PARIS (Reuters) - Germany’s Siemens (SIEGn.DE) wrote to Alstom (ALSO.PA) on Tuesday asking for more information ahead of a likely offer for the French company’s power business, French Economy Minister Arnaud Montebourg said.
Alstom is already in talks with U.S. conglomerate General Electric (GE.N) over a 12.35 billion euro ($16.9 billion) bid for its power arm, which it is due to review by June 2. Under pressure from the French government, however, it has opened its books to Siemens as well.
Sources have told Reuters that Siemens is working on a formal offer to swap part of its rail business plus cash in exchange for Alstom’s power business, which could come as early as this week.
“Siemens is pursuing its work and has written to Alstom this morning asking for more information and a deeper understanding of Alstom, obviously with the aim to most certainly draw up a proposal,” Montebourg told a parliamentary economic affairs committee on Tuesday.
“We understand its determination to be constant, serious and diligent,” he said.
It was not immediately clear what more information the German company had requested. Alstom said it had given Siemens access to the same data as GE.
Siemens declined to comment.
Montebourg and the French government have criticized GE’s bid, saying a sale of Alstom’s power arm would weaken the once-bailed out engineering group by reducing it to its smaller transport business.
Meanwhile, Paris and Berlin have played up an alliance between Alstom and Siemens as a European alternative that would create two industry champions, one around power with Siemens and one around transport with Alstom.
Alstom has shown little interest in a deal with its longtime German rival, but a competing offer would give the French government more leverage with GE after it gave itself the power to block foreign takeovers in “strategic sectors”.
Montebourg said he was still waiting to see improved detailed offers from both groups.
“I cannot prejudge which one will be the best offer,” he said. “Nothing is certain; everything has yet to be decided.”
To address French concerns over energy independence, Siemens could offer, among other sweeteners, to hand over Alstom’s wind and nuclear power assets to French state-controlled energy group Areva AREVA.PA, two sources familiar with the talks told Reuters.
Areva CEO Luc Oursel said earlier on Tuesday his group could be interested in Alstom’s wind turbines unit.
Alstom CEO Patrick Kron, who was auditioned after Montebourg by the same parliamentary committee, confirmed that talks were underway to bring together Alstom’s and Areva’s wind operations.
“Why not, if that helps address some stakeholders’ concerns,” he said, while cautioning against options that would end up “chopping up into pieces” Alstom’s various businesses.
Throughout his audition, Kron continued to back GE’s bid, saying it would help strengthen Alstom in the face of a power market depressed by weak demand and low electricity prices.
He warned that prolonged uncertainty over a deal could discourage clients from signing new contracts with Alstom and thus risk further weakening the business and staff morale.
He also said that if Siemens were to make a formal offer, it would be studied fairly by Alstom’s board of directors. The board would consider not only the financial aspect of the bid but also its execution risk and its impact on jobs, he said. ($1 = 0.7302 Euros)
Reporting by Natalie Huet, Benjamin Mallet and Jean-Baptiste Vey; Additional reporting by Jens Hack in Munich; editing by Jane Baird