Hollande warms up to GE’s bid for Alstom

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Francois de Beaupuy, Gregory Viscusi and Alex Webb Paris

General Electric (GE) had improved its proposal for Alstom’s energy business as chief executive Jeffrey Immelt pledged to create new jobs, the French government said yesterday, softening its stance on the US company’s takeover plans.

The government of President François Hollande, which has openly advocated a European proposal, said GE’s plans were stronger and more precise after a meeting between Hollande and Immelt in Paris. The US company would create 1 000 new industrial jobs in France, a source said, seeking anonymity as the matter is not public.

Immelt made a rare appearance by a US chief executive before France’s National Assembly on Tuesday, saying his $17 billion (R177 billion) bid for Alstom’s energy assets would protect jobs and the nation’s industrial base. Immelt’s personal appeal to political leaders highlighted the importance attached to Alstom by both GE and the French government, which is seeking to extract the best guarantees from any bidder for jobs and the country’s energy independence.

“The government is looking for broader electorate support after the failures in the European elections,” Christopher Dembik at Saxobank said. “The role of the government is to get the best offer from GE.”

The National Front, an anti-euro, anti-immigration party, won its first victory in national voting in European parliamentary elections last week, dealing a further blow to Hollande, the least popular leader in France’s modern history.

Hollande and Economy Minister Arnaud Montebourg previously called on GE to improve its offer for the energy unit of Alstom. Hollande had said the initial bid was “not acceptable” and has called for stronger workforce guarantees, while Montebourg has stated a preference for a proposal from Siemens.

Siemens has proposed swapping its train-making business for Alstom’s energy assets, and plans to present an official offer by June 16 at the latest.

Acquiring Alstom’s energy unit would accelerate Immelt’s plan to return GE to its industrial roots.

Immelt has responded to French concerns that the offer from GE represents a takeover, pledging that the Alstom brand “lives on” and characterising the deal as an alliance.

“Alstom will not disappear,” Immelt said on Tuesday in the National Assembly. “You will have more global impact.”

Siemens’s France chairman Christophe de Maistre told the legislators in a competing presentation that combining Germany’s largest engineering company with the energy business of its French rival would create European leaders in energy and rail.

“Alstom Transport is simply too small” to face Chinese, Japanese, Korean and Canadian competitors if it did not merge with Siemens’s rail business, De Maistre said.– Bloomberg


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