Industryweek 6606 Ge Steps Closer Buying Alstom Energy Assets Board Oks Offer

GE Steps Closer to Buying Alstom Energy Assets as Board OKs Offer

April 30, 2014
The battle for Alstom's prized energy business heated up Wednesday between General Electric and Siemens, as the board of the French "national jewel" approved an offer by the U.S. giant and the German company upped its rival bid.

PARIS -- The battle for Alstom's prized energy business heated up Wednesday between General Electric and Siemens, as the board of the French "national jewel" approved an offer by the U.S. giant and the German company upped its rival bid.

GE and Siemens have been publicly vying for Alstom's energy assets for several days in a politically sensitive battle over the engineering giant.

In a statement, Alstom said Wednesday that its board, which met the previous evening, was in favor of a 12.4 billion euro ($17 billion) bid for its energy arm by GE, without closing the door to other proposals.

It said it acknowledged "unanimously the strategic and industrial merits of this (GE) offer" and had decided to set up a committee to review the bid by the end of May.

"It has however reserved the right to respond to unsolicited offers for its entire energy business and engage in discussions with bidders demonstrating a serious interest that could lead to a superior offer for Alstom," the group added.

News the company could fall into American hands provoked an angry response from French Economy Minister Arnaud Montebourg, who blasted Alstom head Patrick Kron for not informing the government of takeover talks, accusing him of deliberately keeping him in the dark.

French Prime Minister Manuel Valls took a more conciliatory tone Wednesday, telling France Inter radio that the view of the government had been taken into account over the future of what he has described as a company "of national strategic importance."

In a bid to further reassure the government, Kron said Wednesday the state would "have a say" on the outcome of negotiations over Alstom's energy assets.

He added that French construction, media and telecom group Bouygues, a key shareholder in Alstom, would retain its holding of 29.0%.

Keeping Jobs a Priority

French President Francois Hollande, who met the heads of GE and Siemens on Monday, is concerned mainly with safeguarding jobs at Alstom, which is one of France's biggest private sector employers with about 18,000 staff across the country.

GE addressed this concern in a letter to the French presidency, a copy of which was seen by AFP, stressing its desire to create a "world leader in energy in France" and generate jobs in the country.

Siemens, meanwhile, values Alstom's energy business at 10.5 billion to 11 billion euros, and has offered to hand over part of its trains business to the French company in the deal.

In a letter from the German engineering giant to Alstom, the company upped this part of the bid to include its underground trains business as well as the high-speed trains section of the firm.

The German government has welcomed the potential tie-up between the two groups, calling it a "big opportunity" for both countries.

It would present "great potential in terms of industrial policy for Germany and France," a spokesman for the economy ministry said Monday.

'Behind Our Backs'

The battle for the French company is politically sensitive as Hollande's Socialist government battles record unemployment and declining industrial competitiveness.

During his hourlong meeting with GE's chief executive Jeffrey Immelt, the French leader pressed his case for jobs and for Alstom's French decision-making centre to be protected.

Hollande has said the French state would "inevitably have a say" in the case and that the "sole criterion" in choosing the successful bidder would be which one "would be the best in creating more business and jobs."

Montebourg bristled Monday at the possibility that in the space of three days, Alstom "can decide to sell 75% of a national jewel behind the backs of the employees, of the government, of most of the board and of the senior executives."

Energy accounts for about 70% of Alstom's business, with the rest focused mainly on making railway equipment including the TGV high-speed train.

Copyright Agence France-Presse, 2014

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