GE boss faces public Alstom grilling in Paris

Tue May 27, 2014 9:16am EDT

* Jeff Immelt grilling due to start at 1630 GMT

* Siemens France boss to be questioned beforehand

* GE has extended its bid, Siemens seen readying rival offer

By Andrew Callus

PARIS, May 27 (Reuters) - General Electric boss Jeff Immelt faces a public French parliamentary grilling in person on Tuesday over his high-stakes plan to buy the power arm of engineering group Alstom, replacing a subordinate at the last minute.

A statement from the parliamentary economics committee late on Monday put Immelt on its agenda for Tuesday's hearing, which was scheduled originally last week with the head of GE France, Clara Gaymard, on the stand.

Immelt is scheduled to speak in defence of his 12.35 billion euro ($16.9 billion) bid for Alstom's power arm at 1630 GMT, an hour after Christophe de Maistre, chairman of Siemens France , is due to begin facing questions.

Maistre, representing the European alternative to the GE offer, will make the case for a tie-up with the German engineering firm. Sources have told Reuters that Siemens was readying a formal offer under which it would transfer its rail activities and less than 7 billion euros in cash to its French rival in exchange for its power assets.

GE's Immelt was due in Paris anyway this week for a meeting on Wednesday with President Francois Hollande and Economy Minister Arnaud Montebourg.

"The committee asked the country chiefs to attend, but Jeff is our CEO and he is running things," said a GE spokesman. "He is in Paris anyway, so we decided he should attend. It's normal that he should come and defend the project."

The hearing takes place after GE agreed to extend its bid timetable by three weeks until June 23 following objections to the deal from the French government, a letter of intent from Siemens offering to pursue a rival proposal, and a French government decree giving itself an effective veto on any deal.

CRITICAL MASS

GE sees a chance to push on with a new focus on its engineering and industrial roots, expand its installed base of power turbines, and increase exposure to emerging markets.

Siemens wants to head off the creation of an even more powerful rival and grab a chance to turn Alstom from a competitor into a part of its own power division.

Alstom, meanwhile, has heavy debts and is short of cash. It was already rescued by the government a decade ago, amid protests at the time by Siemens.

Analysts see the French group as lacking the critical mass to stand alone in either of its main markets, power turbines and rail equipment. Its top shareholder, the conglomerate Bouygues with 29 percent, would welcome the cash from a GE deal as it faces a costly price war in its telecoms business.

For the French government, represented frequently and vocally by Montebourg, the concerns are strategic, and reach deep into the nation's energy supply and power industry interests, especially in the field of nuclear power.

With 18,000 workers in France out of a total 96,000, Alstom is an important manufacturing employer in a country suffering record unemployment, as well as a strong symbol of French engineering prowess, making the iconic TGV high speed trains.

Alstom is also a main supplier of power turbines to the utility EDF, in which the government has an 84 percent stake and which has a near-monopoly on electricity supply in France and is a major power producer in Britain and Italy. Another key supplier is GE itself.

EDF uses nuclear reactors to supply more than 70 percent of the domestic electricity consumption and is involved in construction of new nuclear plants in China and Britain. EDF, in turn, is the main customer of another state-controlled business, nuclear group Areva.

($1 = 0.7325 Euros) (Editing by Natalie Huet and Susan Thomas)