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GE’s Bid for Alstom Assets Faces Competition From Siemens

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General Electric Company (NYSE:GE) and French firm Alstom SA (EPA:ALO) (OTCMKTS:ALSMY) were planning to wrap up a nearly $13 billion deal for Alstom’s energy assets this weekend, when Siemens popped up with a competing offer late Thursday. Rumor has it France’s activist economy minister, Arnaud Montebourg, reminded Alstom Chairman and CEO Patrick Kron that his blessing was required for any deal involving a major French business.

Siemens offer for Alstom seemingly sweeter

As it stands now, most analysts believe Siemens AG (ADR) (NYSE:SI)’ offer is likely to be perceived as the better of the two. This means the pressure is on General Electric Company (NYSE:GE) and GE CEO Jeffrey Immelt to sweeten their bid as well.

Siemens AG (ADR) (NYSE:SI)’s proposal values Alstom SA (EPA:ALO) (OTCMKTS:ALSMY)’s energy business between $14 and $15 billion. The deal also calls for locating the global headquarters of key power-generating operations in France. Siemens also offered to leave sensitive technology—Alstom develops software used to operate nuclear plants—in French hands. The bulk of the Siemens deal would be trading a significant portion of its rail-transport business to Alstom in return for the French firm’s energy assets.

Alstom SA (EPA:ALO) (OTCMKTS:ALSMY)’s energy assets represent around 70% of the company’s value, with the rail-related enterprises comprising the remaining 30%, so adding Siemens’ rail businesses could provide some synergies.

Montebourg is economic nationalist

French economy and production minister Montebourg is known as left-wing idealist and a man of great energy and purpose. He actually ran against French PM Hollande inb the 2011 Socialist party primaries and put on a very strong showing. Political analysts say his political popularity is why Hollande included Montebourg in his cabinet.

Montebourg takes his role as an economic nationalist for France very seriously. Alstom had been quietly negotiating with GE since February, according to sources, and Montebourg just caught wind of the negotiations last week. He ordered Alstom CEO Patrick Kron to immediately come to the ministry to explain himself.

Sources also indicated that he and Kron shared a “tense and frank” discussion on the topic of the deal. When questioned by the media regarding the meeting, Alstom declined to comment.

GE CEO Immelt met Sunday with Mr. Montebourg to try and calm the situation down and get the deal back on track. Sources say General Electric Company (NYSE:GE) has also indicated a willingness to keep some decision-making powers in France.

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