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Business

Potential GE takeover of Alstom a ‘patriotic concern’ for France

© Photo: AFP

Text by FRANCE 24

Latest update : 2014-04-25

A possible takeover bid by US giant General Electric for struggling French engineering group Alstom would be a matter of “patriotic concern” for France, the country’s Economy Minister Arnaud Montebourg said Friday.

It follows a report by Bloomberg on Thursday that GE is in talks over a $13 billion deal for the turbine and train maker, which employs a fifth of its workforce - or around 18,000 people - in France.

Speaking to French daily Le Monde, Montebourg admitted the possibility of losing one of France’s biggest engineering groups to a foreign company was a significant worry for the government.

“Alstom is a symbol of our industrial power and of French ingenuity,” he said.

“The government expresses patriotic concern and watchfulness with regard to Alstom,” he said. “This concern is focused on the serious risk of losing a major decision centre.”

Montebourg said that he and French Prime Minister Manuel Valls would meet with GE’s president to discuss the issue, adding that he had already spoken with the company’s chief executive on Thursday.

Alstom CEO denies takeover talks

The minister’s comments came as France’s stock market regulator forced a suspension in the trading of Alstom shares – which jumped 10.9% on Thursday – until the company releases a statement on its future.

Under pressure to respond to the rumours, Alstom’s chief executive Patrick Kron reportedly told trade unions the company was in talks with GE over “an industrial deal”, but not a takeover.

“I do not confirm the rumours of a takeover circulating in the US press,” Kron was quoted as saying. “The truth is we are discussing an industrial deal”.

The union sources said Kron was expected to chair a meeting of the executive board later on Friday to discuss the matter.

The French engineering giant has been struggling in recent months, having been hit hard by Europe’s economic weakness and a drop in orders for power equipment from utilities, which in turn are suffering from low electricity prices.

Before the takeover bid report, Alstom shares had slumped 20 percent in the past 12 months, while last year it announced 1,300 job cuts including a stake in its transport business, which makes France’s prized high-speed TGV trains.

A buyout by GE could help the French firm gain access to the cash it needs, while the US group would get infrastructure assets cheaply and make cost savings in power generation. For instance, GE is looking to expand in smart grid technology, where Alstom is a strong player.

GE also has the support of Bouygues, Alstom’s biggest shareholder with a 29 percent stake, according to the Bloomberg report.

(FRANCE 24 with REUTERS)

Date created : 2014-04-25

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