Siemens AG’s share price up, to prepare for bidding war with GE over the energy division of Alstom SA

According to people with knowledge of the matter, Siemens AG is preparing a bid for the energy unit of Alstom SA. The people, who asked not to be identified because the process is still not public, said that Siemens AG, which is working in collaboration with Mitsubishi Heavy Industries Ltd and Hitachi Ltd, is to enter a bidding war with General Electric Co. for one of the most-desired French companies.

As reported by the people with knowledge of the process, the gas-turbines unit may be acquired by Siemens, in a deal that is considered to provide additional cash to Alstoms shareholders and investments. The offer by Siemens and its partners is said to be able to increase pressure on General Electric to improve the bid it already made for the energy business of Alstom, which amounts to 17 billion dollars.

Moreover, each of the two companies that are fighting over the energy unit of Alstom SA is trying to make the French government back the deal. The countrys government, on the other hand, is focused on preserving the nations interest associated with jobs, research centres and turbines for nuclear plants.

As reported by Bloomberg, the Finance Minister of France – Mr. Michel Sapin commented on the situation: “We’re not finished with improvements, on both sides.” He also said that the bid of Siemens becomes more attractive than the one offered by General Electrics now when Mitsubishi Heavy is to participate in the eventual deal.

The official price of Siemens AGs bid is expected to be officially revealed later today, but the price of the deal is expected to be around 4 billion euros (5.41 billion dollars) in cash. A roughly 40% stake of the steam and nuclear-turbine business of Alstom is to be purchased by the energy joint venture between Mitsubishi and Hitachi, according to the person with knowledge of the issue.

Siemens AG was adding 0.14% to trade at 98.94 euros per share by 11:24 GMT, marking a one year change of +28.77%. According to the information published on the Financial Times, the 25 analysts offering 12-month price targets for Siemens AG have a median target of 106.00, with a high estimate of 135.00 and a low estimate of 88.00. The median estimate represents a 7.29% increase from the last price of 98.80.