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France picks GE for Alstom, says there is work to do

GE will sell its rail signalling business to Alstom as part of plans to strengthen the transport activities of the French group.

By: Reuters | Paris | Published: June 22, 2014 1:18 am

France chose General Electric to form an alliance with Alstom on Friday — rejecting an offer from Siemens and Mitsubishi Heavy Industries — but said the deal still needed some work and added it would buy a 20 per cent stake in the hotly-contested company.

Economy minister Arnaud Montebourg said he had used a newly- created state decree to reject both of the existing offers as not being in France’s strategic interest, and had formulated fresh demands to GE chief executive Jeff Immelt.

The decision ended weeks of suspense surrounding one of Europe’s fiercest industrial battles in years, but left open major questions about the final shape of an alliance which GE hopes will give it access to new power markets.

“The points we have raised with General Electric are precise and technical but necessary,” Montebourg told a news conference after two days of talks involving the bosses of the three suitors, President Francois Hollande and top ministers.

He said France had demanded strict conditions “guaranteeing energy independence, job creation on national territory and maintenance of decision-making centres in France”.

He said the offer from Siemens and Mitsubishi Heavy Industries (MHI) was “very serious” and that he had personally backed it, but that the government “had made up its mind”. Montebourg added that he understood the Alstom board would meet later on Friday and give its view. Alstom, GE and Siemens all declined to comment.

Montebourg confirmed that Alstom’s lucrative gas turbines arm would be purchased by GE and said there would be discussions on the shape of joint ventures in other energy areas ranging from renewables to nuclear.

He said the French state would come in as the top shareholder in Alstom by purchasing a 20 per cent stake in it from Bouygues, currently the holder of 29 per cent.

GE will sell its rail signalling business to Alstom as part of plans to strengthen the transport activities of the French group, maker of the famed TGV high-speed trains.

Montebourg said the signalling business was valued at “one billion dollars or euros, I am not sure”. He gave no other valuation details during the news conference.

Alstom’s sensitive nuclear activities will be held in a 50:50 venture with GE in which the French state would have a “golden share” giving it a veto, said the economy minister, a self-styled “economic patriot” from the French left.

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