France picked General Electric to form a partnership with Alstom on Friday, dismissing a joint bid by Siemens and Mitsubishi Heavy Industries. However, the France government said the agreement needed some work and it would acquire a 20% stake in the firm.
France’s Economy Minister Arnaud Montebourg said he had invoked a recently-created state order to dismiss the two existing offers in their current forms, saying they didn’t address strategic interests of the country. Montebourg said he had submitted new demands to GE chief executive Jeff Immet.
The decision brought to a conclusion weeks of uncertainty around one of the toughest industrial battles in Europe in years, although it’s still not known what form the alliance will take, which GE hopes will allow it entry to new energy markets.
“The points we have raised with General Electric are precise and technical but necessary,†Montebourg is quoted by Reuters as telling reporters after two days of discussions with chiefs of the three bidders, President Francois Hollande and senior ministers.
The minister added that France required a deal that ascertained energy independence, creation of employment within the domestic market and the keeping of core decision making hubs in France.
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He said the overture from Siemens and Mitsubishi Heavy Industries was “very seriousâ€, having supported it himself, but the government of France had already made its decision.
Montebourg admitted that GE would buy Alstom’s high-stakes gas turbine unit and talks would follow regarding the nature of partnerships in other sectors of the energy industry including nuclear and renewable.
France is poised to hold the highest number of Alstom shares, as a single entity, after buying a 20% stake out of the 29% held by Bouygues in the company.
But according to the New York Times, the deal may confirm foreign-investor concerns that the current French regime is not ready for a free market and to make policy changes needed to revamp the country’s stalled economy.
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To contact the reporter of this story; Yashu Gola at yashu@forexminute.com
