French president meets bidders for industrial jewel Alstom

28th April 2014, Comments 0 comments

French President Francois Hollande, fighting to protect national interests in takeover target Alstom, met the head of US giant General Electric on Monday before holding talks with rival bidder Siemens.

Germany meanwhile sought to boost Siemens' case, saying a tie-up between the French and German giants offered a "big opportunity" for Europe's two biggest economies.

In talks lasting about an hour with GE chief Jeffrey Immelt, Hollande pressed his case for jobs and Alstom's decision-making centre to be protected in France.

"There were legitimate issues (evoked by the government) which GE is working on," said a GE source.

"There is still work to be done and that's normal. GE is on the case," the source added.

Immelt himself described the talks as an "open, friendly and productive" meeting.

"It was important to hear in person President Hollande's perspective and to discuss our plans," Immelt said. "We understand and value his perspective, and we are committed to work together."

Hollande is later due to meet with Siemens boss Joe Kaeser and Martin Bouygues, the head of the key shareholder in Alstom, French construction, telecom and media firm Bouygues.

Meanwhile in Berlin, a spokesman for Germany's economy ministry said a possible tie-up between Alstom and Siemens would offer "a big opportunity and great potential in terms of industrial policy for Germany and France."

The high-level talks are part of a race by the French Socialist government to protect Alstom's decision-making centre in France, jobs, and strategic energy interests, in what Economy Minister Arnaud Montebourg has described as a "patriotic" response to an expected bid by GE.

At the end of last week it emerged that GE was in advanced talks to buy Alstom's energy interests for about 10 billion euros ($14 billion).

Energy activities account for about 70 percent of Alstom's business, with the rest being focused mainly on making railway equipment including the TGV high-speed train.

GE already has big energy manufacturing activities in France, but Montebourg objected on Monday to the possibility that Alstom "in three days, can decide to sell 75 percent of a national jewel behind the backs of the employees, of the government, of most of the board and of the senior executives."

- 'National gem run from Connecticut' -

He told RTL radio that a bid from GE raised a simple problem that "the main part of Alstom, 75 percent of the businesses, 65,000 employees in the world, is going to be run from Connecticut."

Alstom is under pressure because its main markets for power generation and rail equipment are expected to be weak in the next few years.

Its share price has fallen heavily in the last year, pushing Bouygues into loss, although Alstom shares jumped on the bid reports.

Economists say that Alstom is too small alongside giants such as GE and Siemens and that it is uncompetitive.

They also comment that the French government, since selling its stake in 2006, has little real control over what the Alstom board decides, and they tend to the view that strategically a deal with GE would have a better strategic fit than one with Siemens.

Ten years ago, when Alstom had to be rescued and was shorn of its shipbuilding interests, France cold-shouldered takeover interest from Siemens which is now believed to be interested in acquiring Alstom energy activities in exchange for handing the French group its own rail interests to create two giant, specialised European groups.

The French government, in a recent policy switch and amid growing signs that French industry is seriously uncompetitive, is proposing big cuts in planned public spending to relieve taxes on businesses, but faces strong opposition from its left wing in a crucial vote this week.

The case of Alstom is highly sensitive politically and is also seen as emblematic of deep strains in many parts of French industry.


© 2014 AFP

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