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Last Updated: Tuesday, 25 May, 2004, 14:49 GMT 15:49 UK
EU forces Alstom sell-off deal
Engineers fixing Alstom trains
Alstom builds power stations, ships and rolling stock for the TGV train
France and the European Union have agreed a compromise deal which allows a bail-out of the troubled engineering firm Alstom.

Under the terms of the agreement, Alstom will have to sell a 1.5bn euro stake in the company to outsiders.

The deal was sought by French Finance Minister Nicolas Sarkozy, whose rescue plan costs 3.2bn euro ($3.8bn; 2.17bn)

But it will mean that the prestigious TGV high-speed trains will no longer be an all-French project.

Telephone deal

Mario Monti, the EU competition commissioner, announced the deal, which clears the way for EU approval for the rescue of the company.

"The French state commits itself that Alstom will conclude one or more industrial partnership deals within a deadline of four years," he said.

The stock market welcomed the agreement, which should ensure the future of the company.

Share in Alstom rose by 5.17% to 1.22 euros in Paris shortly after the news was announced.

The final details of the plan, which was clinched in a telephone call between Mr Monti and Mr Sarkozy, has yet to be worked out. It also requires the approval of the full commission.

Alstom, one of the most well-known companies in France, builds power stations, ships and rolling stock for the high-speed TGV train.

The company must sell assets worth 8.8% of the group's overall sales, or 30% of its transportation business, if that was the element sold off.

Political benefit

The deal is politically useful to Mr Sarkozy, who is hoping to prevent Alstom's potential collapse with the loss of thousands of jobs.

The French finance minister earlier said he hoped the deal would meet the needs of the commission - which does not want any bail-out to distort competition - and of the French, who have "made commitments to ensure the future of the great industrial group".

In a radio interview, Mr Sarkozy said:

"What we want to sell is parts which do not undermine the viability of the company.

"Our objective is to avoid the company being broken up and to enable it to return to strength, and to do that we have to choose carefully what we are going to sell, in the interests of the company."

France has been sharply criticised by other countries since announcing the rescue plan last September.


SEE ALSO:
EU nears deal on Alstom bail-out
17 May 04  |  Business
Alstom in the red as orders slide
13 Nov 03  |  Business
New Alstom rescue deal unveiled
22 Sep 03  |  Business
EU blocks Alstom rescue plan
17 Sep 03  |  Business
French PM upbeat on Alstom
22 Sep 03  |  Business
Alstom confirms huge job cuts
10 Aug 03  |  Business


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