New law gives Paris Alstom veto
The French government today forced itself centre-stage of the battle for control of industrial group Alstom by giving itself beefed-up powers to block foreign takeovers.
In a move that caught commentators by surprise, economy and industry minister Arnaud Montebourg signed a decree extending the state’s powers to prevent defence deals into an expanded list of strategic sectors, including energy.
The new law potentially has big implications for GE’s $17bn offer for the energy assets of Alstom – including its significant renewables interests.
Although Alstom’s board has backed the deal, Montebourg and French President Francois Hollande have opposed GE’s offer as it stands, citing fears over jobs and investment.
Apparently under pressure from the government to keep its options open, Alstom is spending a month examining the GE offer and giving time for possible counter-bid by Germany’s Siemens.
It initially appeared that the left-wing Paris government’s influence over the final outcome would be highly significant, but not necessarily decisive in the case of Alstom, which is not state-controlled .
However, analysts said the new decree could change that.
"With this new law, the risk that GE will reconsider its position increases, since additional concessions on a GE-Alstom deal will be sought by the French government to gain broader electorate support," said analysts at Berenberg.
State powers to intervene in foreign takeovers is a live issue in Europe, with the UK currently going through similar agonies over a bid from US pharma giant Pfizer for its own AstraZeneca.
The latest development follows days of sometimes contradictory signals from French government circles over the Alstom saga.
Recently-installed French energy minister Segolene Royal appeared to back the GE bid in a newspaper interview, but later insisted she is neutral on the matter.
It emerged last week that GE has agreed to consider offers from internal French investors for the industrial group’s wind-power operations, prompting reports that the government favours a takeover of Alstom’s offshore wind business by state-owned rival Areva.