France to oppose GE’s $13.5bn Alstom deal
The French government said it would oppose General Electric’s $13.5bn offer for Alstom’s energy business, saying that it wanted the US conglomerate to suggest a different and more equitable deal.
In a letter sent to Jeffrey Immelt, GE chief executive, signed by the French industry minister Arnaud Montebourg, it said it wanted a “balanced partnership” rather than a takeover.
Last week the Alstom board of directors accepted a GE deal which valued its majority energy business, which makes up 70 per cent of revenues, at $13.5bn, despite the clear unease of the government.
“French companies are not prey,” said Mr Montebourg last week, suggesting that he preferred a rival offer from Siemens of Germany, which would involve assets swaps to create two “European champions” in trains and power.
On Monday, in a letter published by Les Echos, the government said it wanted GE to offer a deal more akin to the successful 50:50 joint venture between GE and Safran in aircraft engines, rather than a straight takeover.
“The government would like to examine with you the means of achieving a balanced partnership, rejecting a pure acquisition, which would lead to Alstom’s disappearing and being broken up,” said the letter.
It added that as part of a new deal GE could transfer its railway assets into Alstom Transport. It said that otherwise the division would be too small to compete when the company’s majority energy division was carved out.
‘‘As it stands, we unfortunately cannot support the proposals you have made . . . based solely on the acquisition of Alstom’s activities in the energy domain,” said the letter.
The French government has the power to block takeovers of French companies in “strategic sectors”, although in practice it uses a mixture of tacit warnings, public threats and financial power to try to influence deals.
In the letter Mr Montebourg stressed Alstom’s strategic importance to the country’s nuclear industry.
At a joint press conference in Paris last week Patrick Kron, chief executive of Alstom, and Mr Immelt said they were confident their deal would be completed. “This is not my first time at the Elysee,” said Mr Immelt.
On Monday GE said in a statement: “We appreciate the engagement of the French government. We believe our proposal is good for France, for Alstom and for GE. As our letter to President Hollande stressed, we are open to continuing dialogue.”