General Electric Co (GE) chief executive Jeff Immelt was due in Paris yesterday to meet France’s economy minister as he closes in on a deal to buy the global power arm of struggling French engineer Alstom SA, sources close to the matter said.
Several sources close to talks between the companies said on Friday a transaction could be announced in days.
Some put a US$13 billion valuation on Alstom’s turbines and power grid equipment business.
Photo: Bloomberg
Sources close to the French government who flagged the likely meeting between French Minister of Economic Affairs Arnaud Montebourg and Immelt said French Prime Minister Manuel Valls might also meet the chief executive, who heads one of the 10 largest investor-controlled companies in the world, should the more senior politician return from a visit to Rome in time.
French media said a decisive Alstom board meeting, the second since Friday, would also take place yesterday.
Montebourg has been a strong exponent of France’s traditionally cautious approach to foreign takeovers of companies in flagship industries.
Last week he said he would protect the national interest and study “other solutions and scenarios” for Alstom, also the maker of TGV high-speed trains and one of France’s top private-sector employers, which is struggling with heavy debt and weak demand.
Le Figaro reported that the French government had approached Alstom’s long-time German rival, Siemens AG, about a possible alternative offer.
Siemens declined to comment.
One source close to the talks said the government had been looking for alternatives for months without success “so I don’t see what they will find now.”
Nevertheless, political sensitivities about a national champion run deep.
“I ask you, prime minister, to please tell the shareholders and management of the groups concerned that this transfer of control is out of the question,” former French minister Jean-Pierre Chevenement said in an open letter to Valls published by Les Echos newspaper on Saturday.
An industry source close to the talks said GE would argue there was not much concern about job cuts in France, where Alstom employs 20 percent of its workforce, about 18,000 people.
The source said that in gas turbines, for example, GE has its own gas turbine making business in France while some of Alstom’s is in Switzerland.
“The French state is asking for assurances from GE, all that is a game that implies a discussion around the disappearance of national champions,” the source said. “Conversely, GE will try not to offer too much.”
Sources have said a deal is backed by Alstom’s main shareholder, French conglomerate Bouygues with 29 percent.
Alstom’s Kron told union officials on Friday he was discussing an “industrial operation,” but did not name GE.
A deal to sell Alstom’s power assets, which account for about 70 percent of total group revenue, would effectively break up the engineering group and leave
Alstom as a pure transport business building its well-known high-speed TGV trains, other rolling stock and transport industry equipment.
However, it could be less politically sensitive than a full takeover offer for the company, talk of which caused Alstom shares to soar on Thursday.
Alstom was bailed out by the French state in 2004 and relies heavily on orders from national rail operator SNCF and utility EDF.
It employs 93,000 worldwide, with about half of its French total of 18,000 in the power business.
Alstom’s power assets include turbines for coal, gas and nuclear power plants, wind farms and systems for power transmission and distribution.
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