GE holds Alstom talks with French government

General Electric executives are meeting French politicians over the weekend to discuss the potential acquisition of Alstom, as Siemens said it was open to talks with the French train and power plant builder. French industry minister Arnaud Montebourg has expressed concern about the sale of a national engineering champion to a US group and said he was working on "other solutions". More

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Jeffrey Immelt, GE's chief executive will meet the French president Franois Hollande on Sunday, Le Figaro reported. GE officials will also meet Manuel Valls, the prime minister and Mr Montebourg, according to Bloomberg, which first reported news of a possible formal bid on Wednesday. Siemens on Saturday sent a letter to Alstom saying that if the French group wanted to talk it was happy to listen, a source familiar with Siemens' thinking said. However, the source denied that Siemens had made, or was preparing, a counterbid. Talks between the two companies are understood to have first taken place some weeks ago after Siemens chief executive Joe Kaeser met his Alstom counterpart. But those initial discussions did not lead to a solution. Siemens declined to comment. Shares in Alstom were suspended on Friday after the price jumped 11 per cent on Thursday following news that GE was considering a EUR10bn offer for the power unit of the group, which makes turbines and TGV high-speed trains. "Alstom is the symbol of French industrial power and ingenuity," said Mr Montebourg, adding that the government was "concerned" about the loss of jobs that would come with such a deal and were showing due "patriotic vigilance". The firebrand industry minister, who once told Indian industrialist Lakshmi Mittal that he was "not welcome in France" after he tried to close a plant in 2012, also said that he would meet the president of GE to lay out government "concerns". The comments raise the prospect that the government will try and arrange for another French company come in and buy all or part of Alstom in a deal to keep the struggling national champion in French hands.

Alstom is the symbol of French industrial power and ingenuity

- Arnaud Montebourg The French government is now said to be digging up old potential deals between Alstom and other French companies, including nuclear reactor maker Areva and aircraft engine maker Safran, that have been regularly mooted over the past decade, according to people with knowledge of the groups. Some voiced scepticism at the government's ability to stop a tie up with General Electric at this point. A Siemens deal, if one were to emerge, would at least keep the company in European hands. Siemens has held back from big acquisitions in recent years and has been reluctant to become financially overstretched. Of late it has focused on selling underperforming assets as well as share buybacks. It is also in the process of concluding a portfolio and strategy review, which could lead to further asset sales. "Siemens is very careful regarding its balance sheet . . . d need huge European assurances that it wasn't going to fly back in their faces," a London-based analyst said. Analysts also view a Siemens counterbid as unlikely due to considerable overlaps in their transmission, power generation and rail businesses. "Siemens would probably not counterbid due to antitrust issues in Europe in most businesses," Gael de Bray at Socit Gnrale said. Alstom was bailed out by the government in 2004 and relies heavily on orders from state-owned rail operator SNCF and utility EDF. Alstom said on Thursday that it was "not informed of any potential public tender offer for the shares of the company" but has not communicated since. Bouygues, which has a near 30 per cent stake in Alstom, and GE, declined to comment. People close to the Alstom-GE talks said GE on Friday was considering a roughly EUR10bn offer for http://www.xilisoft.com/download-youtube-video.html the group's turbine equipment business, which makes up 70 per cent of Alstom's EUR20bn revenues. The Alstom board met on Friday. The driving force behind starting the deal discussions has been Alstom, according to one person with knowledge of the deal, rather than GE. Alstom has been hit by the shift in the European energy landscape away from thermal power in recent years, as utilities cut back on orders for traditional coal and gas-fired plants. Its shares are still down by a half since the start of 2010. In January, the engineering group cut its operating margin and cash flow forecasts for this year, citing weakness in its thermal power division. The group last year announced it was cutting 1,300 jobs, mainly at its coal-fired boiler business.

Michel Barnier, the EU single market commissioner, said on Friday that a deal with GE could make "sense" for Alstom given the problems facing the European energy market. A GE acquisition of Alstom's energy business might also be positive for Siemens as it would have one less competitor in European power generation. Siemens and GE already coexist quite happily in the US market and could do so in Europe. Copyright The Financial Times Limited 2014. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. http://www.ft.com/cms/s/0/3f6ec29a-cc61-11e3-bd33-00144feabdc0.html?ftcamp=published_links%2 Frss%2Fhome_uk%2Ffeed%2F%2Fproduct