(Corrects paragraph under second subheading to say "former
president, then finance minister" and not "then president".
Nicolas Sarkozy was finance minister in 2004. He became
president in 2007)
* President Hollande meets GE, Siemens bosses about proposed
* GE says discussion 'productive'
* Economy Minister Montebourg says will block any unfit deal
* Siemens says confirms interest, sources say bid likely
By Natalie Huet and Benjamin Mallet
PARIS, April 28 France said it would defend jobs
and its national interest as it met suitors eyeing a breakup of
engineering group Alstom on Monday and suggested it
preferred Germany's Siemens over U.S. giant General
President Francois Hollande held talks with GE boss Jeff
Immelt on Monday morning and sat down later with Siemens CEO Joe
Kaeser to discuss the fate of Alstom, the maker of the country's
prestigious TGV high-speed trains and turbines for power plants.
"We won't let Alstom sell this national champion behind the
back of its shareholders, its employees and the French
government," Economy Minister Arnaud Montebourg wrote on his
official Twitter account before the meetings started, accusing
Alstom's CEO Patrick Kron of "a breach of national ethics".
Alstom, which is battling with big debts and falling
demand, was bailed out by the French government in 2004 but now
needs help again. Smaller than its suitors, it was hardest hit
by a slump in orders for power equipment since the 2008 economic
downturn depressed electricity prices.
Monday's meetings follow a weekend of drama when Alstom's
German rival Siemens proposed exchanging part of its train
business plus cash for Alstom's power arm to counter a potential
Alstom-GE energy tie-up. Montebourg said the Siemens plan would
create "two European and global champions".
Berlin weighed in on Monday morning, saying an
Alstom-Siemens deal could offer "great opportunities" for
Siemens also re-confirmed its interest in an Alstom deal.
After GE CEO Immelt emerged from talks at the presidential
palace late on Monday morning, the company issued a statement
calling the dialogue "open, friendly and productive".
"It was important to hear in person President Hollande's
perspective and to discuss our plans ... We understand and value
his perspective, and are committed to work together," it said.
Hollande and Montebourg have said their concerns are related
to jobs, the nation's energy independence, and the location of
activities both in power and rail. A source familiar with the
discussions said GE had offered some solutions to these concerns
but that there was still a lot of work to do.
Montebourg said before the meeting with GE that France would
oppose any deal it considered unsuitable. But the minister, who
has threatened in the past to nationalise assets belonging to
steelmaker ArcelorMittal, stopped short of suggesting
the state would do the same for Alstom.
"It's too early to raise that question," he said.
In the evening, Hollande met with Kaeser from Siemens and
with Martin Bouygues, the billionaire chairman of family
conglomerate Bouygues, which is Alstom's largest
shareholder, with a 29.4 percent stake.
Kaeser later issued a statement that he had had a "very
open, trustful and amicable exchange" with Hollande and
Montebourg, and the Siemens board would convene as soon as
possible to decide whether to make an offer.
Immelt arrived in Paris during the weekend, aiming to hammer
out a $13 billion deal to buy Alstom's power turbines business.
News of talks between the two surfaced last week, and sources
with knowledge of them say they have been going on for months
and are very advanced.
However, Siemens may also be working on refining its
proposal, a second source with knowledge of the talks said.
"It is clear that Siemens wants to remain in the race. They
could come back with a more binding offer or with another, more
detailed letter addressing some of the issues pointed out in the
press, such as antitrust and jobs."
A third source said it should confirm its offer on Tuesday.
Analysts see sense in an Alstom-GE tie-up. GE is relatively
weak in turbines for nuclear and coal power generation, where
Alstom is strong, and the French group's established base of
power installations generated 70 percent of its global revenue
in the last year. A deal would also enable GE to expand into
offshore wind power and grid technology.
Such a beefed-up GE would be a tough competitor for Siemens,
hence its counter-attack, say industry sources.
Citi analysts estimate that combined with Alstom, Siemens
could account for 50 percent of the world's installed power
capacity, well ahead of GE's 25-28 percent.
GE has struck 50 deals worth more than $125 billion that
have been approved by the EU in the past decade. That includes
the acquisition of French motor maker Converteam for about $3
billion in 2011.
Siemens, like Alstom, makes high-speed trains and other
rolling stock as well as power station turbines, and according
to sources familiar with its plan is proposing an asset swap
that would make Alstom a more significant rail transport player
while enhancing its own turbines and power grid equipment
Its proposal also offers Alstom some cash, and puts an
enterprise value of around 10 to 11 billion euros ($14-$15
billion) on Alstom's power arm.
Sources close to the talks said that at this stage, the cash
in GE's offer was more attractive to Alstom's top shareholder
Bouygues, and would also help Alstom finance strategic
acquisitions to grow as a pure player in transport.
"Meanwhile, Siemens wants to offload a declining business
that's partly redundant with Alstom's - that's not very
attractive," one of the sources said.
A deal with Siemens - an option floated a decade ago but
rejected by both Alstom's CEO Kron and former president, then
finance minister, Nicolas Sarkozy - could be more complicated to
carry out, due to more overlap and antitrust issues than with
GE, the sources said.
Alstom's unions warned a Siemens tie-up would mean big
layoffs at both companies. Alstom employs 18,000 people in
France, about 20 percent of its total workforce, against GE's
10,000 French workers and 7,000 for Siemens.
"Why not a Franco-French solution? Can't the French state
intervene directly by partly taking over the stake Bouygues
holds?" the CFE-CGC union said in a statement.
The CGT union meanwhile called for Alstom's nationalisation.
Labour Minister Francois Rebsamen, asked about this option, told
France Inter radio: "I think nothing is out of the question at
Beyond Monday's brief statement, GE declined to comment.
Bouygues has limited itself to saying it supports Alstom's
strategy. Siemens said on Sunday it had written to Alstom about
Siemens has hired Societe Generale and BNP Paribas to help
it on a possible deal swap with Alstom, according to sources
with knowledge of the situation who declined to be named.
Rothschild and Bank of America Merrill Lynch are advising
Alstom on the deal, while GE is working with Lazard and Credit
Suisse, the sources said. BNP and Societe Generale declined to
comment; the other banks were not immediately available for
Alstom's shares are suspended from trading until Wednesday
while it considers its options. The shares, which had slumped
earlier this month to a near nine-year low, jumped at the end of
last week to reach their highest in five months.
($1 = 0.7227 Euros)
(Additional reporting by Elizabeth Pineau, Nicolas Vinocur,
Matthieu Protard and Julien Ponthus in Paris, Arno Schuetze in
Frankfurt and Sophie Sassard and Anjuli Davies in London;
Editing by Sophie Walker and Will Waterman)