France Says It May Extend GE-Alstom Deal Review Beyond June
Economy Minister Concerned Purchase Could Hand U.S. Company Vital French Technology
French officials said Friday they might extend their review of General Electric Co. GE +0.26% 's proposed $17 billion takeover of Alstom SA ALO.FR -1.58% 's power business beyond the beginning of June.
Economy Minister Arnaud Montebourg met Friday with Steve Bolze, chief of GE's power unit, and warned that more time could be needed to evaluate how GE's proposed purchase would affect issues of national sovereignty.
The minister gained new powers over the acquisition this week via a government decree that effectively gives him veto power over deals involving areas deemed to be strategic to the country, such energy and transportation.
Read More GE Heads to Paris to Save Alstom Deal Policy, Data, CEO Frustration Chill French Business Climate France Boosts Power to Block Foreign Takeovers of Strategic Firms On Wall Street, meanwhile, the political wrangling has some analysts warning that GE should be prepared to walk away from the transaction rather than concede too much to get it done.
GE has justified doing a deal that was much larger than the $1 billion to $4 billion acquisitions it has targeted by saying it was a bargain.
"People were OK with it, because this was kind of an opportunistic value move—Alstom needed the cash, GE had the cash, and so they could get it at a kind of acceptable price," said Shannon O'Callaghan, a senior analyst at Nomura. "You don't have a ton of room to move away from that."
The French minister is concerned GE's purchase could transfer ownership of vital technology, such as nuclear-power generation, out of French hands. The country remains heavily reliant on nuclear power.
The meeting between Messrs. Montebourg and Bolze was productive, according to a government aide who attended. Mr. Bolze said Mr. Montebourg's concerns about the GE proposal were "legitimate," the aide said, and the two agreed to continue their discussions.
A GE spokesmen didn't respond to requests for comment.
Alstom's board is scheduled to meet June 2 to take action on the GE proposal, which it has already endorsed. Action by the board could box out GE rival Siemens AG SIE.XE -0.32% , which has said it is weighing a bid as well.
Mr. Montebourg has encouraged Germany's Siemens to step forward and said he would prefer a deal that pairs some assets from Alstom with those of another European firm. Siemens, however, has yet to make a formal bid.
Chief Executive Jeff Immelt has offered to be flexible. In a letter to President François Hollande earlier this month, Mr. Immelt suggested the company could make concessions regarding nuclear technology and would also be willing to part with some Alstom assets, including onshore and offshore wind technology.
But GE hasn't publicly offered more generous concessions, in part because it has made the only formal bid so far.