Siemens Lands New Partner to Unplug General Electric From Alstom

NEW YORK (TheStreet) -- Industrial conglomerate General Electric (GE) promised investors it would get back to its industrial roots. Equally and perhaps more important, CEO Jeff Immelt is no longer interested in prolonging the weak GE Capital finance unit.

To that end, acquiring the power business from struggling French company Alstom (ALSMY)was a logical first step. But the deal has been anything but smooth. And it looks as if Immelt's confidence in GE's ability to close Alstom will be tested in more ways than one.

German rival Siemens AG (SI), which has made a counter-offer for Alstom, moved closer this morning by teaming up with Mitsubishi Heavy Industries out of Japan. Both companies are joining forces to counter GE's $17 billion offer.

There are still questions, however, about the extent of their tag-team. Will Siemens and Mitsubishi Heavy issue separate bids? Or will they come together and offer a joint proposal, which needs to be submitted to Alstom's board of directors by June 16.

What we do know is that Siemens intends on making it as hard as possible for its hated rival GE to grab a foothold near its Munich headquarters.

In April, shortly after GE made its initial bid of $13.5 billion for Alstom, Siemens countered by offering its high-speed train and locomotive units in return for Alstom's power business. And to sweeten the deal, Siemens held out a carrot, saying was ready to offer a "significant" amount of cash to Alstom shareholders.

Feeling the pressure from Siemens and the French government, GE upped its bid by an extra $4 billion. Alstom's board has formally accepted that proposal. But citing concerns about possible job losses, the French government prefers Siemens to win the deal, given Siemens' close proximity to France.

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