French President Francois Hollande’s government said General Electric Co. (GE) improved its proposal for Alstom SA (ALO)’s energy business as Chief Executive Officer Jeffrey Immelt pledged to create jobs, softening its stance on the U.S. company’s takeover plans.
The French government, which has openly advocated a European solution, said GE’s plans are now more precise and strengthened after a meeting between Hollande and Immelt in Paris today. The U.S. company will create 1,000 industrial jobs in France in three years, a person familiar with the matter said, asking not to be named as the matter is not public.
Immelt yesterday made a rare appearance by a U.S. CEO before France’s National Assembly, saying his $17 billion bid for Alstom’s energy assets would protect jobs and the nation’s industrial base. Immelt’s personal appeal to political leaders highlighted the importance attached to Alstom by both GE and the French government, which is seeking to extract the best guarantees from any bidder for jobs and the country’s energy independence.
“The government is looking for broader electorate support after the failures in the European elections,” Paris-based Saxobank analyst Christopher Dembik said in a Bloomberg Television interview. “The role of the government is to get the best offer from GE.”
France’s National Front, an anti-euro, anti-immigration party, last week won its first-ever victory in nationwide voting in European parliamentary elections, dealing a further blow to Hollande, the least popular leader in the country’s modern history.
Hollande and Economy Minister Arnaud Montebourg previously had called on GE to improve its offer for the energy unit of Alstom, which is based in the Paris suburb of Levallois-Perret. Hollande had said the initial bid is “not acceptable” and has called for stronger workforce guarantees, while Montebourg has publicly stated a preference for the proposal from Munich-based Siemens AG. (SIE)
Montebourg said today that GE’s offer has improved following Immelt’s job pledge.
GE “brought better proposals to the table,” he said. Montebourg said the government will study GE’s offer as well as the one expected from Siemens.
The German company has proposed swapping its trainmaking business for Alstom’s energy assets, and plans to present an official offer by June 16 at the latest.
Alstom rose 1.6 percent in Paris trading as of 2:26 p.m., valuing the company at 9 billion euros, while Siemens gained 0.3 percent in Frankfurt. GE yesterday rose 0.2 percent in New York.
Acquiring Alstom would accelerate Immelt’s plan to return Fairfield, Connecticut-based GE to its industrial roots and could be a chance to invigorate the shares, which are little changed since GE made an offer last month for Alstom.
Immelt has responded to French concerns that the offer from GE represents a takeover, pledging that the Alstom brand “lives on” and characterizing the deal as an alliance.
“Alstom will not disappear,” Immelt yesterday said in the National Assembly. “You will have more global impact.”
Siemens’s France Chairman Christophe de Maistre told the lawmakers in a competing presentation that combining Germany’s largest engineering company with the energy business of its French rival would create European leaders in energy and rail.
“Alstom Transport is simply too small” to face Chinese, Japanese, Korean and Canadian competitors if it doesn’t merge with Siemens’s rail business, de Maistre said. “A critical size” is required to get bank guarantees for large contracts, he said.
GE could cede control of its signaling business to Alstom’s rail unit to help it compete with Siemens, Canada’s Bombardier Inc., and Italy’s Ansaldo STS, Immelt said.
The GE CEO and the Siemens executive both sought to allay French government concerns regarding Alstom’s steam turbines and services for nuclear plants, a key issue for power company Electricite de France SA and atomic-reactor maker Areva SA. (AREVA)
“I’m confident we can find the solutions needed to ensure our French customers they will have the most reliable supply of steam turbines for nuclear power plants anywhere in the world,” Immelt said. “We remain open to an investment by the French government in the business alliance.”
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