(October 4, 1996) Almost certainly French president Chirac himself has agreed to let the UK-French firm GEC Alstholm take over the French nuclear reactor manufacturer Framatome.
(459.4553) WISE-Amsterdam The announcement about the agreement was "low-key"; in the press release, there was no mention of privatizing a company with a "strategic" role in industry, simply that they were negotiating a "merger" with Framatome. The French electronics and engineering group Alcatel Alstholm and the United Kingdom's General Electric Company are both 50% shareholders of GEC Alstholm.
Approval by the French Economy and Finance Ministry has come as something of a surprise and appears to represent a major change of tack by the government, which refused to allow Alcatel Alstholm to raise its existing 44% stake in Framatome in 1994. The final shareholdings in the new GEC Alstholm-Framatome group have yet to be nogotiated. Nevertheless, GEC has already indicated that it wants it as close as possible to the 50% that it has in GEC Alstholm. However, according to Power In Europe, a magazine published by the Financial Times, extrapolating from existing holdings, analysts have suggested something like 48.5% for Alcatel, 37.5% for GEC, 13% for the (French) state and 1% for the Framatome staff.
Alcatel Alstholm's president Tchuruk claimed he still has faith in nuclear energy's long-term prospects. But he also said that in the medium-term, when Electricité de France (EdF) comes to replace its existing nuclear park, it is likely to feel market pressure to adopt a more flexible technology. In laymen's language, that means he thinks existing nuclear reactors will not be replaced by nuclear capacity because it will be too expensive. Nice to hear that!
A very interesting issue in the planned merger is the unexpected willingness of the French government to allow a private and half-foreign company to take over a partially state-owned and strategic asset. One wonders if this could have implications for a possible privatization of EdF, another state-owned strategic asset.
Source: Power In Europe, 6 September 1996
Contact: WISE-Paris