Siemens barges into Alstom - GE deal with asset-swap offer

German engineering giant Siemens AG yesterday waded into Alstom's late-stage talks to sell its energy assets to General Electric Co (GE) by proposing an asset swap deal, a transaction that has found the favour of the French government.

GE was close to finalising a deal to buy the Alstom's energy operations in a deal said to be around $13 billion.

Without disclosing details, Siemens yesterday said that it had ''submitted a letter to Alstom to signal its willingness to discuss future strategic opportunities.''

French newspaper Le Figaro, which claims to have seen the letter, yesterday reported that Siemens is proposing an asset swap, where it would give Alstom some of its high-speed train and locomotive businesses plus cash in exchange for Alstom's power business.

The deal does not include Siemens' metropolitan trains division. Le Figaro gave no details of the cash part of the deal.

Alstom's energy business accounts for more than 70 per cent of the group's annual turnover of $20 billion.

Although Alstom's management is in favour of GE's offer, the French government prefers Siemens asset-swap proposal.

French economy minister Arnaud Mounteborg yesterday postponed a scheduled meeting with GE CEO Jeffrey Immelt, who was to outline his company's offer, to welcome Siemens' proposal saying it would create ''two European and world champions in the fields of energy and transport.''

Mounteborg said that the government will take the interests of the nation and not make a decision in haste.

France has recently blocked takeovers of local companies by American firms. In 2010, it turned down GE's proposal to buy French nuclear giant Areva's power grid equipment unit in favor of Schneider Electric.

Mounteborg had also last year blocked Yahoo's plan to buy French online video-sharing service Dailymotion from France Telecom. He did not want one of France's most successful start-ups being "devoured" by Americans, and instead pushed for a 50-50 joint venture.

Montebourg, who last year publicly rebuked steel tycoon Lakshmi Mittal and Maurice Taylor, head of US tyre maker Titan, is reported to have told France Télécom's CFO, Stéphane Richard, ''I won't let you sell one of France's best startups ……  You don't know what you're doing.'' 

Montebourg had called Lakshmi Mittal a liar and said that he could no longer be trusted after ArcelorMittal announced plans to close two blast furnaces at its steel plant in Florange.

Earlier the Luxembourg-based steelmaker had said it would invest €320 million at Florange, before backing out in the face of the continuing slump in demand for steel in Europe (See: ArcelorMittal mothballs two blast furnaces in France).

Montebourg also started a war-of-words with Maurice Taylor, head of US tyre maker Titan, who had responded sarcastically to Montebourg's suggestion to invest in a loss-making Goodyear plant in Amiens in northern France.

Alstom has recently been hit hard due to low demand for its new thermal power plants. The Paris-based company last year announced 1,300 job cuts in order to reduce costs by as much as €1.5 billion by April 2016 and plans to sell assets worth €3 billion to raise cash.

Early this month it struck a deal to sell its heat exchange unit to German private equity firm Triton for €730 million.  (See: Alstom to sell heat exchange unit to German PE firm Triton for $1.01 bn)

It is also under US investigation over alleged bribery in 11 power projects in Indonesia, China and India.

Alstom has a joint venture with Bharat Heavy Electricals Ltd in India.