- POSTED: 23 Jun 2014 00:50
- UPDATED: 23 Jun 2014 02:54
France was close to finalising a deal to take a 20 per cent stake in Alstom, sources said, a move which would pave the way for the acquisition of the French group's energy business by US giant General Electric.
PARIS: France was close on Sunday to finalising a deal to take a 20 per cent stake in Alstom, sources said, a move which would pave the way for the acquisition of the French group's energy business by US giant General Electric (GE).
"There is an agreement in principle," said one source close to the ongoing negotiations, while another said the talks were "on the right track".
Sources said that an agreement had already been reached on the price and that further discussions were focusing on how and when the purchase would take place.
It was hoped a deal could be reached before markets opened in Paris at 0700 GMT on Monday.
Alstom's board of directors on Saturday unanimously approved GE's 12.35 billion euro (US$16.8 billion) bid to acquire its energy business.
The statement came a day after the French government stepped firmly into the battle over its industrial jewel Alstom, saying it favoured General Electric's bid over a rival joint offer from Germany's Siemens and Japan's Mitsubishi Heavy Industries.
The government's decision marked a turnaround from April, when news first emerged that GE was in talks with rail to power group Alstom over the acquisition.
Then, President Francois Hollande's government objected to the GE bid on the grounds that jobs and decision-making could be lost.
It instead encouraged German giant Siemens to make a counter offer, hoping that a Siemens-Alstom tie-up would create a global-scale European group. But Siemens linked up with MHI to present a rival offer, which analysts say would lead to a breakup of Alstom.
While favouring GE's bid, the French government also announced a surprise caveat on Friday that it would take a controlling stake in Alstom to preserve French strategic interests, which it plans to do by purchasing two-thirds of the shares owned by construction-telecoms conglomerate Bouygues.
Even if the deal between the government and Bouygues is finalised, Alstom said it would still need to put the GE bid to employee representatives and gain regulatory approval related to foreign investment rules.
Siemens chief Joe Kaeser insisted that "it is not over", in an interview with Bild newspaper, adding that he is still open for negotiations with Alstom and the French government.
"The doors are open for Alstom and the French government," he said, according to extracts of the interview released ahead of publication.
Siemens and Mitsubishi improved and simplified their linked offer on Friday, increasing their valuation of Alstom's energy division to 14.6 billion euros (US$19.9 billion), less than a day after GE had made several changes to make its bid more attractive.
GE sweetened its proposal by offering a government veto over sensitive nuclear energy technology and promising to strengthen Alstom's transportation business, which makes the French TGV trains.
The beleaguered Alstom is seeking to offload its energy businesses - ranging from wind power to turbines for nuclear reactors - as it feels that they are not large enough to compete globally.
The fate of Alstom, which employs 18,000 people in France out of a total 90,000 worldwide, is an important issue for the French president, who is battling to reduce a huge trade deficit and record unemployment as his approval ratings have dropped to record lows.