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 Citing "patriotic concern" over loss of jobs and control of a group
with a history stretching back 86 years, President Francois
Hollande's government leapt into action to find ways of countering
the offer after news of it emerged last week.
While Germany's Siemens <SIEGn.DE> — billed by Paris as a possible
white knight — still has a month to make its intentions clear, Alstom's decision to review GE's $16.9-billion bid makes the U.S.
giant the clear favorite to secure the turbine and grid assets that
make up the bulk of Alstom revenues.
If GE succeeds, it will mark the latest climb-down for a
two-year-old government which has already ended up on the losing
side of public stand-offs in the telecom and steel industries.
"This is the end of an era. The state no longer has the means to
protect weak companies in sensitive sectors," left-leaning Le Monde
said in a front-page editorial entitled "The state can't do it all".
Such views are not widely held in a country where the state holds
stakes in dozens of blue-chip companies and governments of all
stripes see it as their duty to intervene in corporate matters. A
conservative government bailed out Alstom in 2004, five years before
the economic crisis tore through the firm's order books.
Yet the saga of the past week shows Hollande's Socialists unable or
unwilling to get out the big guns of state weaponry to ward off the
U.S. giant.
France's move in 2005 to name dairy group Danone <DANO.PA> a concern
of strategic importance to shield it from a feared takeover by U.S.
drink-maker PepsiCo is now regarded as a textbook classic of
"economic patriotism".
But GE's offer to ring fence from the Alstom deal the turbines used
by France's nuclear industry — which generates some 75 percent of
the country's power — has meant the state has not played the
strategic concern card this time.
Unions are urging the government to purchase a 29 percent stake in
Alstom held by industrial group Bouygues, which is seeking an exit
to be able to invest in its telecom unit. Economy Minister Arnaud
Montebourg said on Wednesday that he would study the option.
But such a move was swiftly knocked down by the official government
spokesman, while a source close to Hollande said it would run up
against European Union antitrust laws.
"Even if the state took on Bouygues' stake, it wouldn't be able to
keep it for very long because the European Commission would tell us
to get rid of it," said the source.
Even the emergence of Siemens as a possible savior had an unlikely
air about it.
One industry insider told Reuters that no one at Alstom wanted a
deal with Siemens because everyone — from the low-level worker to
chief executive Patrick Kron — recalls how Siemens lobbied against
state aid for Alstom back in 2004.
Sector analysts noted that overlaps between the two groups made the
risk of job losses among Alstom's 18,000 French staff high and
questioned whether there was any logic in Siemens' pursuing the
matter now that GE was in the driving seat.
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"We have a slightly critical view of this because it seems that this
is more a reaction to GE's move," Tim Albrecht, fund manager at DWS
Investment, said of Siemens' general expression of interest over the
weekend.
In taking a share in PSA-Peugeot-Citroen <PSA.PA> alongside China's
Dongfeng <0489.HK>, Hollande last month hailed a move aimed at
ensuring the turn-around of the ailing auto-maker.
But other efforts to intervene have fallen flat.
Despite his 2012 promise to protect steelworkers from a plan to
close two blast furnaces in northern France, Hollande's government
ultimately proved unable to stop owner ArcelorMittal <ISPA.AS> from
doing just that one year ago.
It was humbled again this month when cable group Numericable <NUME.PA>
won the battle to buy Vivendi's <VIV.PA> telecoms arm SFR despite
overt state backing for a rival offer from Bouygues.
A more sympathetic narrative is that the government — usually in the
strident shape of Economy Minister Montebourg — is holding out for
jobs and other key interests against forces that would put the quest
for shareholder value above all else.
Montebourg told parliament on Wednesday that his efforts had won a
month's more time for negotiations on what he urged should be a
"partnership of equals rather than a takeover".
He pointed to the fact that GE boss Jeffrey Immelt had provided
guarantees that the deal would boost employment in France and the
group would locate global headquarters of several businesses in the
country, from grids to hydropower.
However, one source close to the discussions said it was likely that
GE would have made the same concessions without Montebourg's
intervention. Trade unions were equally skeptical of whether it had
made a difference.
"Promises are only for those who believe in them," said Dominique
Gillier of the CFDT union, one of those who held crisis talks with
Montebourg late on Tuesday.
"What we need are guarantees on specific sites."
(Additional reporting by Nicholas Vinocur and Matthieu Protard;
editing by Peter Graff)
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