The takeover of Alstom by Siemens presented as a merger “between equals“

Without contesting the strategic interest of the merger between these firms, this operation being presented as a merger “between equals” which is – if it is approved in these conditions – a takeover of Alstom by Siemens, and harms the minority shareholders with an insufficient control premium and is unsatisfactory in terms of governance.

Thus Phitrust :
– has written to the Chairman of Alstom, asking for him to review the conditions of the operation,
– asks several written questions at Alstom’s General Assembly,
– is opposed at this stage to the 13th and 14th resolution asking to approve the steps and conditions of this merger.

The AGM must allow voting on the terms of the merger between the Mobility division of Siemens ( rail transports and signalizations) with Alstom’s which since the divestment to General Electric of its energy activities has refocused its activities on Transports. At the end of the different steps of the merger initially presented as an operation between “equals”, Siemens will hold more than 50% of Alstom’s capital (52% in 4 years). It is in fact a proper takeover operation by Siemens.

The premium proposed to the minority shareholders is only 4€ per share (about 10%), a very weak premium compared to the premium’s generally awarded to minority shareholders at the occasion of a loss of control.

By asking to vote against the 13th and 14th resolutions, asking to approve the intricacies of this operation, Phitrust does not stand with this takeover attempt by Siemens; most notably the fact that it is not properly compensating the minority shareholders.

Another complication with this operation in terms of governance is the fact that the Board post-merger will be controlled mostly by Siemens which will have assigned 6 Directors – including the President – out of 11, the designation of these 4 non-executive Directors by Alstom needing to be approved by Siemens.

We can as well question the value of the engagements regarding the protection of labor in France (8828 people) that would have been taken by Siemens knowing the antecedent of the operation of disposal of assets to General Electric.

Phitrust hopes that Alstom’s Board will respond favorably to these questions and that the conditions of the operation will be reviewed at the profit of Alstom’s minority shareholders who by their votes will also assume the responsibility of the operation.

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