GE's Alstom bid shows limits of French state intervention
By Julien Ponthus and Mark John
PARIS (Reuters) - General Electric's (GE.N: Quote) overtures to the power business of France's former industrial beacon Alstom (ALSO.PA: Quote) have shown again how the French state, for all its interventionist zeal, has limited room for maneuver against big business.
Citing "patriotic concern" over loss of jobs and control of a group with a history stretching back 86 years, President Francois Hollande's government leapt into action to find ways of countering the offer after news of it emerged last week.
While Germany's Siemens (SIEGn.DE: Quote) - billed by Paris as a possible white knight - still has a month to make its intentions clear, Alstom's decision to review GE's $16.9-billion bid makes the U.S. giant the clear favorite to secure the turbine and grid assets that make up the bulk of Alstom revenues.
If GE succeeds, it will mark the latest climb-down for a two-year-old government which has already ended up on the losing side of public stand-offs in the telecom and steel industries.
"This is the end of an era. The state no longer has the means to protect weak companies in sensitive sectors," left-leaning Le Monde said in a front-page editorial entitled "The state can't do it all".
Such views are not widely held in a country where the state holds stakes in dozens of blue-chip companies and governments of all stripes see it as their duty to intervene in corporate matters. A conservative government bailed out Alstom in 2004, five years before the economic crisis tore through the firm's order books.
Yet the saga of the past week shows Hollande's Socialists unable or unwilling to get out the big guns of state weaponry to ward off the U.S. giant.
France's move in 2005 to name dairy group Danone (DANO.PA: Quote) a concern of strategic importance to shield it from a feared takeover by U.S. drink-maker PepsiCo is now regarded as a textbook classic of "economic patriotism". Continued...