20 June 2014
Last updated at 17:39
Alstom makes the high-speed TGV train and is seen as one of France’s key industrial firms
The bid battle for France’s Alstom has shifted in favour of General Electric.
France’s economy minister Arnaud Montebourg said that neither the GE bid, nor a joint Siemens-Mitsubishi Heavy Industries offer, met the government’s demands.
But the government had chosen to work on a new GE bid that would involve the French state buying a stake in Alstom.
“The Siemens-MHI offer was serious but the government has made up its mind,” Mr Montebourg told a news conference.
The new deal being worked on with GE would mean the French state buying a 20% stake in Alstom from main shareholder Bouygues.
He said that key decision-making centres of the Alstom group would remain in France, a key issue for the French government, which insists that any takeover should preserve jobs.
Alstom has been at the centre of a bid battle for several months after Francois Hollande’s government objected to the US company buying one of the jewels of French engineering.
After talks with the government, Siemens and Mitsubishi raised their offer to buy Alstom, increasing the cash component of their bid by 1.2bn euros to 8.2bn euros (£6.6bn; $11.2bn).
The improved offer raises the valuation of Alstom’s energy business by 400m euros to 14.6bn euros. The move by Siemens and Mitsubishi came just a day after GE sweetened its offer.
On Thursday, GE proposed creating a joint venture with the firm’s nuclear and energy businesses and to sell its profitable rail signalling business to Alstom.
However, it did not increase its $17bn bid.
Alstom, which feels that its energy businesses – which range from wind power to turbines for nuclear reactors – is not large enough to compete globally, originally approached GE.
When the government learned of the advanced talks to sell the power business, it objected on the grounds that jobs and decision-making could be lost and encouraged Germany’s Siemens to make a counter offer, hoping that a Siemens-Alstom tie-up would create a global-scale European group.
Siemens then linked up with Mitsubishi to present a rival offer.
Alstom, which employs 18,000 people in France out of a total 90,000 worldwide, is an important issue for the French president, who is battling to reduce a huge trade deficit, record unemployment and whose approval ratings have dropped to record lows.