The head of Alstom has revealed that his motivations in rigorously negotiating a deal for his company have been heavily motivated by a bailout by the French government over a decade ago.
Referring to the state-backed bailout, Alstom Chairman and Chief Executive Patrick Kron said, “I promised myself to never live that nightmare again.”
Mr Kron has persuaded his board to unanimously back GE’s $13.5bn acquisition, something that Economy Minister Arnaud Montebourg is greatly unhappy with. According to a Bloomberg follow-up piece, the minister told Kron he was misled in not being made aware of the behind the scenes negotiations with the US giant.
This week Mr. Montebourg questioned whether Mr. Kron had committed a “breach of national ethics,” suggesting he needed to hook the executive up to a lie detector.
Mr. Kron dismissed the idea that he was a liar. “Everything that’s excessive is irrelevant,” he said in Paris Wednesday.
Mr Montebourg is adamant that Siemens would be his preferred choice, stating in parliament, “We won some time to organize the intervention of the state in this dossier.”
GE would have a number of challenges facing it from a regulatory point of view over the coming months, which enables Siemens time to make a formal bid.
Mr. Kron said Wednesday that Siemens would get the same access to Alstom as GE to prepare its potential bid, which Alstom would give the same attention.
Despite the bailout, Alstom has continued to be dogged by low profitability. The subsequent European recession has further eroded energy demand in the bloc, and further eroded the company’s finances along with it.
Mr Kron said on Wednesday that what Alstom’s energy business lacked was the scale of GE. Power generation is a highly capital-intensive business, requiring costly investments in big projects that can take years to pay off.
The Wall Street Journal reports that having concluded Alstom could no longer risk standing alone, Mr. Kron took the step of discussing a tie-up with GE CEO Jeffrey Immelt at a Paris restaurant three months ago.
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