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Alstom approves €12.35b bid from General Electric

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Alstom approves €12.35b bid from General Electric
Alstom's board has accepted a €12.35 billion bid from General Electric for its energy arm. Photo: Sebastien Bozon/AFP
08:44 CEST+02:00
The board of French engineering group Alstom voted on Tuesday to accept a €12.35 billion takeover bid from US giant General Electric for its energy arm. The move will not go down well with the French government, who have appeared to favour a rival offer from Siemens.

The Alstom board voted on Tuesday to approve a €12.35 billion bid for its energy arm by US group General Electric over a rival offer from German engineering giant Siemens.

The offer was approved after the board met following an announcement by Siemens that it had decided to make an offer for the energy wing of the French engineering company, which is also known for making TGV trains.

A statement from Alstom said the influx ofcash would allow the group to "concentrate on its transport activities for which it is a global leader" and to repay its debt, which amounts to €3 billion. Shareholders would also get a bonus.

The offer will now be examined in detail over the nexxt month by an independent committee, whi will take into account the interests of all stakeholders, including the French state, Alstom's board said.

The fate of the French group was suddenly put into play last week when it emerged that it was in advanced talks with GE.

News that the company, which has been termed a French "national jewel", could fall into American hands provoked an angry response from French Economy Minister Arnaud Montebourg.

He reproached Alstom head Patrick Kron in strong terms for not informing the government of takeover talks, accusing him of deliberately keeping him in the dark.

French Prime Minister Manuel Valls said Alstom was "of national strategic importance" and stressed the government would keep a watchful eye over offers.

However some analysts say the French government are simply making a lot of "noise" becasue the issue is so sensitive but deep down they accept that Alstom's shareholders will ultimately decide its fate.

Alstom: Intervention by French government is all 'noise'

Earlier on Tuesday, Siemens said it had decided to make an offer to Alstom but gave no details of its intended bid.

But the German behemoth said it was conditional on it being granted access to the French company's books and the green light to quiz management.

According to a preliminary proposal sent at the weekend to Alstom, seen by AFP but not confirmed by the German company, Siemens offered to buy Alstom's energy business and give the French giant part of its train activities in return.

Economists say Alstom is too small alongside giants such as GE and Siemens and that it is uncompetitive.
 
A 'big opportunity' -
 
The latest announcements come a day after Siemens chief Joe Kaeser met French President Francois Hollande in Paris for what the chief executive called "a very open, trustful and amicable exchange".
 
In unusually frank remarks about company strategy, the German government on Monday said a possible tie-up between the French and German groups offered a "big opportunity" for both countries.
 
It would present "great potential in terms of industrial policy for Germany and France", a spokesman for the economy ministry said in response to reporters' questions.

In a letter to the French presidency Tuesday, a copy of which was seen by AFP, GE stressed its desire to create a "world leader in energy in France" and create jobs in the country

France's Financial Markets Authority (AMF) called on Alstom to make known the details of the offers before the bourse opens on Wednesday.

Hollande, who also met the head of GE Monday, has vowed to safeguard jobs at Alstom, which is one of France's biggest private sector employers with about 18,000 staff across the country.

A national jewel 

The battle for the French company is politically sensitive as Hollande's Socialist government battles record high unemployment and declining industrial competitiveness.
 
During his hour-long meeting with GE's chief executive Jeffrey Immelt, the French leader pressed his case for jobs and for Alstom's French decision-making centre to be protected.
 
Hollande has said that the French state would "inevitably have a say" in the case and that the "sole criterion" in choosing the successful bidder would be which one "would be the best in creating more business and jobs".
 
Montebourg bristled Monday at the possibility that in the space of three days, Alstom "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".
 
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.
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