GE CEO to Meet French Minister on Alstom Deal

By Dow Jones Business News, 
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PARIS--The race to take over Alstom SA's energy assets is turning into a marathon.

General Electric Co. Chief Executive Jeffrey Immelt is set to meet French Economy Minister Arnaud Montebourg in Paris on Thursday, the third time the executive has visited the City of Light since GE launched its $17 billion bid for the French engineering firm's business in late April.

His mission: to shut down government interest in a competing offer from Germany'sSiemens AG and Japan'sMitsubishi Heavy Industries Ltd before it gathers too much momentum.

"Our proposal is an alliance that brings together two energy companies to compete globally," GE spokesman Gary Sheffer said Wednesday. "We believe that's better for Alstom than carving it up."

Mr. Immelt is expected to make a series of concessions, according to people familiar with the matter, giving the French government a say in the fate of Alstom products that Paris deems strategic, such as the oversized steam turbines used in nuclear power plants. GE is also considering selling its train-signaling business to Alstom, according to people familiar with the matter, in an attempt to satisfy President François Hollande's demand that the U.S. conglomerate help beef up Alstom's train business in exchange for the government's blessing.

GE has already moved senior executives to Paris to make its case, including Steve Bolze, head of its power and water business, and John Flannery, head of mergers and acquisitions.

To win the heart of the French government, however, Mr. Immelt faces stiff competition from Siemens CEO Joe Kaeser and his Mitsubishi counterpart, Shunichi Miyanaga, who decamped in Paris earlier this week to trumpet their own offer in interviews with the French media and in audiences with Mr. Hollande and members of Parliament.

Already, the tandem has put its political acumen on display, claiming their bid is "not about the money." Instead, the executives have framed their offer as a made-to-measure response to the demands of Mr. Montebourg, who invited the German firm to join the fray with a proposal to partner with Alstom rather than own its energy business outright.

Under their binding offer, Siemens would pay EUR3.9 billion ($5.3 billion) to buy Alstom's gas turbines while Mitsubishi would spend EUR3.1 billion for minority stakes of Alstom businesses, including the politically sensitive nuclear turbine operations.

Flanked by a French translator, Mr. Miyanaga told Parliament on Tuesday that the complex array of industrial alliances, which values Alstom at EUR14.2 billion ($19.3 billion), is designed to keep Alstom in French hands. He also invited the French government to take a stake in the industrial firm.

A government official said such an investment was "possible," adding that the government viewed the joint offer of Siemens and Mitsubishi as "serious." That assessment contrasted with Paris's response to GE's bid, which the government says is unacceptable as it stands and "needs improvement."

On Wednesday, the soft-spoken Japanese executive was back in the public spotlight, telling broadcaster France 24 that GE's bid "is just a kind of chess acquisition. It is a kind of end of Alstom's energy business. Our proposal is a partnership."

"Our proposal is an alliance that brings together two energy companies to compete globally," GE spokesman Gary Sheffer said Wednesday. "We believe that's better for Alstom than carving it up."

Regarding the Siemens-Mitsubishi proposals, one key Frenchman isn't impressed: Alstom CEO Patrick Kron. The executive, a longtime foe of Mr. Kaeser, met with unions on Wednesday and delivered an ominous warning, according to Miguel Torvisco, a CGT union official who attended the meeting.

A spokeswoman for Mr. Kron declined to comment on the meeting.

Mr. Kron described Siemens's plan to carve out Alstom's gas turbine business as "impossible," according to Mr. Torvisco, because the marketing and maintenance operations of the gas turbine business are inextricably tied to those of Alstom's other turbine activities.

And Mr. Kron cast Mitsubishi's pledge to remain a minority shareholder as the start of a creeping takeover, said Mr. Torvisco. Mr. Kron warned the group, according to Mr. Torvisco, that Mitsubishi already produces turbines for nuclear reactors, competing with Alstom for contracts around the world.

"I'm not going to bed with a competitor," Mr. Kron said, according to Mr. Torvisco.

Jan Hromadko and Ted Mann contributed to this article.

Write to Inti Landauro at inti.landauro@wsj.com and Stacy Meichtry at stacy.meichtry@wsj.com

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