It seems the U.S. Department of Justice isn’t the only one complicating General Electric Co.’s (GE) bid to purchase French conglomerate Alstom SA’s energy business. Top French government officials are also pretty unhappy about the deal. However Alstom chairman and CEO Patrick Kron has defied the government and plunged ahead anyway.
On April 29, Alstom agreed to GE’s $13.5 billion bid to purchase the conglomerate’s energy assets. This deal represents a last resort for the French energy icon; the deal follows a bailout by the French government a decade ago. Alstom’s energy business, which includes TGV bullet trains and power turbines for the country's fleet of nuclear plants, accounts for 70 percent of the company’s revenue.
In making the deal, Kron said he called upon lessons learned from that bailout in making this deal, persuading his board to vote for the proposal rather than turn once again to the government. “I promised myself to never live that nightmare again,” Kron said after the vote, according to the Wall Street Journal.
However, French Economy Minister Arnaud Montebourg has loudly criticized the deal. Speaking before Parliament on April 29, Montebourg suggested that Kron had turned his back on France. He also questioned whether the CEO had committed a “breach of national ethics” and suggested that Kron be subjected to a lie detector test.
French President François Hollande has also questioned whether the deal would actually create jobs for the French people. In response to Hollande’s concerns, GE said that the company will place four global businesses, including hydropower and steam turbines, in France. GE Chief Jeff Immelt also told Hollande in a letter that he would suggest adding a French business leader to the company’s board of directors.
Despite the protestations of the French government, the final voice on the sale may actually belong to a fellow bidder, Siemens AG. While GE overcomes U.S. regulatory hurdles surrounding the sale, Siemens will still be able to place a formal bid for the company. Kron said that the Siemens bid will receive the same attention as the GE bid, and Alstom will provide Siemens the same amount of access to the company.
However, according to the WSJ, Kron has also suspected Siemens of trying to dismantle the company during the European Union’s investigation of the bailout. Following the bailout deal, Siemens grabbed a key asset that had previously belonged to Alstom, a move that one source close to Kron called “below the belt.”
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