Alstom advancing GE's $17bn bid is a poke in the eye for Francois Hollande

The French president would rather the industrial giant trades assets with Germany's Siemens and keeps things on the continent, but actually he needs any foreign investment he can get.

by Rachel Savage
Last Updated: 15 May 2014

It’s been on the cards for weeks and now Alstom has finally stopped fluttering its eyelashes at US giant General Electric, which is lusting after the French industrial darling’s energy business, to the chagrin of the country’s socialist government.

GE has submitted a $17bn (£10bn) ‘binding’ offer for Alstom’s power turbines and transmission assets, which the French company has responded ‘positively’ to and will review by June 2, the American company said in a statement.

However, the deal is far from sealed, as Siemens is also making doe-eyes at its French counterpart. The German industrial leviathan has mooted swapping Alstom’s energy assets for its high-speed trains, which would fit neatly with the French manufacturer’s zippy TGVs.

Siemens has yet to make an offer though, as it has only just been given access to its target’s books. It will need to be a pretty juicy deal, as Alstom has to pay GE a break fee of 1.5% of the purchase price if it spurns the Americans.

The French government has been doing its level best to put the brakes on GE’s advances, balking at losing a sizable chunk of one of its treasured industrial jewels. President François Hollande has claimed he only wants ‘what is best for jobs’, but has met with both GE and Siemens for talks in recent weeks.

Meanwhile, his loud-mouthed industry minister Arnaud Montebourg, who once told Indian tycoon Lakshmi Mittal he was ‘not welcome in France’, has thrown his weight behind the Germans, wittering approvingly about creating a ‘European champion’.

The irony, of course, is that the lacklustre French economy could really use more foreign investment, no matter where it comes from. Hollande won election in 2012 on the now-tattered promise of rolling back austerity, but has seen his approval ratings bottom out as new jobs fail to materialise. A menage-a-trois between Alstom, GE and the socialist government is, therefore, not such a bad idea for Monsieur President (particularly after all the lurid reporting of his rumoured affair...).

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