Siemens and Mitsubishi challenge GE with rival bid

Move to acquire part of French company and form partnership could derail GE's £10bn offer

Germany's Siemens has joined forces with Japan's Mitsubishi Heavy Industries (MHI), to offer a rival bid for Alstom, which includes £2.4 billion in cash, challenging a bid by General Electric.

Under the deal, Siemens offered to acquire 100% of Alstom's gas business for £3.1 billion in cash. In an attempt to sway the French government, Siemens also pledged to create 1,000 jobs and establish its European headquarters for the combined gas turbine business in France.

Meanwhile, Mitsubishi Heavy Industries (MHI) said it intended to create three joint ventures with Alstom, injecting £2.4 billion in cash into the company, and acquire a 10% stake in the French firm from long-time shareholder Bouygues.

Alstom said it would review the proposal in the coming days. 

Joe Kaeser, chief executive of Siemens said: "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."

However, the French government is still discussing with GE ways to improve its offer to acquire the thermal, renewables and grid businesses of Alstom, totalling £10 billion, with the deadline for its decision on the bid set for 23 June.

The French government wants the US firm to give more guarantees about the number of jobs in France, the location of decision-making centres in the country and the country's "energy independence". The government has been talking to GE for more than a month.

Alstom said: “At the request of the French government, we have agreed to extend the deadline for consideration by the Alstom board of our proposal until June 23. We have done so to facilitate ongoing discussions with the government. The industrial project we have presented is good for Alstom, for France and for GE, and our discussions have continued to be constructive.”

Any bid will have to be approved by the French government, which has the power to intervene in takeovers of strategic companies.