May 15 (Bloomberg) -- Siemens AG received a twin boost from the French government in its bid to beat General Electric Co. to Alstom SA’s energy operations, as France’s industry minister praised the German company hours after extending the state’s influence over foreign takeovers.
GE has so far failed to improve on its $17 billion offer, while talks with Siemens have been more productive, Industry Minister Arnaud Montebourg said today. Montebourg published a decree today that extends the protective arm of the state beyond defense to industrial areas covered by Alstom.
“There are talks with Siemens that are very constructive, which is not the case with GE,” Montebourg said.
Montebourg’s comments and decree are a reminder to GE of the French state’s influence ahead of a meeting tomorrow between government officials and its chief of power and water operations, Steve Bolze. Siemens Chief Executive Officer Joe Kaeser has made at least three trips to Paris to meet with President Francois Hollande and Montebourg. While due diligence work on Alstom is ongoing, Siemens is frustrated by the level of access to the books and management, according to two people familiar with the situation.
No improved offer has been forthcoming from GE as yet, and the government hasn’t received a response to a demand that an initial proposal be bettered, Montebourg said. GE appreciates the importance of the energy sector to France and will continue to have “open and productive” talks with the state, a company official said today.
According to an internal Siemens document obtained by Bloomberg, the decree “clearly aims at curbing GE’s zeal towards Alstom.” The sale of energy businesses might require the approval of France’s economy minister and the decree could also influence any transaction related to the rolling stocks and signaling activities, according to the document.
Siemens is seeking to influence Alstom by gaining the backing of the French government for its idea to create a European champion for trains under Alstom and an energy champion in Germany through Siemens, said the people, who asked not to be identified because details of the plan are private.
The Munich-based company remains interested in an Alstom deal and may decide as early as next week on an improved offer, contingent on sufficient access, or it could also walk away if that’s not granted, the people said.
A representative of Siemens declined to comment.
GE is proposing an “absorption” of Alstom while Siemens is talking about an “alliance,” a more preferred option, Montebourg told reporters. The minister’s decree allows the state to block foreign takeovers in areas such as energy, equipment, plants and transportation that are critical for national security and health, ramping up pressure on GE.
“We want alliances that give our companies a global scale, we don’t want dismantling,” Montebourg said citing GE’s jet-engine venture with defense contractor Safran SA as “a good model” to follow.
Siemens has had daily contact with the French government in the past week, with CEO Kaeser meeting Energy Minister Segolene Royal yesterday after earlier meetings and phone chats with President Hollande and Montebourg. He’s talked to Alstom’s CEO Patrick Kron by telephone, according to a person familiar with the meetings.
German Chancellor Angela Merkel is wary about engaging on the issue until Siemens has made a formal offer, according to an official.
Alstom’s Kron, who backs GE’s offer, has given the board until the end of the May to review bids and will go before legislators at a hearing on May 20. The CEO has not met with Montebourg since their April 24 face to face after GE’s bid was revealed. Instead he’s talked to David Azema, the head of France’s shareholding agency APE, according to Montebourg’s office. Alstom’s board named a committee of independent directors to study the binding offer from Fairfield, Connecticut-based GE by June 2, with exclusive talks to follow if that plan wins support.
The French state is not planning to take a stake in Alstom, Montebourg’s office said, while it’s not ruling it out. “For now we have the decree,” he said. “This decree should have been done a long time ago.”
To contact the editors responsible for this story: James Hertling at firstname.lastname@example.org Andrew Noel, Alan Crawford