By Peggy Hollinger

When Jeffrey Immelt, chief executive of General Electric, flew into Paris last month he knew he would seek out his old friend, Nicolas Sarkozy. The boss of one of the world’s largest companies has met the French president every year since he was a minister in the government of his predecessor Jacques Chirac.

This time, however, the two men had more than geopolitics and the global economy to discuss. Clara Gaymard, head of GE France, admits that the discussion touched on the US conglomerate’s €4bn ($6bn) bid for the power transmission and distribution subsidiary of state-controlled Areva. “Jeff spoke about his commitment to it,” Gaymard says from her office in the heart of Paris. “And [the president] said our offer was welcome.”

Yet the sale of Areva’s T&D business has sparked speculation about whether France really is ready to choose a foreign bid over a home-grown solution. GE is not only competing against Toshiba of Japan, but a French consortium of Schneider Electric and Alstom, the latter run by one of Sarkozy’s favourite corporate leaders. On price alone, the bids are close, though it seems the foreigners have the edge. But the government has been torn. Foreign bids are always politically difficult, especially given the virtual disappearance of Péchiney, the French aluminium group, after it was taken over by Alcan of Canada. Yet the French offer means breaking up Areva T&D, sharing out the medium and high voltage businesses between Schneider and Alstom, respectively.

This would spell the end of a company that has quietly become a French champion in its field, the world’s third largest behind ABB, the Swiss-Swedish engineering group, and Germany’s Siemens, in the field of supplying equipment to power grids and utilities. A decision is expected any day. Yet some officials suggest the government could ask everyone to make new offers in the hope a greater price gap would make the choice easier.

In spite of the tension, Gaymard is relaxed. “We are completely confident in the process,” she says. “So far it has been clear and transparent.” Gaymard insists that GE’s offer should win out precisely because it brings more value to France than those of her rivals — even those considered French.

“What is a French company? That’s the real question,” she says. “If it is French managers, there will be French managers. If it is a company where the decision making centre is in France, it will be in France. Is it a company where the capital is French? Then you can ask questions about our competitors.” Gaymard, the former head of French development agency Invest in France, says GE has been committed to the country for almost 40 years. It has a globally successful aircraft engine joint venture with Safran and generates total sales from France of €10bn a year in businesses from radiography to turbines. It has also established global research centres in France and is accustomed to having divisional headquarters outside the US, a role that Areva’s business will play if GE wins.

“Good economic patriotism is to look at what creates value, jobs, research and the technology of the future on French soil,” Gaymard says. GE says its ambition is to “create a world champion”. It will inject its own US-based T&D business to create a group with annual sales of about €8.5bn, against ABB’s roughly €12bn a year and the €10bn generated by Siemens in the sector.

Gaymard says GE plans to generate an extra €1.5bn in annual sales by 2012, by giving Areva’s products access to the US and Chinese market and bringing its own smart grid activities to Europe and India. Not surprisingly GE’s rivals contest the US group’s arguments. Many question the wisdom of reinforcing GE, which competes against France in nuclear power. Critics also suggest that GE is merely looking to bulk up its own small T&D activities in order to sell them off. Indeed, many point to the gaffe made by GE at the start when it partnered with private equity group CVC. This was widely taken as a sign that GE merely intended eventually to spin the business off.

Gaymard hotly denies this. “It is absolutely strategic for us. We thought by teaming up with this partner we would leave the door open to a certain autonomy and national identity,” she says. “But it was perceived differently.” CVC has now gone and the GE executive instead accuses her French rivals of planning to destroy value by splitting the group.

She rejects Schneider and Alstom’s arguments that a split makes sense as clients rarely buy both high and medium voltage equipment in the same tenders. “ABB and Siemens have an integrated offer. The future is in integrated solutions. The separation makes no sense,” she says. Gaymard puts up a good fight and some insiders suggest GE has tabled the most attractive overall offer, though its price is a touch less than Toshiba’s. But in the end the contest may depend on more than the simple criteria of price, strategy and jobs. In France, no one is yet ready to declare the game over.