Siemens, Mitsubishi hatch Alstom plan as French ministers meet

Thu Jun 12, 2014 8:51am EDT
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By Benjamin Mallet and Natalie Huet

PARIS (Reuters) - French ministers met on Thursday to discuss the fate of cash-strapped engineering group Alstom as Siemens and Mitsubishi Heavy Industries hatched a plan to beat an offer by U.S. conglomerate General Electric.

The German and Japanese groups said on Wednesday they were discussing a joint offer for Alstom's energy assets that would compete with GE's $17 billion proposal and would be worth around $9.8 billion, according to the Nikkei newspaper.

Two sources familiar with the Siemens-Mitsubishi plan said it would not be a direct buyout of Alstom's power assets but would rather set up one or several joint holdings in power. They added that Siemens was still ready to give Alstom its train business as part of the deal - although the French group has so far not shown much interest in such an asset swap.

Such a plan could, however, address calls from the government to favor partnerships over a straight sale of Alstom's power arm - 70 percent of group revenue. They fear leaving the company vulnerable once reduced to its smaller transport business.

France has tried hard in recent weeks to drum up better offers for Alstom, which makes power turbines and trains, saying it wanted to preserve the country's jobs and industrial know-how and even giving itself powers to veto a deal.

Alstom is the maker of France's iconic TGV high-speed trains and a top supplier of power equipment that is used in 40 percent of the world's nuclear plants. It employs some 18,000 people in France - around a fifth of its global workforce. It was rescued by the state from near bankruptcy a decade ago and has since strongly relied on public orders for rail and power equipment.

Thursday's meeting brought together French President Francois Hollande, Economy Minister Arnaud Montebourg and David Azema, the head of French state holding company APE.

Another meeting is scheduled next week, an official at the president's office said, stressing that the government did not favor one offer over the other at this stage.   Continued...

The logo of French power and transport engineering company Alstom is pictured on the roof of the company's plant in Reichshoffen near Haguenau, North Eastern France, April 24, 2014. REUTERS/Vincent Kessler