Paris is demanding continued French minority ownership in Alstom’s energy assets as the price for approving a $16.9bn bid from General Electric of the US over a rival offer from Siemens and Mitsubishi.
The socialist government is pressing GE to allow Alstom to preserve a minority stake in the turbine business, with potentially a “tiny symbolic” stake for the French state as well, a senior official said.
The demands come as Jeffrey Immelt, the chief executive of GE, flew back to Paris for a new round of negotiations with government officials on Thursday. Alstom’s board have until Monday to decide between the two offers.
The French government has given itself an effective veto over the deal. It is intending to make a decision on its preferred bidder by the weekend, the senior official said, who described the two offers as currently running “neck and neck”.
Siemens is offering €3.9bn for Alstom’s gas turbines business, while Japan’s Mitsubishi Heavy and partner Hitachi would pay €3.1bn to take a minority stake in a joint venture with Alstom in its steam, grid and hydro divisions.
The offer from GE is more straightforward, offering to buy Alstom’s energy assets outright, although agreeing to a number of concessions on employment and preserving centres of decision making in France.
With intense talks still under way with both sides, the government viewed Mitsubishi-Siemens as having a “slight advantage” because their proposal was based on forming a partnership with Alstom, not a takeover.
But if the GE offer “ticked the sovereignty box”, the bias would shift its way because its proposal was more straightforward to implement and was favoured by the Alstom board, the official said.
The government also wants GE to ring fence Alstom’s nuclear turbine operation, which it regards as a strategic national priority, and wants full joint venture terms for Alstom’s grid and renewables businesses.
The official said the government meanwhile needed more clarity from Mitsubishi on its long-term intentions for Alstom’s steam turbine operations in which the Japanese company proposes taking a 40 per cent minority stake.
Paris wants to know whether Mitsubishi would look to merge them with its existing joint venture with Toshiba.
The Alstom board is leaning towards supporting the GE offer in part due to concerns about how the rival offer would give Mitsubishi the power to veto future tender bids that competed directly with the Japanese group, according to people close to the talks.
The Mitsubishi-Siemens deal would see the Japanese group become a 40 per cent shareholder in Alstom’s steam turbine business, which is also its direct rival, regularly competing for projects across Europe and Asia.
Under the proposal, which has been seen by the Financial Times, at least one of Mitsubishi’s four board members would have to support any major commercial decisions, including “any open-bid process” over a certain size.
Mitsubishi said in a statement that it intends to use this right to “promote the autonomous commercial interests of Alstom JV . . . in compliance with our common interests and, more importantly, with our business ethics.”
Under the proposal, Alstom Steam’s chief executive officer and chief of sales would be designated by Alstom, while the chief financial officer and one of the two chief technical officers by Mitsubishi and partner Hitachi, according to the document.