Battle for Alstom: Saving jobs is key for Hollande

AFP/The Local
AFP/The Local - [email protected] • 29 Apr, 2014 Updated Tue 29 Apr 2014 08:55 CEST
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French engineering group Alstom looked set to be the centre of a takeover tussle between US giant General Electric and Germany's Siemens on Tuesday as French President François Hollande said his chief concern was to protect jobs.


The battle for Alstom was set to intensify on Tuesday, with Siemens ready to confirm its bid for the French engineering group also coveted by US rival General Electric, an informed source said.

French President Francois Hollande vowed on Monday to safeguard jobs at Alstom as he met with both GE and Siemens chiefs, while Germany sought to boost Siemens' case, saying a tie-up offered a "big opportunity" for Europe's two largest economies.

The case of Alstom - which builds high-speed trains and power stations - is highly politically sensitive as Hollande's Socialist government battles record high unemployment and declining competitiveness in industry.

The engineering giant is one of France's biggest private sector employers, with around 18,000 staff across the nation. Hollande said the French state would "inevitably have a say" in the case, underscoring that the government placed several orders with Alstom "in strategic sectors, especially energy".

He said the "sole criteria" in choosing the successful bidder would be which one "would be the best in creating more business and jobs".

The French leader met GE's CEO Jeffrey Immelt for an hour, pressing his case for jobs and for Alstom's French decision-making centre to be protected.

"There were legitimate issues (evoked by the government) which GE is working on," said a GE source.
Immelt described the talks as "open, friendly and productive".
"It was important to hear in person President Hollande's perspective and to discuss our plans," the GE chief said. "We understand and value his perspective, and we are committed to work together."

'Patriotic' reaction

Hollande then met with Siemens boss Joe Kaeser for about an hour. The German behemoth was expected to confirm its bid on Tuesday, a source close to the talks told AFP.
In Berlin, a spokesman for Germany's economy ministry said a possible tie-up between Alstom and Siemens would offer "a big opportunity and great potential in terms of industrial policy for Germany and France".
Under a preliminary proposal, seen by AFP but not confirmed by Siemens, the German group offered to buy Alstom's energy business and give the French giant part of its train activities in return.

Economy Minister Arnaud Montebourg has promised a "patriotic" response to an expected bid by GE, aiming to keep Alstom's decision-making centre in France as well as protecting jobs and strategic energy interests.

At the end of last week it emerged that GE was in advanced talks to buy Alstom's energy interests for about 10 billion euros ($14 billion).

Energy accounts for about 70 percent of Alstom's business, with the rest focused mainly on making railway equipment including the TGV high-speed train.

GE already has big energy manufacturing activities in France, but Montebourg objected on Monday to the possibility that Alstom "in three days, can decide to sell 75 percent of a national jewel behind the backs of the employees, of the government, of most of the board and of the senior executives."

He told RTL radio that a bid from GE raised the fundamental problem that "the main part of Alstom - 75 percent of the businesses, 65,000 employees in the world - is going to be run from Connecticut".

Alstom is under pressure because its main markets for power generation and rail equipment are expected to be weak in the next few years.
Its share price has fallen heavily in the last year, causing losses at construction and telecom group Bouygues, which has a 29.4-percent stake in Alstom and whose CEO Hollande also met Monday.
Shares in Alstom have jumped on the bid reports, however.
Economists say Alstom is too small alongside giants such as GE and Siemens and that it is uncompetitive.
They also comment that the French government, since selling its stake in 2006, has little real control over what the Alstom board decides, and they tend to the view that a deal with GE would be a better strategic fit than one with Siemens.
The French government, in a recent policy switch and amid growing signs that national industry is seriously uncompetitive, is proposing big cuts in planned public spending to relieve taxes on businesses, but faces strong opposition from its left wing in a crucial vote this week.



AFP/The Local 2014/04/29 08:55

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