France changes law to block GE bid for Alstom

The European Commission is to investigate a French decree extending the government’s powers to block foreign takeovers in “strategic sectors”.

The interventionist hand of Arnaud Montebourg, France’s minister for the economy, was strengthened on Thursday (15 May) with the publication of a French decree allowing the government to block a bid by United States giant General Electric (GE) to take over French engineering firm Alstom.

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Montebourg is reluctant to see one of France’s flagship industrial groups pass into foreign hands. He has tried, ever since the €12 billion bid was announced in late April, to orchestrate an asset swap with Siemens, in which the German group would take on Alstom’s energy business while handing over its train-building activities.

François Hollande, France’s president, echoed Montebourg on 5 May, telling GE to improve its offer and suggesting a partnership with Alstom rather than a takeover. Ségolène Royal on Thursday (15 May) broke ranks with the government saying that GE’s offer was a “very good opportunity” for Alstom. Siemens is reported to be preparing an offer which could come this week.

The European Commission immediately announced an investigation into the decree, which extends a 2005 law protecting the defence and security sectors to other “strategic” sectors including energy, water and e-communications. “We will need to examine whether [the law] is justified and proportional” in light of EU treaty rules on the free movement of capital, said internal market commissioner Michel Barnier on Thursday (15 May). The Commission could decide to bring infringement proceedings against France.

• The board of AstraZeneca, an Anglo-Swedish pharmaceutical company, has rejected a “final” bid by US rival Pfizer worth £65bn (€80bn). A number of AstraZeneca’s shareholders have expressed surprise at the board’s swift rejection. The United Kingdom government, spurred on by the opposition, had expressed concern over the deal’s potential damage to jobs and research in the UK. Ian Read, Pfizer’s chief executive officer, did little to alleviate these fears when he was hauled before a parliamentary committee to explain the deal.