Alstom rescue delayed by partnerships clause

24th May 2004, Comments 0 comments

PARIS, May 23 (AFP) - A rescue plan for engineering group Alstom, worked out by EU and French officials in Brussels at the beginning of the week, remained the subject of tough negotiations this weekend over the fine print on partnerships.

PARIS, May 23 (AFP) - A rescue plan for engineering group Alstom, worked out by EU and French officials in Brussels at the beginning of the week, remained the subject of tough negotiations this weekend over the fine print on partnerships.

At issue are sensitive principles concerning the extent to which it is appropriate for an EU state to guide the structure of its national industry.

EU competition authorities want to write restrictive references into the deal but France wants a freer hand, and various sources told AFP that agreement was unlikely before Monday.

A source close to the matter told AFP that talks were continuing and that "the only sticking point is the fine print of the paragraph on future partnerships for Alstom".

France wants the reference to be vague, allowing Alstom a breathing space of four to five years, the time to return to strength.

The source explained: "But there are some in Brussels who would like this clause to be precise and to specify that Alstom will have to make agreements within Europe which do not involve state interests."

This would rule out a tie-up with the French state nuclear power group Areva and would open up opportunities for Siemens of Germany.

EU Competition Commissioner Mario Monti said this week: "We prevented the Areva option because it has negative state aid implications."

Alstom which makes turbines for power stations, builds ships and high-speed trains and has many other engineering interests, was formed of an alliance between Alsthom of France and the power interests of GEC in Britain. It is seen in France as a central part of the country's industrial capability.

Another source said: "Alstom would be happy to make partnerships but it wants to do so from a position of strength and choose its own partner. It is very difficult to commit to a marriage for four years with someone who is not wanted."

This source suggested that more attractive partnerships were to be found in Asia where Alstom obtains big contracts. This remark appeared to refer to Mitsubishi of Japan.

In the background, the main rival to Alstom, the German engineering giant Siemens, appears ready to challenge EU Commission approval for the rescue, which is based on the French state converting aid into equity and on other creditors doing likewise.

Siemens is interested in Alstom's turbine business, and possibly also in its transportation activities so as to strengthen its capacity to compete with General Electric of the United States.

In recent months, as EU competition officials studied a crisis state-orchestrated rescue for Alstom last September, there has been speculation that the French government might welcome some kind of an alliance between parts of Alstom and Areva.

Economy, Finance and Industry Minister Nicolas Sarkozy, who went to Brussels on Monday, for the third time in two weeks, to thrash out the framework of a rescue plan, returned to Paris promising that Alstom would not be broken up. Earlier French President Jacques Chirac had said that France was not opposed to alliances as long as they were balanced.

After the meeting in Brussels, confusion arose over arrangements for a meeting between Chirac and German Chancellor Gerhard Schroeder to discuss the creation of powerful industrial groups in Europe. German officials said that the heads of Alstom and Siemens would participate, but France denied this. The Germans said later that the meeting would be "political" in nature and it was too soon to say if other people might participate.

Signs emerged in Germany late in the week suggesting that Siemens might challenge the rescue in the European court. In any case, the impression that Siemens was being kept at arms length went down badly in Germany following French lobbying recently to ensure that pharmaceutical group Sanofi-Synthelabo acquired the French-German company Aventis.

© AFP

Subject: French news

 

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