 |
| 'GE and Alstom have their agenda, which is that of shareholders...', said Economy Minister Arnaud Montebourg.
PARIS— Siemens AG SIE.XE -1.56% of Germany barged in on Alstom SAALO.FR +10.93% 's plans to sell its energy assets to General Electric Co. GE +0.53%Sunday, proposing a counteroffer that would forge a global behemoth while keeping a symbol of French industry firmly rooted in Europe.
Helping Siemens crash the party was France's sharp-elbowed economy minister, Arnaud Montebourg, who cleared a path for the German firm by reminding Alstom Chairman and Chief Executive Patrick Kron that no major deal in France Inc. happens without his input.
On Thursday, Mr. Kron had just landed in Paris after a flight from the U.S.—where he was closing in on a deal to cede Alstom's huge energy operations to GE for more than $12 billion—when he got an urgent message.
Mr. Montebourg ordered the 60-year-old executive to come to the ministry immediately to explain why Alstom was negotiating without his knowledge.
Reuters
Since taking office in 2012, Mr. Montebourg has wielded his influence to cajole, prod and, if necessary, bend the will of some of the world's biggest companies and business leaders. His status shows that the government of Socialist President François Hollande considers itself a custodian of France's economic nationalism. Despite Mr. Hollande's efforts to revive France's anemic economy with proposed tax cuts and other business-friendly measures, a wing of his government remains firmly entrenched in the dirigisme, or government control of the economy, that defined post-World War II France.
"GE and Alstom have their agenda, which is that of shareholders, but the French government has its own, which is that of economic sovereignty," Mr. Montebourg said Sunday.
Not only does Alstom employ 93,000, it supplies crucial equipment to France's nuclear reactors and makes the country's signature bullet trains, the TGVs. That helps explain why Paris bailed it out when it ran into financial trouble a decade ago.
At the heart of Mr. Montebourg's interventionism lies a belief that government has a duty to meddle in the affairs of companies—even ones where the state has no ownership stake—when jobs hang in the balance.
Related
At a time when other countries are rolling out the red carpet to lure the most innovative companies to their shores, France is worried about fending off foreign suitors.
Some of the country's biggest firms—from advertising company Publicis SA to cement-maker Lafarge SA—are considering pairing up with foreign rivals as well as relocating their headquarters outside France.
Yahoo Inc.'s attempt to buy Dailymotion from former state monopoly France Telecom SA—providing the French Internet video site with a global launchpad—unraveled after Mr. Montebourg stormed the negotiations, chastising the U.S. tech giant's senior management.
"It sends a very bad signal. Foreign investors are discouraged." said Philippe Aghion, a professor of economics at Harvard University. "What's the point of Mr. Hollande going to the Silicon Valley to court them?"
Now GE is on a collision course with the main custodian of France's economic nationalism, Mr. Montebourg.
The minister's intervention has already upended GE's plans to close a deal with Alstom by Sunday. GE CEO Jeffrey Immelt, who is under pressure from investors to shift away from financial activities, backed out of plans to speak at a forum hosted by Sen. John McCain in Arizona Saturday so he could be in Paris Sunday and soothe tensions.
But Mr. Montebourg and Siemens were busy working on an alternative plan. Siemens said over the weekend that it was ready to buy Alstom's energy assets—the same ones that GE covets—but added a number of sweeteners that reflected Mr. Montebourg's demands for preserving jobs and decision-making centers in France.
In a proposal that valued Alstom's energy business at up to $15 billion, Siemens offered to locate the global headquarters of key power-generating operations in France. It also said sensitive technology—Alstom makes software used to run nuclear plants—could remain in French hands, while a significant portion of its rail-transport business could be handed over to Alstom.
Alstom's fate riveted France. A banner headline on Le Journal du Dimanche read: "A national psycho-drama." Late Sunday, Alstom said it was reflecting on strategy and would make an announcement by Wednesday.
GE is still firmly in the running. The company's French operations, which employ 11,000 people, have less overlap with Alstom than a potential tie-up with Siemens, meaning fewer jobs would be at risk.
People close to GE say the U.S. firm is also prepared to locate some decision-making powers in France. Mr. Montebourg may meet GE and Siemens executives on Monday to discuss Alstom's future, his office said.
The fact that Mr. Hollande has entrusted Mr. Montebourg to lead the counteroffensive is a measure of the president's political vulnerability. The economy minister ran against Mr. Hollande in the 2011 Socialist primaries. Though he lost, Mr. Montebourg managed to galvanize a strong following in the Socialist Party's far-left wing.
"Multinational companies no longer serve the economy. They serve themselves," Mr. Montebourg wrote in "Vote for De-globalization!," a book he brandished on the campaign trail.
Mr. Montebourg's popularity compelled Mr. Hollande to reward him in 2012 with the influential post of industry minister. The newly elected president even tweaked the minister's new job title to Mr. Montebourg's liking, naming him the "Minister of Productive Resurrection."
Once in office, Mr. Montebourg began to rail against the strong euro, which he said was hobbling French exports. That raised eyebrows in Brussels, but it also kept the Socialist faithful fired up.
Mr. Montebourg "covers a part of the political spectrum, which is useful," said a senior aide to Mr. Hollande.
Some of the minister's interventions have paid off. When mining giant Rio Tinto sought to close an aluminum smelter in the French Alps, Mr. Montebourg persuaded a German aluminum firm, Trimet, to team up with state-run utility Electricite de France SA to buy the asset and continue production, saving thousands of jobs in the area.
In early March, Mr. Montebourg cleared his schedule to convene a crisis meeting with managers of Les Atelières, a small lingerie factory, helping save the firm and its 31 jobs. "He goes to the max," said Nicole Mendez, one of the Les Atelières workers who dealt with him. "But of course, he doesn't hold all the cards."
The Alstom case will be a litmus test. Early this year, Alstom quietly began talking to GE when it became clear it lacked the financial muscle to navigate through a prolonged dearth of orders in recession-plagued Europe. Throughout the talks, Mr. Kron, the CEO, kept France's government in the dark.
Back in Paris, Mr. Kron was subjected to a "tense and frank" discussion with Mr. Montebourg, according to a person with knowledge of the meeting. Alstom declined to comment.
GE's Mr. Immelt had planned to meet Sunday with Mr. Montebourg to try to calm tensions with the fiery minister.
But the minister slammed on the brakes. In a letter to Mr. Immelt reviewed by The Wall Street Journal, Mr. Montebourg postponed the meeting and warned Mr. Immelt that the French government had the power to "impose conditions" on the proposed deal with Alstom and, if necessary, to "deny it."
Mr. Montebourg also lectured the American executive on the finer points of French law, which requires the government to sign off on the sale of assets the French state has defined as strategic. "We do not believe that creating a fait accompli," Mr. Montebourg wrote, "would be a wise course of action."
—Andrea Thomas, Inti Landauro and Géraldine Amiel contributed to this article.
Write to Stacy Meichtry at stacy.meichtry@wsj.com and David Gauthier-Villars at David.Gauthier-Villars@wsj.com
|
online.wsj.com
.jpg)
0 comments:
Post a Comment