PARIS (The Deal) -- Japanese engineering group Hitachi said Thursday that it is interested in joining peer Mitsubishi Heavy Industries and Germany's Siemens in their bid for Alstom's power-equipment unit, potentially adding financial muscle to a consortium that is hoping to beat General Electric (GE - Get Report) to acquire the French operation.
A joint bid would enable the Japanese companies to maintain the status quo in a thermal power joint venture that was established in FebruarY and help Hitachi achieve its aim of doubling the proportion of sales that it makes outside of Japan.
"Hitachi is aware of the Alstom issue ... we think this is a favorable development for the thermal generation power partners MHI [Mitsubishi] and Hitachi and we would like to continue to collaborate in this regard as well," Hitachi's Katsumi Nagasawa, who is power systems head, told analysts on Thursday.
The comments came a day after Siemens and Mitsubishi said they were working on a joint bid for Alstom's energy unit, to counter an 11.4 billion euro ($15.4 billion) offer from Fairfield Conn.-based GE.Hitachi and Mitsubishi could jointly bid 500 billion yen ($4.9 billion) for Alstom's steam turbine business, while Siemens will bid the same amount for the gas turbine operation, Japan's Nikkei newspaper reported on Thursday. Mitsubishi will purchase a 65% stake in the Alstom operation, leaving Hitachi with 35%, in line with their respective share of the power business joint venture, Mitsubishi Hitachi Power Systems Ltd, according to the paper. Mitsubishi is also considering a bid for Alstom's energy grid operations, a source with knowledge of the situation said on Wednesday. That was contradicted Thursday by the Nikkei report, which claimed that the Japanese and German bid partners will not make an offer for the grid operations. Siemens and Mitsubishi expect to make their offer before June 16, the companies said on Wednesday. Hitachi wants to increase revenue from its power systems operations to 800 billion yen by 2020, up from a forecast 520 billion yen in 2015, the company said on Thursday. The bulk of that growth is targeted outside of Japan where Mitsubishi expects the share of revenue to more than double to 41% of its total take. Hitachi CEO Hiroaki Nakanishi said last month that the merger of his company's thermal power business with Mitsubishi's operations would enable the JV to pursue acquisitions. "There's no big cap on how much to spend," he said. Hitachi's involvement in the Mitsubishi and Siemens bid could strain relations with General Electric, its partner in a nuclear power venture, though Nagasawa insisted on Thursday that its participation in the Alstom bid would not affect the partnership. The emergence of the Japanese companies as part of Siemens group may, however, have fundamentally changed the structure of the German company's offer for Alstom. Siemens had initially hoped to secure the power business in a straight swap for its transportation assets, which are mainly train manufacturing. That proposal was met with little enthusiasm by Alstom's management, which considers the German technology to be inferior to its own and was attracted by the simplicity of GE's cash offer. An all-cash offer from the Japanese and German partners could prove more attractive to the French company, which might also be interested in holding onto the cash generative grid business. Alstom's power grid unit generated 211 million euros of operating income in 2013 from sales of 3.7 billion euros. Alstom said at the end of April that is supports GE's cash bid but would wait to see what Siemens offered. GE has struggled to win the support of the French government, which is seeking assurances that French job losses will not result from a deal with the Americans.