Alstom sees GE deal as tortuous

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br France Alstom Associated Press Alstom chief Patrick Kron says the transaction will take time. Photo: AP

Paris - General Electric’s (GE’s) planned $17 billion (R180bn) purchase of Alstom’s energy assets, which includes creating joint ventures and a stake sale to the French state, will take time and face operational challenges, according to the French firm’s chief executive.

Executing the agreed deal would be “long and difficult”, Alstom chief executive Patrick Kron said yesterday.

GE chief executive Jeffrey Immelt said the agreement was still a “good deal” for both firms, adding that customers had responded positively.

Immelt agreed last week to GE’s biggest acquisition ever, prevailing over a Siemens counter-proposal and initial opposition from the French government. GE is buying Alstom’s gas turbine operations and creating joint ventures in the steam turbine, renewable energy and electrical transmission businesses.

As part of the deal, the French state will buy as much as 20 percent of Alstom. Economy Minister Arnaud Montebourg had said that the state would block the GE deal without that stake.

Alstom built France’s power grid and makes the high-speed TGV trains, as well as the generators that produce most of the nation’s electricity. That history has helped cement its status as a local industrial icon, and spurred the government’s pursuit of an equity stake.

GE refined its initial offer by proposing alliances in nuclear technology and rail, and adding safeguards to its pledge to create 1 000 industrial jobs in France.

Montebourg, who is known for clashing publicly with foreign investors, reacted furiously in April when he learned through media reports that GE was planning some form of approach to buy Alstom’s turbines and grid equipment business.

He set to work stalling GE, soliciting a rival bid from Siemens and issuing a decree which stated that any deal in the energy, water, transport, telecoms or health sectors required the approval of the economy minister.

Montebourg argued a GE-Siemens tie-up would create a European champion in which France would have a voice, while a GE takeover would put French strategic interests in the hands of a far-away foreign owner.

“We won’t let Alstom sell this national champion behind the back of its shareholders, its employees and the French government,” he wrote in April on his official Twitter account.

Some Alstom workers expressed regret at no longer being on the payroll of a French company, and welcomed the fact that the government had struck a deal to purchase a stake in Alstom from its leading shareholder, Bouygues.

“This is the least bad solution,” said an engineer. “It’s the best solution in terms of keeping our jobs, compared with Siemens.” - Bloomberg and Reuters

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