In the name of “economic sovereignty” Paris yesterday fashioned an alternative to a $13bn (£7.7bn) move by the US industrial giant, General Electric, to acquire the energy business of the ailing French company, Alstom.
Instead, the French government pushed the idea of a “double merger” between the energy and transport businesses of Alstom and its European arch-rival, the German engineering company, Siemens. Two new businesses would be created and presented as Franco-German champions – a sort of energy-industry “Airbus” and train-building “Airbus”.
The industry minister, Arnaud Montebourg, cancelled a meeting with GE boss, Jeff Immelt, at short notice yesterday afternoon, saying that he needed time to study a counter bid by Siemens.
French president François Hollande met GE chief executive Jeff Immelt at the Élysée Palace today to discuss the bid as well as Siemens boss Joe Kaeser and billionaire Martin Bouygues, the head of Alstom’s largest shareholder. Siemens is proposing an asset swap with Alstom rather than a full-scale takeover.
Economy minister Arnaud Montebourg said France would block any deal it considered contrary to its long-term interests “We are working to improve the offers to make sure that French companies... do not become prey,” he said. “On the other hand we are open to alliances that help to equip us for globalisation.”
France is in uproar over the potential loss of a national champion, whose turbines are used in power stations and which makes carriages for Tube trains.
Montebourg also warned that the government would not accept a swift sale of Alstom’s power business and refused to rule out nationalisation.
According to leaks to the French media, it was Mr Montebourg who negotiated a last-minute intervention of the German company to prevent the political embarrassment of one of the leading names in French industry falling partly into American hands. A government statement said that decisions would be taken in the name of France’s “economic sovereignty”.
Alstom manufactures nuclear turbines and other energy equipment but is also the designer and builder of France’s high-speed trains or Trains à Vitesse (TGV). GE is said to have reached a $13bn deal with Alstom’s leading shareholders to buy the struggling energy businesses. The railway business would have remained independent.
According to a letter leaked to the website of the French newspaper Le Figaro, Siemens made a hurried bid yesterday for Alstom energy business. As part of the deal, it offered to cede half of its own train-building operations to the French company.
This would include the building of freight locomotives and the German high-speed train, known as the ICE. It would not include Siemens’ underground railway rolling stock business.
The proposed deal, apparently negotiated secretly by the French government, runs against the wishes of Alstom shareholders and top managers. They have argued that a take-over of Alstom’s energy businesses by a direct rival like Siemens would destroy far more jobs in France than a sale to a would-be investor and saviour like GE.
However, Mr Montebourg – with the approval of President François Hollande – has been desperately searching for a solution which would prevent any part of Alstom falling into American hands. Ten years ago, the former President Nicolas Sarkozy, when he was finance minister, claimed to have “rescued” Alstom for the nation by negotiating a state rescue package.
Ironically, however, the fate from which Mr Sarkozy rescued Alstom was a merger with Siemens. It remains to be seen whether the new proposal – a German-led “energy Airbus” based on Siemens and a French-led “train-building Airbus” run by Alstom - will satisfy shareholders, politicians and trades unions. It could also, conceivably, run into objections from the European Commission on competition grounds.
According to Le Figaro, Mr Montebourg cancelled a meeting with the GE boss yesterday afternoon – when Mr Immelt had already crossed the Atantic. Le Figaro said that the industry minister – whose full title is “minister for industrial recovery” – complained that he had been confronted with a “fait-accomplit” by GE and Alstom.
He said that France had a right to intervene because of the strategic importance of Alstom’s nuclear generator business.