PARIS General Electric's (GE.N) overtures to the power business of France's former industrial beacon Alstom (ALSO.PA) have shown again how the French state, for all its interventionist zeal, has limited room for maneuver against big business.
Citing "patriotic concern" over loss of jobs and control of a group with a history stretching back 86 years, President Francois Hollande's government leapt into action to find ways of countering the offer after news of it emerged last week.
While Germany's Siemens (SIEGn.DE) - billed by Paris as a possible white knight - still has a month to make its intentions clear, Alstom's decision to review GE's $16.9-billion bid makes the U.S. giant the clear favorite to secure the turbine and grid assets that make up the bulk of Alstom revenues.
If GE succeeds, it will mark the latest climb-down for a two-year-old government which has already ended up on the losing side of public stand-offs in the telecom and steel industries.
"This is the end of an era. The state no longer has the means to protect weak companies in sensitive sectors," left-leaning Le Monde said in a front-page editorial entitled "The state can't do it all".
Such views are not widely held in a country where the state holds stakes in dozens of blue-chip companies and governments of all stripes see it as their duty to intervene in corporate matters. A conservative government bailed out Alstom in 2004, five years before the economic crisis tore through the firm's order books.
Yet the saga of the past week shows Hollande's Socialists unable or unwilling to get out the big guns of state weaponry to ward off the U.S. giant.
France's move in 2005 to name dairy group Danone (DANO.PA) a concern of strategic importance to shield it from a feared takeover by U.S. drink-maker PepsiCo is now regarded as a textbook classic of "economic patriotism".
But GE's offer to ring fence from the Alstom deal the turbines used by France's nuclear industry - which generates some 75 percent of the country's power - has meant the state has not played the strategic concern card this time.
Unions are urging the government to purchase a 29 percent stake in Alstom held by industrial group Bouygues, which is seeking an exit to be able to invest in its telecom unit. Economy Minister Arnaud Montebourg said on Wednesday that he would study the option.
But such a move was swiftly knocked down by the official government spokesman, while a source close to Hollande said it would run up against European Union antitrust laws.
"Even if the state took on Bouygues' stake, it wouldn't be able to keep it for very long because the European Commission would tell us to get rid of it," said the source.
Even the emergence of Siemens as a possible savior had an unlikely air about it.
One industry insider told Reuters that no one at Alstom wanted a deal with Siemens because everyone - from the low-level worker to chief executive Patrick Kron - recalls how Siemens lobbied against state aid for Alstom back in 2004.
Sector analysts noted that overlaps between the two groups made the risk of job losses among Alstom's 18,000 French staff high and questioned whether there was any logic in Siemens' pursuing the matter now that GE was in the driving seat.
"We have a slightly critical view of this because it seems that this is more a reaction to GE's move," Tim Albrecht, fund manager at DWS Investment, said of Siemens' general expression of interest over the weekend.
In taking a share in PSA-Peugeot-Citroen PSA.PA alongside China's Dongfeng (0489.HK), Hollande last month hailed a move aimed at ensuring the turn-around of the ailing auto-maker.
But other efforts to intervene have fallen flat.
Despite his 2012 promise to protect steelworkers from a plan to close two blast furnaces in northern France, Hollande's government ultimately proved unable to stop owner ArcelorMittal (ISPA.AS) from doing just that one year ago.
It was humbled again this month when cable group Numericable NUME.PA won the battle to buy Vivendi's (VIV.PA) telecoms arm SFR despite overt state backing for a rival offer from Bouygues.
A more sympathetic narrative is that the government - usually in the strident shape of Economy Minister Montebourg - is holding out for jobs and other key interests against forces that would put the quest for shareholder value above all else.
Montebourg told parliament on Wednesday that his efforts had won a month's more time for negotiations on what he urged should be a "partnership of equals rather than a takeover".
He pointed to the fact that GE boss Jeffrey Immelt had provided guarantees that the deal would boost employment in France and the group would locate global headquarters of several businesses in the country, from grids to hydropower.
However, one source close to the discussions said it was likely that GE would have made the same concessions without Montebourg's intervention. Trade unions were equally skeptical of whether it had made a difference.
"Promises are only for those who believe in them," said Dominique Gillier of the CFDT union, one of those who held crisis talks with Montebourg late on Tuesday.
"What we need are guarantees on specific sites."
(Additional reporting by Nicholas Vinocur and Matthieu Protard; Editing by Peter Graff)