Newspaper article International New York Times

France Backs G.E.'S Bid for Alstom, with a New Twist ; Government to Buy 20% of Industrial Company It Deems a National Asset

Newspaper article International New York Times

France Backs G.E.'S Bid for Alstom, with a New Twist ; Government to Buy 20% of Industrial Company It Deems a National Asset

Article excerpt

But in a surprise move, the government said it would take a 20 percent stake in the parent company, ensuring that a national treasure remains in French hands.

The American business giant General Electric emerged on Friday as the apparent winner in the battle for a big piece of Alstom, a French industrial conglomerate.

President Francois Hollande's government said it backed the G.E. bid and, in a surprise move, would itself take a 20 percent stake in the main remaining portion of Alstom.

The agreement, if concluded, would end nearly two months of negotiations by G.E. and the government.

A previous deal that Alstom and the American conglomerate had tentatively reached, in which G.E. would pay about $13.5 billion for Alstom's entire energy business, was stopped in its tracks in May by opposition from the Hollande government, which described Alstom as too much a national treasure to let fall into foreign hands and demanded a seat at the negotiating table.

At that point, what G.E. had hoped would be a straightforward American-style business deal became entangled in Mr. Hollande's struggling Socialist government's efforts to protect its reputation with those on the left who see it as weak in the face of corporate power and by concerns within the state about critical nuclear technology falling under foreign control -- while trying to keep France attractive to foreign business investors. At a time when Mr. Hollande's government is beleaguered by a bad economy and its own indecisiveness, the G.E.-Alstom deal became as much a political as a financial issue.

In the arrangement announced Friday by the French economy minister, Arnaud Montebourg, the government appears to have won at least a symbolic victory by keeping a big part of Alstom a truly French company. But G.E., with a few concessions, would obtain the prize it had sought all along.

General Electric had no immediate comment Friday afternoon in Paris.

General Electric and Alstom will create three joint ventures, in the areas of steam turbines, renewable energy and electrical grid, the Mr. Montebourg said in a news conference.

The agreement is to all intents the revised deal that Jeffrey R. Immelt, the G.E. chairman and chief executive, presented on Thursday.

G.E. will obtain Alstom's world-class business that manufactures electrical power-plant turbines that run on natural gas. G.E. in turn will sell its business that makes railroad signaling systems to Alstom, which will fold it into its rail transport and infrastructure business -- the company that will retain the name Alstom and remain in French hands.

The French government will also buy into Alstom, becoming its largest shareholder by buying the stake from the Bouygues family, which is Alstom's largest shareholder.

The agreement gives the French government leverage to ensure that G. …

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