France sends political warning to GE over interest in Alstom

The French government has issued a warning to General Electric that it is ready to fight to protect national interests if the US conglomerate attempts to buy Alstom, a train and power plant builder.

Manuel Valls, France's new prime minister, said the socialist government was "attentive to jobs, technology and decision-making centres" after reports that GE was considering a $13 billion (€9.4bn) offer for the national champion.

Shares in Alstom, which employs 18,000 people in France, surged by as much as 16 per cent yesterday following the report by Bloomberg.

Agreement
It had cited sources saying an agreement might be announced next week.

Alstom shares closed up 10.9 per cent at €27. The rumoured interest follows a bout of French dealmaking in recent months, with cement groups Holcim and Lafarge announcing a $40 billion (€29bn) merger this month and Altice buying telecoms group SFR in a deal worth €17 billion.

But politics is likely to be a significant obstacle to any Alstom acquisition.

The French group, which makes the high-speed TGV trains, was bailed out by the government in 2004, and relies heavily on orders from state-owned rail operator SNCF and utility EDF.

A banker in Paris said talks were triggered by the need of Alstom's biggest shareholder, Bouygues, to raise funds for a bid it made for French mobile phone operator SFR last month.

Power unit
He added that GE was only interested in Alstom's power unit, which accounts for three-quarters of its €20 billion annual revenues.

Alstom is still expected to spin off its transport unit, as announced last year.

Tender offer
Alstom said yesterday that it was "not informed of any potential public tender offer for the shares of the company".

Both Bouygues, which has a near 30 per cent stake in Alstom, and GE declined to comment. – (Copyright The Financial Times Limited 2014)