International manufacturing powerhouses Mitsubishi Heavy Industries, Ltd. and Siemens AG have announced a US$12.2 billion plan to take over French conglomerate Alstom.
The partners said they “propose several transactions in order to preserve Alstom’s current perimeter in almost all its activities, enhance its industrial sustainability, strengthen its position as a diversified global player in energy and transport, and strengthen its financial structure, while remaining a major French listed group.”
Mitsubishi Heavy Industries (MHI) and Siemens also said that their proposal would be “very beneficial for Alstom employees” and will help foster further job creation in France.
The proposal, detailed today in a joint press conference, would see MHI take a 20% interest in Alstom’s hydroelectric power division, 20% interest in its grid business, and 40% interest in its steam and nuclear arms for $4.2 billion in cash.
“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,” MHI President and CEO Shunichi Miyanaga said. “We believe that this proposal will create a partnership for our long-term co-prosperity based on mutual trust.”
The deal would also give MHI a 10% interest in the company from its largest shareholder, Bouygues SA, which, according to MHI, “would seal Alstom’s future growth and give a strong and stable industrial anchorage to Alstom.”
HydroWorld.com reported in May that Alstom’s hydropower branch had a strong performance through Fiscal Year 2013/14, posting a 40% increase in orders over the previous fiscal year.
Meanwhile, Siemens would take a 100% share in Alstom’s gas business for $5.3 billion in cash while offering a three-year job guarantee in France and Germany for transferred business after closing the transaction.
The deal would help Alstom “strengthen its balance sheet”, MHI and Siemens said, allowing the company to invest more into its transportation units.
“This move would be a win-win solution for all related parties,” Siemens President and CEO Joe Kaeser said. “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.”
The MHI/Siemens proposal was received by Alstom yesterday and will soon be submitted to the company’s Board of Directors.
Alstom is one of France’s largest private sector employers, with 18,000 staff. The company reportedly has a market value of about $11.5 billion.
HydroWorld.com reported in April that Alstom was also fielding offers from General Electric and Areva.