GE steps closer to buying Alstom energy assets as board OKs offer

0
22
Print Friendly

The battle for Alstom’s prized energy business heated up Wednesday, as the board of the French “national jewel” said it was in favour of an offer by US giant General Electric while Germany’s Siemens upped its rival bid.

The US and German behemoths have been publicly vying for Alstom’s energy assets for days in a politically sensitive battle over the French group.

France’s government, which views Alstom as a firm of national strategic importance, has waded into the bidding war, with Economy Minister Arnaud Montebourg vowing to defend the “industrial interests of the nation”.

In a statement, Alstom said Wednesday that its board, which met the previous evening, was in favour of GE’s 12.4-billion-euro ($17-billion) bid for its energy arm, without closing the door to other proposals.

It said it acknowledged “unanimously the strategic and industrial merits of this (GE) offer” and had decided to set up a committee to review the bid in depth by the end of May.

“It has however reserved the right to respond to unsolicited offers for its entire energy business and engage in discussions with bidders demonstrating a serious interest that could lead to a superior offer for Alstom,” the group added.

News the company could fall into American hands has angered some in France, including firebrand Economy Minister Arnaud Montebourg.

“It’s not over yet,” Montebourg said on Wednesday.

“We have a few weeks ahead of us… and the government intends to use this time to defend the industrial interests of the nation.”

French Prime Minister Manuel Valls took a more conciliatory tone, telling France Inter radio that the view of the government had been taken into account over the future of what he has described as a company “of national strategic importance”.

In a bid to further reassure the government, Kron said Wednesday the state would “have a say” on the outcome of negotiations over Alstom’s energy assets.

Energy activities — which include power generation and transmission — account for about 70 percent of Alstom’s business but the company is better known as a railway equipment maker that manufactures France’s prized TGV high-speed trains.

– Keeping jobs a priority –

French President Francois Hollande, who met the heads of GE and Siemens on Monday, is concerned mainly with safeguarding jobs at Alstom as his Socialist government battles record unemployment and declining industrial competitiveness.

The French firm is one of the country’s biggest private sector employers with about 18,000 staff nationwide.

Christian Noyer, governor of the Bank of France, said the case “highlights that some French companies struggle to survive alone, and there again you have a problem of competitiveness.”

“It’s one more argument showing that increasing the competitiveness of French companies is essential,” he told Europe 1 radio.

During his hour-long meeting with GE’s chief executive Jeffrey Immelt, Hollande pressed his case for jobs and for Alstom’s French decision-making centre to be protected.

GE in turn addressed this concern in a letter to the French presidency, stressing its desire to create a “world leader in energy in France” and generate jobs in the country.

Siemens, meanwhile, values Alstom’s energy business at 10.5 billion to 11 billion euros, and has offered to hand over part of its trains business to the French company in the deal.

In a letter from the German engineering giant to Alstom seen by AFP Wednesday, the company upped the transport part of the bid to include its underground trains business as well as the high-speed trains sector.

The German government has welcomed the potential tie-up between the two groups, calling it a “big opportunity” for both countries.

It would present “great potential in terms of industrial policy for Germany and France”, a spokesman for the economy ministry said Monday.

Shares in Alstom, which had been suspended this week, soared when they resumed trading on Wednesday — up some 9 percent around midday.