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Business

French government backs GE bid for Alstom

© AFP

Text by FRANCE 24

Latest update : 2014-06-20

The French government on Friday said it preferred General Electric as the new owner of Alstom’s energy business and announced plans to take a 20 percent stake in the French engineering group, which is the centre of an intense bidding war.

The move ends months of uncertainty over whether GE would be able to get a deal done but left open major questions about the final shape of an alliance that GE hopes will give it access to new power markets. GE is competing with a partnership made up of German company Siemens and Japan’s Mitsubishi Heavy Industries (MHI).

“The points we have raised with General Electric are precise and technical but necessary,” Economy Minister Arnaud Montebourg told a news conference. He said France had demanded strict conditions “guaranteeing energy independence, job creation on national territory and maintenance of decision-making centres in France”.

He said the offer from Siemens and MHI was “very serious” and that he had personally backed it, but that the government “had made up its mind”. There had been two straight days of meetings between President François Hollande and top ministers over the issue.

Montebourg added that the Alstom board would meet later on Friday and give its view.

Montebourg confirmed that Alstom’s lucrative gas turbines arm would be purchased by GE and said there would be talks on the shape of joint ventures in other energy areas ranging from renewables to nuclear.

He said the French state would come in as the top shareholder in Alstom by purchasing a 20 percent stake in it from Bouygues, which currently holds 29 percent.

GE will sell its rail signalling business to Alstom as part of plans to strengthen the transport activities of the French group, maker of the famed TGV high-speed trains.

Bids revamped at the last minute

Alstom’s sensitive nuclear activities will be held in a 50:50 venture with GE in which the French state would have a “golden share” giving it a veto, said Montebourg, who is a self-styled “economic patriot” from the French left.

GE had radically overhauled its bid on Thursday, hoping to appease unions and politicians by transforming what had been largely a straight purchase into an offer of joint ventures similar to that of Siemens-MHI.

In response, Siemens-MHI added €1.2 billion to its offer for Alstom’s energy business on Friday – taking their cash component to €8.2 billion – and simplified the structure of the deal, hoping to beat off GE before Monday’s deadline for an Alstom board decision on the company’s fate.

Hollande’s government blocked GE’s initial advances on Alstom two months ago and forced it to improve its offer by encouraging Siemens to enter the fray.

(FRANCE 24 with AP, REUTERS)

Date created : 2014-06-20

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