French engineering company Alstom SA says it will decide by the end of this month whether to accept a 12.35 billion euro (US$17 billion) offer from General Electric Co (GE) for its energy business.
France’s government, which regularly intervenes in corporate decisionmaking, had questioned whether selling Alstom to Connecticut-based GE threatens the country’s energy independence and jobs. Officials had pressed for more time to allow rival Siemens AG, based in Germany, to make an offer.
Alstom described the proposal to merge with GE as “practically perfect” yesterday and said should it decide to accept a Siemens offer it would be have to pay the US company 1.5 percent of the purchase price.
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Alstom, which pioneered high-speed trains, said it would focus on transport operations after selling off the energy business.
Alstom shares rose 10.3 percent to 29.78 euros in initial trading yesterday.
Alstom chief executive Patrick Kron, strongly criticized by French Economy Minister Arnaud Montebourg for not informing the government of talks with GE, said that the French state would “have a say” in the outcome of the rival negotiations.
French Prime Minister Manuel Valls told French Inter radio that the view of the government had been taken into account over the future of Alstom and expressed satisfaction that “no exclusive talks” had been opened with GE for the moment.
However, late on Tuesday Alstom’s board voted to approve the GE bid over a rival offer from Siemens, an informed source said.
“Alstom has approved GE’s offer,” the source said after the board met following an announcement by Siemens that it had decided to make an offer for the engineering company.
Neither company would comment, but French daily Le Figaro said that the Alstom board of directors had voted unanimously in favor of GE’s “firm and financed” offer to buy its energy unit.
Earlier on Tuesday, Siemens said it had decided to make an offer to Alstom, but gave no details of its intended bid.
However, the German behemoth said it was conditional on it being granted access to the French company’s books and given the green light to quiz management.
According to a preliminary proposal sent at the weekend to Alstom, not confirmed by the German company, Siemens offered to buy Alstom’s energy business and give the French giant part of its train activities in return.
Economists say Alstom is too small alongside giants such as GE and Siemens, and that it is uncompetitive.
The latest announcements come a day after Siemens chief executive Joe Kaeser met French President Francois Hollande in Paris for what he called “a very open, trustful and amicable exchange.”
In unusually frank remarks about company strategy, the German government on Monday said a possible tie-up between the French and German groups offered 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 in response to reporters’ questions.
In a letter to the French presidency on Tuesday, GE stressed its desire to create a “world leader in energy in France” and create jobs in the country.
France’s Financial Markets Authority called on Alstom to make known the details of the offers before the bourse opened yesterday.
Hollande, who also met the head of GE on Monday, has vowed to safeguard jobs at Alstom, which is one of France’s biggest private-sector employers with about 18,000 staff across the country.
Energy accounts for about 70 percent of Alstom’s business, with the rest focused mainly on making railway equipment, including high-speed trains.
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