General Electric Co. {fortune-stock symbol=”GE”] chief executive Jeff Immelt is back in Paris Thursday in a fresh attempt to persuade the French government that it should be allowed to buy the energy assets of Alstom SA (AOMFF).
Immelt is set to present an improved proposal to Industry Minister Arnaud Montebourg under which GE would sell its rail signalling business to Alstom, and create a joint venture in the energy grid business, rather than buying it outright, French daily Le Figaro reported, without citing its sources.
A spokesman for GE said Immelt will also meet French President Francois Hollande Friday to press his case. However, he declined to confirm the media reports about the new proposals.
The creation of a joint venture in grid technology would soften the impression created by Montebourg, an old-style French Socialist, of an ugly American takeover of one of France’s industrial jewels. The inclusion of GE’s signalling business, meanwhile, would give added heft to the future Alstom as a company focused on transportation technology.
GE’s $17 billion bid already has the support of the Alstom board, which wants to exit a power business where it has insufficient global scale and focus on transport, specifically, its rail operations. Alstom is the maker of the iconic “TGV” high-speed trains.
However, it’s not clear whether that will be enough to persuade the government, which fears the loss of high-tech jobs and the erosion of France’s industrial base, to drop its objections to the deal. Immelt’s earlier promise to set up global HQs for the energy business in France appear to have failed to convince Paris.
At the government’s invitation, Germany’s Siemens AG (SIEGY) and Japan’s Mitsubishi Heavy Industries (MHVYF) have proposed a rival bid which would see Siemens buy Alstom’s gas turbine business and MHI take minority stakes in three joint ventures covering hydro turbines, steam turbines and grids.
MHI chief executive Shunichi Miyanaga told French lawmakers Wednesday that their bid valued the Alstom business at $19.2 billion–over 10% more than GE’s bid.
Alstom’s workforce, too, appears to favor the German-Japanese bid. The French daily Les Echos quoted a union official as saying that “the best offer in terms of our demands, and which would avoid dismantling the company, seems to be that of the Siemens-Mitsubishi duo.”
However, the Wall Street Journal reported Alstom CEO Patrick Kron Thursday as telling worker representatives that the plan was unworkable, since it would be impossible to separate the gas turbine operations from the other ones, and also noting that MHI would remain a competitor in the global market for supplying nuclear power stations with turbines.
Alstom’s board wants to reach a final decision on the bids by Monday.
