Alstom/GE: politics would prove a big obstacle
Alstom shares are still trading up about 13 per cent on Thursday, following a report from Bloomberg that it's in talks with US giant General Electric over a blockbuster $13bn bid for the French trainmaker.
As fastFT has already reported, Alstom's rather cagey effort to defect speculation aren't exactly being digested as an outright denial of a potential deal, particularly one that many analysts think would make sense.
The FT's Michael Stothard, however, has some crucial context on the politics, which may prove to be the biggest obstacle if an offer materialises.
The deal would see a French national champion, which employees 18,000 people in France and was rescued in a state-backed bailout in 2004, sold to an American company.
It might also be seen as a slap in the government's face from Bouygues, which received an enormous amount of support from the state for its ultimately unsuccessful bid to buy telecoms operators SFR from Vivendi.
Alstom has been hit by the shift in the European energy landscape away from thermal power in recent years, as utilities cut back on orders for traditional coal and gas-fired plants.
Shares are still down 25 per cent since the start of 2011.
The engineering group in January cut its operating margin and cash flow forecasts for this year, citing weakness in its thermal power division. The group last year announced that it was cutting 1,300 jobs, mainly at its coal-fired boiler business.
The deal would be unlikely to face too many competition concerns, as GE's power equipment and diesel freight locomotives do not generally compete with Alstom products, although there is some overlap in gas turbines and nuclear power.