Le Pen Victory Hurts Chances for GE, Alstom Deal

NEW YORK (TheStreet) -- Jeffrey Immelt is no doubt feeling the French ground shifting beneath his feet Tuesday. The GE (GE) CEO is in France in the hopes of winning the support of President Francoise Hollande's government for his company's acquisition of French high-speed train manufacturer and energy giant Alstom.

But before those discussions could begin, European parliamentary election results sent shock waves through the halls of power. While Europe's current political leadership remains in charge, many policies will have to be changed to accommodate a ratcheting pressure from the so-called Euroskeptics parties -- an assembly of far right challengers to the European Commission's handling of the economic crisis.

Chief among them is the victory of Marine Le Pen's National Front in France. Le Pen is the daughter of notorious 85-year-old French polarizing rightist leader Jean-Marie Le Pen, a sometime presidential candidate who has had a massive influence on the country's political spectrum over his long career. Marine is his successor as the head of the National Front. On the heels of this victory -- which the Independent posits as a victory of voter "anguish, rage and denial" -- she is said to be preparing for a presidential run in 2017.

Marine Le Pen's party won 25% of the vote and she will be one of 24 ministers to the European Parliament, vastly increasing her power there. Hollande's Socialist party won only 14% of the vote.

The win has immediate ramifications for GE's proposal to buy Alstom's energy business. The deal had already run into political resistance, notably from French Economy Minister Arnaud Montebourg, who has appeared determined to keep U.S. hands out of the iconic French operation. He successfully pushed through a power play last week in the form of a government decree that requires a foreign company to seek his office's blessing before a deal for a French company can go forward.

The National Front is nationalist and staunchly conservative, and will most likely be sympathetic to Montebourg's opposition to the GE deal, where Hollande himself seemed more willing to engage the offer. The National Front's motto, "France for the French," is aimed at both immigration policies and EU authority over the country's economic policies. Le Pen's camp is unlikely to look favorably on a U.S. takeover of Alstom's nuclear power facilities and other energy interests.

On the other hand, the competing offer for Alstom is from Siemens (SI), a German company. Reuters reported Siemens is wrapping up work on its offer to take Alstom's energy business in exchange for its own business in transportation and 7 billion euros ($9.5 billion) in cash. Alstom would be able to focus more completely on its high-speed train manufacturing; Siemens in theory would be more inclined than GE to keep jobs and energy operations in France. Montebourg helped engineer the Siemens proposal as a counter to GE.

Neither deal will likely sit well with National Front members. Le Pen herself has said, according to Reuters, that Hollande's government had "abandoned Alstom to be dismantled for American or German profit." However given Germany's closer ties to France and the two countries' existing economic interdependence through the EU, Siemens looks like the clearer bet to win, if not the party's support, at least, its agreement to not oppose the deal.

No matter what, Immelt's stay in France just got a lot more complicated.

GE's stock was unchanged in early trading Tuesday at $26.51.

>>Read More:

Fragile Five Pose Renewed Opportunity 

Alstom's Board Embraces GE Deal

-- Written by Carlton Wilkinson in New York

More from Mergers and Acquisitions

Sprint, T-Mobile Might Have to Do More Than Make Promises to Get Deal Approved

Sprint, T-Mobile Might Have to Do More Than Make Promises to Get Deal Approved

Xerox Received Interest From HPQ Before Fuji Deal: Sources

Xerox Received Interest From HPQ Before Fuji Deal: Sources

Divestitures at Newell Expected in Weeks: Wells Fargo

Divestitures at Newell Expected in Weeks: Wells Fargo

In Biopharma M&A, 'Where There's Real Innovation There's Someone Willing to Pay'

In Biopharma M&A, 'Where There's Real Innovation There's Someone Willing to Pay'

AT&T Expert Calls DOJ's Model 'Theoretically Unsound'

AT&T Expert Calls DOJ's Model 'Theoretically Unsound'