Siemens AG’s share price up, raises its bid for Alstom SA’s energy assets in cooperation with Mitsubishi

Siemens AG and its partners, including Mitsubishi Heavy Industries Ltd, made a joint statement today revealing that they increased their bid for the energy business of Alstom SA. The improved offer is estimated at 14.6 billion euros (19.9 billion dollars). According to the joint statement, the cash component of the bid was raised by 1.2 billion euros (1.63 billion dollars) and reached 8.2 billion euros.

As reported by the Financial Times, Siemens AG said in its statement: “The proposal continues to preserve Alstom’s current perimeter in almost all its activities.” The company, which is based in Germany, also added that the offer “enhances its industrial sustainability” and “strengthens its financial structure”.

The move of Siemens AG and its partners values Alstoms energy unit at a total of 14.6 billion euros and comes after yesterday their main rival Geleral Electric Co. increased its own offer for the energy assets of the French industrial company. Moreover, the sweetened bid was made only few hours before the French President Francois Hollande meets Mr. Jeffrey Immelt, who is the current Chief Executive Officer of General Electric.

The Japanese company Mitsubishi, which works in collaboration with Siemens, also revealed that it plans to purchase a 40% stake in the combined stream, grid and hydro business of Alstom. This increases the cash contribution from Mitsubishi Heavy Industries Ltd by 800 million euros to 3.9 billion euros, which leaves the valuation of the businesses unchanged.

The improved offer of Siemens comes right after General Electric Co. also sweetened its bid for the energy business of Alstom SA.

One of the analysts, who work at Landesbank Baden-Wuerttemberg, commented the situation for Bloomberg: “The Siemens-Mitsubishi offer is more attractive from a purely valuation perspective. The cash element has naturally now edged a bit closer to the GE cash element.”

Siemens AG was adding 0.02% to trade at 99.96 euros per share by 9:16 GMT, marking a one year change of +31.54%. According to the information published on CNN Money, 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 6.06% increase from the last price of 99.94.