France opposes General Electric's €12.4bn offer for Alstom energy arm

http://www.theguardian.com/world/2014/may/06/france-opposes-general-electric-offer-alstom-energy

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France's government has dismissed General Electric's €12.4bn (£10.2bn) offer for the energy division of Alstom as "not good enough".

Its economy minister Arnaud Montebourg wrote to the US industrial group and bypassed Alstom's board of directors, which has already approved the sale.

President François Hollande backed Montebourg's intervention on Monday in an interview marking the start of his third year in office. "The role of the state is to be able to have answers to all the questions so that the national interest can be maintained. I would prefer better offers," Hollande told BFM radio.

GE has offered to buy Alstom's energy division that makes up around 70% of the French firm's turnover. After being approached by Paris and urged to make an offer, Germany's Siemens has also expressed an interest, but has yet to submit an offer.

In his letter, Montebourg said Alstom's energy interests – the company makes turbines for the nuclear industry – were "of strategic importance".

"This is particularly the case for its nuclear activities, over which France must retain its technological sovereignty," he wrote, adding that Paris was particularly concerned about the future of Alstom's "skills and workforce".

He suggested an "equal partnership … to avoid a simple acquisition that would, in effect, lead to the disappearance of Alstom", adding that GE transfer its transport division to the French firm as part of the deal. Alstom also makes France's TGV high-speed trains as well as the Pendolino trains used on the west coast mainline in the UK.

In a statement GE said: "As we underlined in our letter to President Hollande, we are ready to continue negotiations." It added that it considered its current offer to be "good for France, good for Alstom".

Last week Alstom's board voted unanimously to accept the GE offer, but said it would postpone a final decision for one month to consider other offers, particularly from Siemens.

Montebourg's previous interventions have proven less than successful. In 2012, the minister told the steelmaker Mittal, which bought France's Arcelor in 2006, that it was "no longer welcome in France" in a row over plans to close furnaces in Florange.

The minister also threatened to nationalise the furnaces, as he has also done with Alstom, and threatened to resign. The furnaces closed last year. This year, Montebourg opposed the sale of mobile phone company SFR to Numericable and favoured a rival bid from Bouygues. His interference was seen as counterproductive and SFR went to Numericable.

Economist Nicolas Bouzou, of the consultancy group Asterès, said the minister's intervention over Alstom was for public consumption. "The gesture is uniquely political. It's to show that the government is doing something to protect a French company. That's what the public wants," Bouzou said.

"Economists abandoned Colbertism four centuries ago, but the French public still like the tradition. Montebourg calls for economic patriotism; this roughly translates as French good, Europe less good, outside Europe not good," he said, referring the economic approach of Louis XIV's minister of finances Jean-Baptiste Colbert, an unashamed advocate of state intervention to boost the royal treasury.

Bouzou added: "In the end, GE will buy Alstom's energy division, Alstom will keep its transport division, and the government will justify its intervention by saying it won guarantees over jobs. Siemens has no real interest in buying Alstom's energy sector."