Is GE Making Concession to France on Alstom Deal?

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April 25 (Bloomberg) -- Bloomberg’s Matthew Campbell examines General Electric’s potential bid for Alstom on Bloomberg Television’s “The Pulse.”

Matt campbell joins us now with the very latest.

We heard about the deal yesterday.

It was a great bloomberg exclusive which you helped to break.

Give us a sense of where the different parties are standing.

What seems to be taking shape is a significant transaction that would leave a small part of alstom behind.

The transport business which makes rolling stock would actually be separated from everything else alstom does.

Transport is about 20% to 25% of sales.

The great majority of alstom is being taken over by general electric according to people familiar with the situation.

None of this is official yet but we expect an announcement could come soon.

Even in the next few hours.

The fact that the unit is being left to one side may allow a political way out for the french government.

This is a trophy asset for the french government.

They are not tacking over the trains.

There was some hint the french government was concerned.

This is an interesting bit of a lyrical kung fu.

I suspect ge would love to take over all of alstom.

They are making this concession because the french government says they can now go to the voters and say, we didn't give it to the americans because that would be a daft thing to do.

As big as the rest of what alstom does is, it is hard to get the voters excited about gas turbines and electrical distribution infrastructure.

Trains are something everyone can identify with.

This is a clever bit of structure.

This is a thing that the french really like.

Give us a sense of -- are there likely to be any counter bids?

That is an excellent question.

Alstom is clearly in play.

This is something every big industrial company is going to have to think about.

Alstom is not all that valuable at this point.

The whole market cap is about 10 billion euros which for a really enormous french industrial player is not very much money.

While that is not something we are aware of yet, it is a possibility.

More broadly, at siemens in munich and abb in zurich, they have to be thinking about how they are going to respond to this dramatic move by ge on their own turf.

Do you have any idea about what sparked this?

What generated the initial idea?

I read something about how organs was quite keen -- bouygues was quite keen on the concept.

Immelt was talking about smaller numbers.

Immelt being the chief executive officer, said that ge will spend between $1 billion and $4 billion on acquisition.

This is obviously much larger.

He said in exceptional circumstances they would spend more.

Ge has $57 billion in cash held outside the u.s.. that is not money that can be repatriated due to tax penalties.

It has to use that money productively.

Yesterday we were talking about french protectionism.

We were expecting the government to make a little bit of noise.

The minister of industry says that france is working on other alstom solutions.

Is this rhetoric?

Do we think that we could have a white night coming in from france?

Is there anyone big enough to take over the assets?

It is hard to see who could do something like this.

The industry minister is well known for speaking a little bit out of turn on the sus ex -- on these susubjects.

What he says does matter.

It doesn't always mean that we

This text has been automatically generated. It may not be 100% accurate.


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