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French energy 'jewel' Alstom taken over by General Electric

Monday, June 23rd 2014 - 07:29 UTC
Full article 5 comments
CEO Patrick Kron called it a win-win-win situation, good for Alstom employees as well as GE and the French state. CEO Patrick Kron called it a win-win-win situation, good for Alstom employees as well as GE and the French state.

The board of directors of French power-to-rail group Alstom unanimously approved US conglomerate General Electric's 12.35 billion Euro bid to acquire its energy business.

 “The board of directors unanimously decided to issue a favorable opinion of GE's offer” and will begin consultations with personnel, a statement said.

The statement came a day after the French government stepped firmly into the battle over its industrial jewel Alstom, saying it favored General Electric's bid over a rival joint offer from Germany's Siemens and Japan's Mitsubishi Heavy Industries.

GE boss Jeff Immelt hailed the deal, saying it was “good for France, GE and Alstom” while adding that it would not be finalized before next year.

His counterpart at Alstom, Patrick Kron called it a win-win-win situation, good for Alstom employees as well as GE and the French state.

The plan “seems to respond fully to the government's preoccupations of the government on energy and transport,” he said in comments published Sunday in the weekly Journal du Dimanche.

Kron added that he would see the GE transition was successfully “on the rails” before bowing out and letting a new team take charge at Alstom.

The French government announced a surprise caveat on Friday that it would take a 20% controlling stake to preserve French strategic interests in its industrial jewel, which it plans to do by purchasing two-thirds of the shares owned by another French group, Bouygues.

Discussions on the price were ongoing between the government and Bouygues on Saturday night after a long day of negotiations.

The French government had wanted to buy the shares at the current price, which stood at 28 Euros per share on Friday, according to the latest listing of Alstom on the Paris Bourse. But Bouygues was asking for 35 Euros per share.

Economy Minister Arnaud Montebourg sought to reassure the French public on Saturday, saying the deal would cost taxpayers “zero Euros”.

Montebourg said the money for the purchase would be raised from the sale of government-owned shares in other companies such as Safran and Airbus.

Even if the deal between the government and Bouygues is finalised, Alstom said it would still need to put the GE bid to employee representatives, and gain regulatory approval related to foreign investment rules.

The future of Alstom has been at the centre of a transatlantic tug of war for several months after President Francois Hollande's Socialist government objected to the US giant buying the jewel of French engineering, and encouraged the rival offer by Siemens and Mitsubishi.

The German and Japanese firms improved and simplified their linked offer on Friday, increasing their valuation of Alstom's energy division to 14.6 billion Euros, less than a day after GE had made several changes to make its bid more attractive.

GE sweetened its proposal by offering a government veto over sensitive nuclear energy technology and promising to strengthen Alstom's transportation business, which makes the French TGV trains.

The beleaguered Alstom, which feels that its energy businesses -- which range from wind power to turbines for nuclear reactors -- are not large enough to compete globally, originally approached GE.

Top Comments

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  • ChrisR

    Having been a director in a GE Company Ltd company, the machinations of Alstom over the years proved the logic in getting rid of the British generation business to them decades ago.

    I hope the yanks can get used to the French way of “working”, otherwise it will be tears before bedtime.

    Jun 23rd, 2014 - 11:34 am 0
  • Spanish Mole

    Siemens bought part of Rolls Royce recently , GE gets Alston now . interesting

    Jun 23rd, 2014 - 11:55 am 0
  • GeoffWard2

    'Economy Minister Arnaud Montebourg sought to reassure the French public on Saturday, saying the deal would cost taxpayers “zero Euros” ... the money for the purchase of Bouygues' shares in Alstom (%?) would be raised from the sale of government-owned shares in other companies such as Safran and Airbus.' !

    It's good to know that the taxes of French citizens used to buy major companies are NOT lost when the government sells them. Hmmm

    ... So ... the French government will lose their 'Jewel in the Crown' Alstom (inc. their nuclear industry) - “too small” - but will have a minority share in the US-acquired G.M. energy company.

    It also loses French government involvement in Airbus and Safran.

    [EADS owns 80% of Airbus:-
    Daimler-Chrysler 22.5%
    **French Government 12%**
    Spanish Government 5%
    Lagardere publishing 12%
    Hamburg (city of?) 1.5%
    Publicly traded 24%
    “Others” 3%
    = the 80% owned by EADS
    BAE SYSTEMS owns the other 20%
    The German government and UK government have no ownership of Airbus.

    Safran S.A. (ex-SNECMA and SAGEM) is the French multinational aircraft and rocket engine, aerospace component, and security company. ]

    Hmmmm. Things must be truly dire in France.

    Jun 23rd, 2014 - 11:57 am 0
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