Alstom Takeover: Too Important To Pass Up
Siemens is unlikely to easily concede Alstom's power assets to General Electric (GE) and we expect the German company to submit a competitive counter-bid for Alstom's energy business by the end of May. While there are currently several overlaps between Siemens' and Alstom's energy businesses, we believe the stakes are too high for Siemens to not submit a competitive bid. That said, we note that Siemens has significantly less room to manoeuvre than GE based on its financial position. We also note that the French government will play a key role in determining the eventual acquirer of Alstom.
On April 29, several major media sources reported that French engineering group Alstom had accepted a cash offer of EUR10bn from US-based General Electric (GE) for its energy unit. This announcement comes just two days after Alstom's German rival Siemens had submitted a letter to Alstom's board, stating its intention to intervene in the acquisition. At present, media sources have reported that the board of Alstom remains open to a counter bid from Siemens, which is currently undertaking due diligence. Alstom's energy business accounted for just over 70% (or EUR15bn) of the company's global revenue in FY2013, and this deal is contingent on the approval of the French government.
Stakes Too High To Fold
|Power The Dominant Business|
|Alstom - Revenue By Business, EURmn|