Share “Orchestrating Alstom follows long French...”

Orchestrating Alstom follows long French tradition

Published on NewsOK Modified: April 28, 2014 at 12:18 pm •  Published: April 28, 2014

PARIS (AP) — France's Socialist leader summoned three CEOs to the presidential palace on Monday to orchestrate the sale of Alstom, an engineering firm and treasure of French industry, in the government's latest effort to bring globalization to heel.

President Francois Hollande's decision to jump into the talks on a proposed merger with either General Electric or Siemens is part of a long tradition of French state interference in corporate life that claims to protect national security and to keep jobs and companies in the country.

This government has already scuttled Yahoo's attempt to buy a videosharing website, gotten into a spat with a freewheeling American CEO over the work habits of workers in a factory for sale, and tried unsuccessfully to stack the deck in the sale of a mobile phone company.

In Alstom's case, the economy minister stepped in early to suspend any potential deal between GE and Alstom, estimated to be worth around 10.5 billion euros ($14.5 billion). That gave time to Siemens, a German conglomerate, to enter the negotiations at the last minute, bolstering Alstom's — and the French government's — negotiating position.

The three companies are leaders in making vital equipment for power generation, and analysts say any merger could shift the dynamics of the power industry for years to come. In addition, Alstom pioneered TGV high-speed trains and exported them around the world.

Alstom's roots stretch back nearly a century, and French Economy Minister Arnaud Montebourg pointedly recalled that it depends on public contracts, even if the state has a stake of less than 1 percent.

"We realize that the stockholders have an interest, but the government also has interests and ours are for economic sovereignty," Montebourg, whose job includes industrial renewal, told RTL radio on Monday. "French companies are not prey."

Montebourg, an outspoken Socialist, has stopped deals before, as have previous conservative governments. What to many in the U.S. or Britain might be called protectionism has a different word in French — dirigisme —that better translates as "directionism."

"The government has a voice," Hollande said Monday. "I have only one criteria: What is best for keeping business and jobs in France? And only one obligation, because I am the head of state: What will ensure France's energy independence?"

But ultimately, there is little the government can do beyond putting pressure on companies through rhetoric, according to Laurent Warlouzet, a professor at the London School of Economics who studies the history of French industrial policy.

"There is a discrepancy in France in my opinion between the discourse and the reality," Warlouzet said. Between globalization and European Union regulations, he added, French politicians "don't have a lot of power anymore."

Continue reading this story on the...