General Electric’s push into the European energy sector has hit a snag after the French government said it would oppose any takeover bid for domestic firm Alstom’s power business. At the end of April, GE had a $16.9bn offer accepted by Alstom’s board for its energy business, which makes up the vast majority of the company’s operations. However, in response to the news, France’s socialist government has said it would be against any takeover by the American firm.
In a letter to GE’s CEO Jeff Immelt, France’s Industry Minister Arnaud Montebourg said that the current terms of the deal did not do enough to maintain a French influence. Instead, Montebourg said the offer amounted to a full takeover that would not necessarily be good for France’s energy sector.
Montebourg said the offer amounted to a full takeover that would not necessarily be good for France’s energy sector
“While it is natural that GE would be interested in Alstom’s energy business, the government would like to examine with you the means of achieving a balanced partnership, rejecting a pure and simple acquisition, which would lead to Alstom’s disappearing and being broken up.” He added, “In its current form, we unfortunately cannot give backing to the proposals that you have made, based solely on the purchase of Alstom’s energy activities.”
Montebourg said that it was hoping to maintain the country’s “technological sovereignty” at a time where many international investors are looking to pick off some of the country’s leading businesses. With France’s economy stuttering in recent years, the country’s energy sector has appeared ripe for foreign takeovers.
A rival bid from German technology giant Siemens is said to be on the cards that would potentially lead to swaps between the two companies’ power and rail businesses. While the French government is reportedly keen to strengthen France-German business ties, any such deal would almost certainly lead to large-scale job losses at Alstom. Aside from its power business, Alstom is the manufacturer of the high-speed TGV trains that directly compete with Siemens train designs.
After news of the bid, Montebourg said in a statement that both offers would be considered. “General Electric and Siemens are two important investors in France, and top-ranking players in our national industrial fabric. The government is prepared to consider their plans, with the concern of preserving the interests of France’s industrial base, and to participate financially.”