Paris - Germany’s Siemens is working on a formal asset-swap offer for Alstom’s power business that could come as early as this week and see France take a stake in a resulting rail-focused French group, sources close to the talks told Reuters. Alstom is already in talks with U.S. conglomerate General Electric over a 12.35 billion euro ($16.9 billion) bid for its power arm, which it is due to review by June 2. However, under pressure from the French government, it has opened its books to Siemens so it can propose its own deal if it wants to. Sources on both sides of the talks said Siemens was actively working on an improved asset swap offer that would create two European “champions”: one in power around Siemens, one in transport around Alstom.
In a short letter to Alstom late last month, Siemens had outlined a proposal worth $14.5 billion, offering to exchange part of its rail business plus cash in exchange for Alstom’s power assets. Siemens has since sweetened its offer to suggest handing over all of its rail business to Alstom and discuss setting up a joint venture in rail signalling, sources familiar with the talks said. To limit the German firm’s influence in the resulting transport-focused Alstom group, Siemens is also discussing with Paris and Berlin the opportunity for France - which owns 0.9 percent of Alstom’s capital via state fund CDC - to take a more sizeable stake, political and other sources familiar with the talks said. According to various sources, Paris has lately been considering taking a stake in Alstom - one source said it could take over 10 percent - in an effort to secure the French roots of the engineering group which received a state bailout a decade ago and is a big private employer in the country. Meanwhile Siemens could offer to sell Alstom’s wind and nuclear power assets to French state-controlled energy group Areva, thereby addressing government concerns over France’s energy independence, said two of the sources familiar with the talks. Some of the sources close to the talks cast doubt on whether Alstom would be interested in the new deal sketched out by Siemens. Still, a rival offer would give the French government more leverage with GE after it gave itself the power last week to block takeovers in “strategic sectors”.
Sources close to Alstom say it wants cash and backs GE’s bid, and while it does want to expand in rail signalling it is not interested in taking on more rolling stock. Siemens, General Electric and Areva declined to comment. A spokeswoman for Alstom declined to comment beyond saying it was reviewing GE’s bid and had received an expression of interest from Siemens, but no formal offer. A spokesman for French state fund CDC could not be reached outside European business hours.