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ALSTOM

US and German rivals in bidding war for Alstom

The battle for French engineering giant Alstom neared the finish line on Friday with rivals General Electric and Siemens, Mitsubishi both sweetening their offers in a bid to convince the President François Hollande and the government.

US and German rivals in bidding war for Alstom
Who will win the battle for French engineering giant Alstom: Photo: AFP/Shutterstock

The battle for French group Alstom heated up on Friday, as Siemens-Mitsubishi and General Electric sweetened their rival bids to win over the government and tie-up with the firm's main power-generation division.

French President Francois Hollande was due to meet his prime minister and energy and economy ministers on Friday before receiving the firms' chiefs separately to hear their respective cases.

Alstom, which also makes high-speed trains, said it would mull the competing bids in a meeting sometime before Monday which marks the final day of the current GE offer.

The future of Alstom has been at the centre of a trans-Atlantic tug of war for several months after Hollande's Socialist government objected to the US giant buying the jewel of French engineering, and encouraged a rival offer by Germany's Siemens, which then teamed up with Japan's Mitsubishi.

Early on Friday, Siemens and Mitsubishi improved and simplified their linked offers, increasing their valuation of Alstom's energy division to €14.6 billion less than a day after GE had made several changes to make its €12.35-billion ($17 billion) bid more attractive.

The Siemens-Mitsubishi offer increased the valuation of Alstom's energy division, representing 70 percent of the French group, by €400 million to €14.6 billion and upped the cash contribution by €1.2 billion to €8.2
billion, the groups said in a statement.

It also simplified the implementation of the transaction, following analysts' comments that the initial Siemens-Mitsubishi offer unveiled late on Monday was too complex and would break up Alstom.

"The specified proposal continues to preserve Alstom's current perimeter in almost all its activities, enhances its industrial sustainability, strengthens its financial structure," the companies said in a statement.

GE for its part on Thursday made several changes to make its bid more attractive, including a government veto over sensitive nuclear energy technology and strengthening the French company's transportation business.

"France will have one of the most complete energy capabilities of any country in the world and certainly in Europe," GE chief executive Jeff Immelt told journalists on Thursday in Paris.

Key issue for Hollande 

The beleaguered Alstom, which feels that its energy businesses – which range from wind power to turbines for nuclear reactors – is not large enough to compete globally, originally approached GE.

When Hollande's government learned of the advanced talks to sell the power business, it objected on the grounds that jobs and decision-making could be lost and encouraged Germany's Siemens to make a counter offer, hoping that a Siemens-Alstom tie-up would create a global-scale European group.

Siemens then linked up with Mitsubishi Heavy Industry (MHI) to present a rival offer.

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, record unemployment and whose approval ratings have dropped to record lows.

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GE

US giant GE to pay France €50 million after creating just 25 jobs out of 1,000

The French government announced Tuesday that US industrial conglomerate General Electric will pay €50 million ($57 million) after falling short of its goal of creating 1,000 new jobs in the country.

US giant GE to pay France €50 million after creating just 25 jobs out of 1,000
Alstom employees protest in front of the France's Ministry of Finance in Paris. Photo: AFP

GE had pledged to create the jobs by the end of last year as part of its 2015 purchase of the power and electrical grid businesses of France's Alstom.

But shortly after closing the deal GE unveiled a series of job cuts across Europe as slumping oil and gas prices crimped demand for its heavy-duty turbines and other equipment.

The company had already warned last year that it wouldn't meet the target, though the new CEO Larry Culp confirmed in October that GE would “fulfil its commitments.”

It had promised to pay €50,000 for every job not created over the three-year period.

The French finance ministry said after a meeting with GE officials Tuesday that the firm had created just 25 new jobs overall, meaning it would pay €50 million into an industrial development fund.

“GE underscored the significant of its continual investments in France during the period, and noted that despite the particularly difficult business climate, the group had done its utmost to create jobs,” the company said in a statement.

It pointed to a $330 million investment in offshore wind turbines in France announced last year, which it expects to eventually create 550 new jobs.

But union sources said last month that GE was planning to cut nearly 470 jobs, at its Alstom Power Systems GE Energy Power Conversion units.

Under Culp the company has been trying to get its power operations on more solid financial footing, with plans to cut costs further and reduce debt.

Last week it posted a $574 million profit for the fourth quarter, a welcome turnaround from the $11 billion loss a year earlier. 

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