GE strengthens hand in Alstom battle with pledge on jobs

Wed May 28, 2014 12:49pm EDT
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By Natalie Huet and Julien Ponthus

PARIS (Reuters) - General Electric (GE) (GE.N: Quote) strengthened its position in the battle for the power arm of French group Alstom (ALSO.PA: Quote) on Wednesday with a pledge to create new jobs in France and recognition from Paris that it had made a more acceptable offer.

GE Chief Executive Jeff Immelt promised 1,000 new engineering and manufacturing jobs within three years of a deal when he met French President Francois Hollande in the morning, said two sources close to the talks who asked not to be named because the matter has not been announced by the U.S group.

"Today we can see that GE's offer has been detailed, improved, strengthened," an official at Hollande's office said separately, adding however that there was still "some work to be done".

The comments signaled a change of tone from the French government, which had been heavily critical of the U.S. conglomerate's $16.9 billion bid for Alstom's power arm for fear of the impact on French jobs and industrial know-how.

It had promoted instead a European tie-up with Germany's Siemens (SIEGn.DE: Quote) and even passed a decree earlier this month to give itself an effective veto on any deal.

Alstom, which is famous for making France's iconic TGV high-speed trains, is a big private-sector employer in the country and was bailed out by the state a decade ago.

Saxo Bank analyst Christopher Dembik said French Economy Minister Arnaud Montebourg appeared to be getting his way in forcing GE to come up with a better offer for Alstom, though he warned other potential bidders for French firms might be deterred by the government's tactics.

"It's a clever game of poker in the short run for Arnaud Montebourg, but that could have harmful consequences in the medium and long run, particularly in relation to Anglo-Saxon investors who are wary of state intervention in economic affairs," he said.   Continued...

General Electric Chairman and CEO Jeffrey Immelt (C), Senior Vice President for Corporate Business Development John Flannery and Clara Gaymard (L), the head of GE France, leave after a meeting with French President to discuss the future of French engineering group Alstom at the Elysee Palace in Paris, May 28, 2014.   REUTERS/Christian Hartmann