There was dual cause for back-slapping in President François Hollande’s Élysée Palace late Friday night.
France had thrashed Switzerland in their World Cup match, largely assuring its place in the next round. And the government had just imposed its will to end a two-month fight for control over ailing French engineering group Alstom SA.
“France has shown it can negotiate cleverly and openly with multinationals,” an official close to Mr. Hollande said of the decision, announced earlier Friday, that defines the shape of a planned tie-up between Alstom and U.S. conglomerate General Electric Co.
“France’s international image was at stake ... We have shown we can stand up for our sovereign interests, as other countries do,” said the official, speaking on condition of anonymity.
It may be debatable what that image now is. But for prospective investors in France, the Alstom saga has brought home one simple fact: In France, economic patriotism rules.
From the moment in late April that GE revealed its interest in the 86-year-old group that built France’s power grid and high-speed TGV trains, politics has never been far removed.
The battle over Alstom was fought as Mr. Hollande’s Socialists tried in vain to halt the rise in last month’s European Parliament elections of the far-right National Front, whose protectionist platform attracts voters bewildered by France’s economic decline.
The pace-setter in the race for Alstom has not been GE or its German rival Siemens AG but 51-year-old French economy minister Arnaud Montebourg, a loose cannon who makes no secret of his own presidential ambitions.
On Sunday, a definitive pact was assured after Alstom minority shareholder Bouygyes SA agreed to sell the French state a 20-per-cent stake.
The accounts of participants in the closed-door talks interviewed by Reuters show how the proposed GE-Alstom tie-up was partly dictated by Mr. Montebourg’s push for an alliance in which French interests will be secured.
When Mr. Montebourg learned through media reports in late April that GE was planning some form of approach to Alstom, he could not contain his rage.
Only two months earlier when he held the more junior industry portfolio, he had dismissed as “hare-brained” suggestions that the French government was worried about Alstom’s future after the company’s shares plummeted on a profit warning due to weak order books.
Now, newly-promoted to the economics post in a government reshuffle, he looked embarrassingly out of the loop.
“We won’t let Alstom sell this national champion behind the back of its shareholders, its employees and the French government,” he fumed on his official Twitter account.
He further accused Alstom’s CEO Patrick Kron of “a breach of national ethics” for not keeping him informed of GE’s $13-billion (U.S.) approach for its turbines and grid equipment business.
That sense of betrayal, according to several sources who dealt directly with the minister, was at the root of his preference for a tie-up offer from Siemens, a group whose acquisition advances Mr. Kron balked at a decade ago.
“For Montebourg this is personal. He’s out to get Kron,” said one of those sources.
It was Mr. Montebourg who on April 27 first officially revealed a Siemens plan he hoped would create two “European champions” with tie-ups in energy and transport to counter the U.S. offer.
Over the next week, he acted fast. He set much of the agenda for Mr. Hollande, whose unflattering nickname “Flanby” – a French brand of wobbly caramel custard – he owes to a Montebourg quip years earlier. While Mr. Hollande played down the prospect of the French state purchasing a stake and urging an “industrial solution,” that was an option Mr. Montebourg never ruled out.
And when the president accepted an invitation by German Chancellor Angela Merkel to join her one weekend in May in her constituency of Ruegen, a windswept island on the Baltic coast, Mr. Montebourg had already laid the groundwork.
On the morning of May 9, Mr. Montebourg had met Siemens CEO Joe Kaeser in Paris before dashing to Berlin to meet his German counterpart Sigmar Gabriel, a fellow left-winger who is also vice-chancellor in German Chancellor Angela Merkel’s grand coalition.
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