Released June 17, 2014 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Mitsubishi Heavy Industries (OTC:MHVYF) (MHI) (Tokyo, Japan) has joined Siemens AG (NYSE:SI) (Munich, Germany) to take over the power business of French engineering giant Alstom S.A. (Paris, France).
The companies have announced a joint offer that includes 7 billion ($9.5 billion) in cash, challenging a much higher cash offer from General Electric Company (NYSE:GE) (Fairfield, Connecticut) which has already submitted a 12.35 billion ($16.9 billion) bid. However, Siemens and MHI are not aiming to take as much of Alstom's power business and the deal will allow Alstom to remain a French-listed company.
Siemens wants to pay 3.9 billion ($5.3 billion) to buy Alstom's gas business including related service contracts. It has also offered a job guarantee for three years in France and Germany for the transferred business after the deal closes. Mitsubishi Heavy Industries is looking to form a 'broad industrial alliance with Alstom' and create three joint ventures by acquiring 40% of Alstom's Steam and Nuclear business, 20% of its Grid business and 20% Hydro business. MHI is willing to pay 3.1 billion ($4.2 billion) in cash. It also wants to become a 'long-term shareholder' in Alstom by offering to acquire up to a 10% per cent stake from current Alstom shareholder, Bouygues SA.
The partners claimed that their offer would result in the creation of more than 1,000 jobs in France. Last month, the French government revealed that it wanted GE's bid to be successful. It also broadened an existing 2005 law that will let it block foreign takeovers of French companies operating in what it termed 'strategic industries'. For additional information, see May 22, 2014, article - France Could Block Alstom Takeover.
Alstom declined comment but said that it will present the offer to its board in the coming days.
"We have been in successful alliance with the French company, Areva, within the nuclear power field," said Shunichi Miyanaga, President and CEO of Mitsubishi Heavy Industries. " I believe our collaboration with Alstom in the turbine business will give birth to another Japan-France alliance with superior technological expertise, which will be able to address the needs of emerging nations. In thermal power generation, utilization of high-efficiency combustion technology of globally abundant low-grade coal is poised to grow. In environment, with respect to measures addressing particulate matter (PM) 2.5, significant technological synergies are expected. Investment in grid would better position MHI for the possible power deregulation as well as the separation of power generation from transmission/distribution. We believe that this proposal will create a partnership for our long term co-prosperity based on mutual trust".
Joe Kaeser, President and CEO of Siemens, added: "This move would be a win-win solution for all related parties. Alstom would remain an independent energy and transport player with a strong brand. Its energy business would be strengthened through the partner MHI and we intend to explore opportunities with Alstom to create a European rail champion for the world market. This transaction would further enhance our value chain of electrification by expanding our installed base in gas. This fits well into Siemens -- Vision 2020 to strengthen our core activities."
As part of its Vision 2020 programme, Industrial Info reported recently that Siemens aims to axe 11,600 jobs in an effort to cut its costs by 1 billion ($1.34 billion). For additional information, see June 3, 2014, article - Siemens Axing 11,600 Jobs.
Last month Siemens and Mitsubishi created closer ties when they formed a joint venture with to provide plants, products and services for the iron, steel and aluminium industries. Both companies will contribute their metallurgical industry activities to the joint venture, with MHI taking a 51% stake and Siemens 49%. The new joint venture will start operation in January next year. For additional information, see May 9, 2014, 2014, article - Siemens, Mitsubishi Heavy Industries form Joint Venture for Iron, Steel and Aluminium.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
The companies have announced a joint offer that includes 7 billion ($9.5 billion) in cash, challenging a much higher cash offer from General Electric Company (NYSE:GE) (Fairfield, Connecticut) which has already submitted a 12.35 billion ($16.9 billion) bid. However, Siemens and MHI are not aiming to take as much of Alstom's power business and the deal will allow Alstom to remain a French-listed company.
Siemens wants to pay 3.9 billion ($5.3 billion) to buy Alstom's gas business including related service contracts. It has also offered a job guarantee for three years in France and Germany for the transferred business after the deal closes. Mitsubishi Heavy Industries is looking to form a 'broad industrial alliance with Alstom' and create three joint ventures by acquiring 40% of Alstom's Steam and Nuclear business, 20% of its Grid business and 20% Hydro business. MHI is willing to pay 3.1 billion ($4.2 billion) in cash. It also wants to become a 'long-term shareholder' in Alstom by offering to acquire up to a 10% per cent stake from current Alstom shareholder, Bouygues SA.
The partners claimed that their offer would result in the creation of more than 1,000 jobs in France. Last month, the French government revealed that it wanted GE's bid to be successful. It also broadened an existing 2005 law that will let it block foreign takeovers of French companies operating in what it termed 'strategic industries'. For additional information, see May 22, 2014, article - France Could Block Alstom Takeover.
Alstom declined comment but said that it will present the offer to its board in the coming days.
"We have been in successful alliance with the French company, Areva, within the nuclear power field," said Shunichi Miyanaga, President and CEO of Mitsubishi Heavy Industries. " I believe our collaboration with Alstom in the turbine business will give birth to another Japan-France alliance with superior technological expertise, which will be able to address the needs of emerging nations. In thermal power generation, utilization of high-efficiency combustion technology of globally abundant low-grade coal is poised to grow. In environment, with respect to measures addressing particulate matter (PM) 2.5, significant technological synergies are expected. Investment in grid would better position MHI for the possible power deregulation as well as the separation of power generation from transmission/distribution. We believe that this proposal will create a partnership for our long term co-prosperity based on mutual trust".
Joe Kaeser, President and CEO of Siemens, added: "This move would be a win-win solution for all related parties. Alstom would remain an independent energy and transport player with a strong brand. Its energy business would be strengthened through the partner MHI and we intend to explore opportunities with Alstom to create a European rail champion for the world market. This transaction would further enhance our value chain of electrification by expanding our installed base in gas. This fits well into Siemens -- Vision 2020 to strengthen our core activities."
As part of its Vision 2020 programme, Industrial Info reported recently that Siemens aims to axe 11,600 jobs in an effort to cut its costs by 1 billion ($1.34 billion). For additional information, see June 3, 2014, article - Siemens Axing 11,600 Jobs.
Last month Siemens and Mitsubishi created closer ties when they formed a joint venture with to provide plants, products and services for the iron, steel and aluminium industries. Both companies will contribute their metallurgical industry activities to the joint venture, with MHI taking a 51% stake and Siemens 49%. The new joint venture will start operation in January next year. For additional information, see May 9, 2014, 2014, article - Siemens, Mitsubishi Heavy Industries form Joint Venture for Iron, Steel and Aluminium.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
