France plans 'patriotic' action to outwit GE bid for Alstom
- Published: 25/04/2014 at 07:49 PM
- Online news:
France geared up Friday for action to protect engineering jewel Alstom from a possible bid by US giant General Electic, amid a policy switch to get flagging French businesses back on track.
Shares in French engineering group Alstom, which builds power-generating equipment and high-speed trains, shot up nearly 14.0 percent in early trading on Thursday on rumours that US General Electric may make a takeover bid
"Alstom is the symbol of our industrial power and French ingenuity," Economy Minister Arnaud Montebourg said, referring to its main activities of building power stations and the French TGV high-speed train.
Montebourg, a fierce protector of French industry, was responding to speculation that GE will bid about $13 billion (9.4 billion euros) for the whole group, or may be interested only in the power-generation division accounting for 70 percent of the business.
"On this matter of Alstom, the government is showing patriotic concern and vigilance," he told the Le Monde newspaper.
The government "is working on other solutions and outcomes" than the possibility of a takeover of Alstom's energy business by GE.
The French stock market regulator suspended trading in Alstom shares on the Paris stock market Friday after they had shot up by almost 11 percent to 27.0 euros on bid speculation.
Then rating agency Standard and Poor's downgraded its long-term rating for Alstom by one notch to BBB- with a stable outlook, saying the move reflected weak conditions in Alstom's markets over the next two to three years.
For the Socialist government, the future of Alstom is a hot issue amid angst about the decline of French industry.
Alstom, a highly politically sensitive symbol of engineering prowess in France and an important exporter, is facing financial pressures and its shares have fallen heavily in the last year.
The pressures on Alstom , which put part of its rail activities up for sale earlier this year, come as President Francois Hollande's government changes policy with a drive to cut public spending and relieve taxes on businesses.
The measures, highly unpopular with the Socialist left, are intended to get industry back on competitive rails, boost growth and exports and reduce record employment.
The government was focusing on "the serious risk" that decision-making for Alstom would leave France, on the need to "strengthen our French industrial base" by bringing industrial production back to France, and on jobs lost of created in the process, Montebourg said.
New Prime Minister Manuel Valls is to meet the head of GE soon to insist on these concerns, he said.
Montebourg's remarks revealed that the government had already been working on help for Alstom.
- GE bid could make 'sense' -
European Internal Market Commissioner Michel Barnier, a Frenchman, said a takeover by GE could make sense to ensure growth in a restricted marketplace.
The swirl of events around Alstom followed a report by financial news agency Bloomberg that GE was in advanced talks to make a takeover offer.
Alstom said it had not been informed of such a bid, that it was constantly reviewing its strategic options and would comment when it issues its annual results on May 7.
The newspaper Le Figaro reported on Friday that GE was interested only in Alstom's energy activities.
The Alstom group is now worth less than 10 billion euros. Saved by the French state in 2004 and shorn of shipbuilding activities, it has been on the back foot for a year because of a slowdown in its main market for electricity power stations.
It had sales in its last financial year of 20.3 billion euros, and employs 93,000 people of whom 18,000 work in France.
By contrast, General Electric had sales of $146 billion last year, and employs 305,000 people in many sectors, and notably in power generation, aero engines and railway equipment
The US group, with a stock market value of more than $265 billion, reported a net profit of $3.0 billion for the first quarter of 2014.
About the author
- Writer: AFP
Position: News agency