France Defends New Takeover Law that Can Seal Alstoms Future

France Defends New Takeover Law that Can Seal Alstom's Future

Under the new decree, which extends the sectors covered in a 2005 law, investments by foreign groups in key sectors such as energy, water, transport, health and telecoms will have to be vetted by the government.

PARIS -- France on Thursday defended moves to thwart foreign takeovers of "strategic" industrial groups after creating new powers to control the fortunes of Alstom, an energy giant and current target.

The new rules, which could be applied to block the attempts of General Electric (IW 500/6) or Siemens (IW 1000/35) to take over Alstom's energy arm, will come into effect on Friday.

"The fundamental role of the state is to protect the strategic interests of France," Finance Minister Michel Sapin told Europe 1 radio.

"This is true in France as it is true in any other country" seeking to safeguard national interests, he said.

Under the new decree, which extends the sectors covered in a 2005 law, investments by foreign groups in key sectors such as energy, water, transport, health and telecoms will have to be vetted by the government.

Economy Minister Arnaud Montebourg, an advocate of economic patriotism who has been accused of protectionism in his bid to promote and protect French industry, will then decide whether to give the green light.

Factors to be taken into account would include the sustainability of the proposal, the infrastructure implications and whether the national interest is satisfied.

Permission would then be granted provided that the company meets certain commitments. Companies can appeal to France's highest administrative court if they are unhappy with the decision.

Economy Minister Montebourg is openly opposed to a buy-out of Alstom's energy wing by  General Electric voicing concern over possible job losses and the fact that a jewel of French industry "is going to be run from Connecticut."

He has instead advocated a tie-up with German firm Siemens.

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The board of Alstom has said that it will decide by the end of May which of the two offers it prefers, although it has already signaled that it prefers the GE offer of 12.35 billion euros (US$17  billion) for its energy activities.

The GE offers the only firm proposal so far. The company said in a reaction to France's new decree that it "recognized the importance of the energy sector for France and will continue our constructive discussions with the French government."

"Our project is good for Alstom, for its workers and for France," the statement said. "Our project aims to build a world leader in the energy sector."

The future of Alstom has caused an embarrassing split in the French cabinet with new energy minister Segolene Royal having come out against Montebourg's stance that a European tie-up would be in France's best interests.

"General Electric is a very good opportunity for Alstom. It offers the best industrial project," Royal said in an interview published on Wednesday.

"Why not say so? And why do we want systematically to make foreign investment go away?" she said.

Royal later moved to play down her remarks, tweeting that talks with Siemens were going well, following a meeting between Montebourg and the chief executive of Siemens, Joe Kaeser.

- Abhik Chanda, AFP

Copyright Agence France Presse, 2014

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