News Column

Talk of GE offer sends Alstom shares up 11%

April 25, 2014

Gwyn Topham Transport correspondent

General Electric is reportedly in talks over a politically sensitive takeover of French industrial group Alstom in a deal worth up to $13bn (pounds 7.7bn).

The US conglomerate's interest in the maker of the TGV high-speed trains met with a warning from France's new prime minister, Manuel Valls, who said the government would keep a close watch on jobs, technology and decision-making at all major French employers.

But investors were less cautious, sending Alstom's shares up nearly 11% in anticipation of an offer for a business that employs 18,000 people in France and 93,000 worldwide.

According to a report in Le Figaro, GE's interest could be exclusively in Alstom's power supply divisions, not the transport arm whose trains are a subject of national pride. The group's importance to the French state was underlined in 2004 when the then finance minister, Nicolas Sarkozy, led a government-backed bailout.

Alstom's energy businesses - which include building coal, gas and nuclear plants, as well as power grids - accounted for more than 70% of its euros 20bn (pounds 16.5bn) global revenues last year, but the unit has struggled as Europe's economic weakness led to a slump in orders. The group announced last year it would cut 1,300 jobs and put assets up for sale, including a minority stake in its transport business.

Both General Electric and Alstom refused to comment on speculation. Alstom said it would comment as scheduled when presenting its annual results in two weeks.

Reports suggest a deal may come before then, however, with fellow conglomerate Bouygues, Alstom's biggest shareholder, thought to back a sale.

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Source: Guardian (UK)