France stepped firmly into the battle over Alstom on Friday, saying it preferred General Electric’s (GE) 12.35 billion euro (US$16.8 billion) bid and would take a 20 percent stake in the French industrial jewel.
French Economy Minister Arnaud Montebourg said he had sent a letter of intent to GE chief executive Jeff Immelt laying out the terms of the alliance, chosen over a rival offer from Germany’s Siemens and Japan’s Mitsubishi Heavy Industries.
The firebrand French minister blamed EU competition rules for thwarting a deal with Siemens, accusing Brussels of blocking the creation of European industrial giants.
Photo: AFP
Under the proposal, the French state would take a controlling 20 percent stake in power and rail group Alstom by buying two-thirds of the shares owned by French group Bouygues as a show of “patriotic vigilance,” Montebourg said.
A nuclear and steam unit backed by Paris is also planned, which Montebourg said “ensures the effectiveness, robustness and sustainability of this alliance.”
Alstom shares rose 1.1 percent to close at 28 euros after the news.
Alstom’s board is to decide whether the group should enter into exclusive negotiations with GE before the offer expires tomorrow.
GE confirmed that Immelt is currently reviewing the offer. The future of Alstom has been at the center of a trans-Atlantic tug-of-war for several months, after French President Francois Hollande’s Socialist government objected to the US giant buying the jewel of French engineering and encouraged a rival offer by Siemens and Mitsubishi.
Early on Friday, Siemens and Mitsubishi improved and simplified their linked offers, increasing their valuation of Alstom’s energy division to 14.6 billion euros (US$19.9 billion), less than a day after GE had made several changes to make its bid more attractive.
GE sweetened its proposal by offering a government veto over sensitive nuclear energy technology and promising to strengthen Alstom’s transportation business, which makes the French TGV trains.
Montebourg said the Siemens offer would have hit opposition from Brussels. “The Siemens offer ... came up against the competition rules that are overseen by the European Commission,” he told journalists.
“If we wanted today to create an Airbus the European Commission — with its very ideological vision on competition — would prevent us,” he said.
“This is an obstacle to the creation of European and multinational industrial champions. This is a lesson to ponder for the new European Commission,” Montebourg said.
Siemens head Joe Kaiser said on Friday that the firm “understands the national interests of the French government regarding the reorganization of Alstom.”
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