CEO of General Electric Jeffrey Immelt after a meeting with France's President Francois Hollande regarding the future of Alstom

GE pledges 1 000 new French jobs as part of Alstom deal

General Electric (GE) has pledged to create 1,000 jobs in France if it wins over its German rival Siemens in the battle over the takeover of Alstom’s energy arm.

The American conglomerate has strengthened its position in the battle and has even received informal recognition from Paris that its offer is now more acceptable.

According to GE’s CEO Jeff Immelt, the new jobs will be created in both – the engineering and manufacturing sector – and will be open within three years from the takeover.

"Today we can see that GE's offer has been detailed, improved, strengthened," said an official at the office of France’s President François Hollande.

The comments signalled a change of tone from the French government, which had been heavily critical of the US conglomerate's $16.9bn (£10.1bn) bid for Alstom's power arm for fear of the impact on French jobs and industrial know-how.

The French government has been more supportive of the proposal of German engineering giant Siemens, hoping that keeping the ownership of Alstom in Europe would be more beneficial.

To give itself an effective veto right, the government has even passed a new decree.

Saxo Bank analyst Christopher Dembik said French Economy Minister Arnaud Montebourg appeared to be getting his way in forcing GE to come up with a better offer, though he warned other potential bidders for French firms might be deterred by the government's tactics.

"It's a clever game of poker in the short run for Arnaud Montebourg, but that could have harmful consequences in the medium and long run, particularly in relation to Anglo-Saxon investors who are wary of state intervention in economic affairs," he said.

The chairman of Siemens France said on Tuesday the German group hoped to make a formal offer by 16 June to buy most of Alstom's power assets and in exchange give up its own rail business, but that it was still looking at the opportunities and risks of a tie-up.

Meanwhile GE has extended its offer until 23 June at the request of the French government. With Alstom, GE sees a chance to push on with a renewed focus on its engineering and industrial roots, expand its installed base of power turbines, and increase exposure to emerging markets.

The French government is not only keen to preserve French jobs, but also the country's energy independence. Alstom is a supplier of turbines for nuclear plants worldwide, and Paris is concerned that a sale of its power arm could hurt France's position in the energy sector.

On Tuesday evening, Immelt told French lawmakers GE would make detailed commitments to increase jobs in France and was in "constructive" talks with the government to secure French access to Alstom's nuclear-related assets.

He also said GE was considering giving control of its rail signalling business to Alstom, addressing concerns that a straight sale of the power arm would weaken the French group by reducing it to its smaller rail business.

Alstom, which was bailed out by the state a decade ago, makes France's iconic TGV high-speed trains. This transport business accounts for under 30 per cent of group revenue.

If GE handed over its high-margin rail signalling business to Alstom, that would boost Alstom Transport's revenue by about 20 per cent and its earnings by about 50 per cent, according to Nomura's Cunliffe.

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