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U.S. conglomerate General Electric Company (GE - Analyst Report) has seemingly entered into a bidding war for the coveted French industrial giant Alstom - currently in the cross-hairs of German engineering firm Siemens and Japan's Mitsubishi Heavy Industries.

Countering General Electric’s $16.9 billion bid to buy Alstom’s energy assets, Siemens and Mitsubishi are expected to submit a joint offer, which includes a cash element of around $12.3 billion, for Alstom’s turbines business today, according to a Reuters report. The bid is likely to heighten the political and industrial scuffle for the creator of famed French high-speed TGV trains, with each side vying for the French Government’s patronage.

GE’s Proposal

Siemens first came into the Alstom fray when General Electric submitted a formal offer to acquire the French conglomerate’s Thermal, Power and Grid businesses (See: Siemens Jumps on Alstom Bandwagon with GE).

General Electric has shown notable flexibility in the melee till date, willing to make concessions in its negotiations with the French government. Showing its determination to conserve the nation’s industrial foothold and protect jobs, the company has pledged to create 1,000 new jobs in France within a span of 3 years, if the Alstom deal goes through.

Responding to a request by the French government, General Electric had extended the deadline for consideration of its proposal by Alstom’s board to Jun 23. Meanwhile, the French officials seek better proposals for Alstom’s assets.

Siemens & Mitsubishi

According to Reuters, Siemens and Mitsubishi are jointly considering a move wherein Siemens would acquire Alstom's gas turbines business, and the Japanese group would infuse cash and industrial assets into a joint venture in steam turbines.

Media reports say that Mitsubishi wants to acquire a 10% stake in Alstom, and subsequently collaborate with it in building steam turbines, and cooperate in its wind and hydro-energy activities as well.

Reuters also reported that Siemens intends to propose merging of its rail operations with that of Alstom. The suggested deal has potential synergies as it would integrate Siemens’s Germany-based ICE high-speed trains with Alstom’s TGV network, creating a European champion in train construction and rail engineering.

Siemens had initially planned to swap its rail assets for the French conglomerate’s energy division, reportedly winning the approval of the French industry minister Arnaud Montebourg.
 
Political Stance

The French Socialist government is not favoring either bidder, citing safeguarding of jobs and preservation of the nation’s industrial competitiveness to be its primary concerns. France is currently struggling with record unemployment, and conserving the 18,000-strong workforce of Alstom remains a priority for the government.

While both contenders are vying for the government’s backing, Finance Minister Michel Sapin said he is looking to General Electric to further sweeten the deal. The government, through a new decree, has extended its powers to block foreign takeovers in sectors having a strategic importance.

Some sources opine that the Siemens-Mitsubishi deal would break up Alstom’s power business, counteracting the government’s aim to preserve Alstom’s size and scale. On the other hand, the structure would allow Siemens to avoid European Union antitrust regulations that would otherwise have created roadblocks for the deal.

General Electric currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Icahn Enterprises, L.P. (IEP), CLARCOR Inc. (CLC - Snapshot Report) and Noble Group Limited (NOBGY), each sporting a Zacks Rank #1 (Strong Buy).

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