning to meet Jeffrey Immelt, GE’s chief executive, in Paris on Sunday to discuss the unconfirmed $13bn approach. Alstom’s board is also expected to meet on Sunday to consider the GE offer.
Mr Montebourg said: “Given the strategic stakes for French industry and economy, the government won’t accept any precipitous decision made without taking account of alternative choices in the national interest.” Siemens on Sunday confirmed that it had sent a letter to Alstom saying it was willing to hold talks with the French power generation and train manufacturer regarding “future strategic opportunities”. A person familiar with Siemens’ thinking told the Financial Times that Siemens had not tabled a counterbid but was happy to hold discussions if Alstom was interested. Siemens' intervention could find favour with the French government, which was reported to have urged the German group to step forward to prevent a jewel of French industrial prowess falling into US hands. This would not be the first time Mr Immelt has been snubbed after flying to Paris to try and win French government support. Four years ago his bid for Areva’s power grid equipment business was rejected in favour of a domestic deal including selling some of that business to Alstom. Some analysts said last week that the German engineering group would probably not stand idle if its big US rival tried to buy a much bigger footprint in Europe. The FT understands that Joe Kaeser, Siemens’ chief executive, held strategic talks with his Alstom counterpart some weeks ago but these did not lead anywhere. The failure of those initial discussions suggests that finding a solution agreeable to both Siemens and Alstom will not be easy. Siemens first considered a takeover of Alstom in 2004 but those plans were stymied by the opposition of then president Nicolas Sarkozy. Relations between Alstom and Siemens have been tense over the years. Nevertheless, Siemens’ political connections in France could stand it in good stead as there is said to be considerable sympathy in Paris for the idea of building a European champion in trains and power generation. Mr Kaeser, Siemens’ chief executive, has in the past expressed his support for building a European champion in trains. Siemens’ successful sale of its SIS IT solutions business in 2010 to France’s Atos Origin – which the companies described as having created a “pan-European IT champion” – showed that Franco-German combinations are possible. Olivier Esnou at Exane BNP Paribas said Siemens might be interested in Alstom as under Mr Kaeser, Siemens is tightening its focus on all aspects of the electrification chain. Siemens is very careful regarding its balance sheet . . . they’d need huge European assurances that it wasn’t going to fly back in their faces An enhanced GE presence in power grids would be a particular worry for Siemens as GE could bring its greater financial strength to bear here. “Siemens is very careful regarding its balance sheet . . . they’d need huge European assurances that it wasn’t going to fly back in their faces,” a London-based analyst said on Friday, before news of the Siemens letter. Some analysts also view a Siemens counterbid as difficult due to considerable overlaps in their transmission, power generation and rail businesses, as well as Alstom’s focus on Europe where Siemens is already well represented. “Siemens would probably not counterbid due to antitrust issues in Europe in most businesses,” Gael de Bray at Société Générale said. Moreover, a GE acquisition of Alstom’s energy business might turn out to be positive for Siemens as it would have one less competitor in European power generation. Siemens and GE already coexist quite happily in the US market and could do so in Europe. “The implications are positive as [a successful GE bid] would further consolidate the power generation and transmission market – which is positive from a competitive behaviour and pricing standpoint,” Mr de Bray said.