Mitsubishi Heavy Industries Ltd. and Siemens AG of Germany need to review their business strategy now that the French government has chosen General Electric Co.’s rival bid for the energy-related operations of Alstom SA.
Mitsubishi Heavy said in a statement it “acknowledges and regrets the decision made by the French government to not support the offer made by itself and Siemens.”
The company “looks forward to having other opportunities to work with leading French companies,” it said, showing its readiness to continue pursuing business expansion overseas.
French Economy Minister Arnaud Montebourg said Friday that the government would back the proposal from GE, citing the need to avoid a monopoly in the European market resulting from a tie-up between Alstom and Siemens.
Alstom’s board of directors on Saturday unanimously approved GE’s bid to acquire its energy business. “The board of directors unanimously decided to issue a favorable opinion of GE’s offer” and will begin consultations with personnel, a company statement said.
GE initially proposed acquiring Alstom’s entire energy-related operations, but later changed course and proposed setting up joint ventures for some operations to leave a certain degree of management control for Alstom.
The revised proposal will reduce GE’s management role, but will still give the U.S. conglomerate strong footholds in Europe, the Middle East and Africa, where Alstom has a strong presence.
In thermal power generation equipment operations, GE boasts annual sales of ¥1.53 trillion, the biggest in the world, while Alstom, the fourth-largest, has sales of ¥1.14 trillion.
Their combined sales of close to ¥3 trillion far exceed the figures for Siemens, the second-largest, at ¥1.33 trillion, and the thermal business joint venture between MHI and Hitachi Ltd., at ¥1.24 trillion.
The future of Alstom has been at the center of a transatlantic tug of war for several months after French President Francois Hollande’s Socialist government objected to the U.S. giant buying the jewel of French engineering, and encouraged a rival offer by Siemens and Mitsubishi.
The pair improved and simplified their linked offers on Friday, increasing their valuation of Alstom’s energy division to €14.6 billion ($19.9 billion), less than a day after GE had announced several changes to make its bid more attractive.
GE sweetened its proposal by offering a government veto over sensitive nuclear energy technology and by promising to strengthen Alstom’s transportation business, which makes the high-speed TGV trains.