The French government announced Monday, May 5th, that it did not approve of General Electric Company (NYSE:GE)’s friendly $13.5 billion offer for French industrial giant Alstom’s energy assets.GE’s offer has already been accepted by Alstom SA (EPA:ALO) (OTCMKTS:ALSMY)’s board of directors.
The French Finance Minister Arnaud Montebourg sent a letter to General Electric Company (NYSE:GE) on behalf of the French president, explaining the government’s position that the deal for the country’s largest industrial conglomerate needed to be reconsidered on a more equitable footing.
According to reliable sources, Finance Minister Montebourg was incensed when he discovered that Alstom SA (EPA:ALO) (OTCMKTS:ALSMY) and General Electric Company (NYSE:GE) were secretly negotiating behind his back last week. Montebourg also had meetings with both GE CEO Jeffrey Immelt and Alstom CEO Patrick Kron late last week.
Competing General Electric and Siemens bids for Alstom
Last week, the French government encouraged Siemens to come up with a competing bid when it found out about General Electric Company (NYSE:GE)’s advanced negotiations with Alstom. Sources say the two companies had been negotiating the deal for almost two months.
Siemens AG (ADR) (NYSE:SI)’s bid for Alstom SA (EPA:ALO) (OTCMKTS:ALSMY)’s energy division is valued at between $14 and $15 billion. Most importantly, from the French government’s perspective, the deal also keeps the global headquarters for power-generating operations in France. The Siemens also leaves sensitive nuclear technology in French hands. Analysts say the Siemens deal is essentially trading a big chunk of its rail-transport business to Alstom in return for various energy assets. Siemens AG (ADR) (NYSE:SI) has also said it might be willing to sweeten the deal.
Montebourg wants General Electric’s transport business included in deal
At one point in his letter, Montebourg’s calls on General Electric Company (NYSE:GE) to throw its its own transport businesses, including its freight train and signaling business, valued at close to $4 billion, ‘‘to assure a certain global future’’ for Alstom.
Montebourg also highlights the importance of Alstom SA (EPA:ALO) (OTCMKTS:ALSMY) to France, and asks Immelt to lay out General Electric Company (NYSE:GE)’s commitment to keeping and creating new jobs in France that ‘‘are not ephemeral.’’