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 Sources said GE is not in exclusive talks with Alstom. The French
transport-to-turbines group is also set to receive an offer from its
much larger German competitor Siemens AG <SIEGn.DE>, which said it
had sent a letter to Alstom after its managing and supervisory
boards had decided to make an offer.
Alstom is expected to make a statement about the two offers early on
Wednesday, before its shares, suspended since late last week, resume
trading.
The rival bids have triggered a fierce national debate about the
fate of power turbine and train manufacturing in France — both
integral to the country's engineering pedigree. The French
government has said it favors the Siemens offer, which via an asset
swap would create two European sector champions: Siemens in
electricity and Alstom in trains.
"Alstom's board has accepted the GE offer, it will be examined by an
independent committee," one source close to the talks told Reuters.
"The two groups will not enter into exclusive negotiations. This
means Alstom cannot go and look for other offers, but there is
nothing to stop it from examining offers it receives without
soliciting them," the source added.
Earlier on Tuesday, Germany's Siemens <SIEGn.DE> said it would make
an offer to Alstom if given four weeks to examine its books and draw
up a detailed plan to rival a move by GE.
"The prerequisite is that Alstom agrees to give Siemens access to
the company's data room and permission to interview the management
during a period of four weeks, to enable Siemens to carry out a
suitable due diligence," Siemens said.
It gave no further details of its plans, but at the weekend Siemens
approached Alstom with a proposal to exchange part of its train
business plus cash for Alstom's power arm. In a short letter, it had
outlined its proposal worth $14.5 billion.
FRENCH CONCERNS
In a letter to French President Francois Hollande, published by
financial daily Les Echos and authenticated by GE, GE Chief
Executive Jeffrey Immelt responded to several of the French
government's key concerns about the U.S.-based firm's offer.
Immelt said that if GE were to buy Alstom's energy unit, it would
boost employment in France and locate global headquarters for
several key businesses in the country, including for grids, hydro
power, offshore wind and steam turbines.
GE would also work with the French government, utility EDF <EDF.PA>
and nuclear group Areva <AREVA.PA> to protect France's strategic
nuclear sector and its exports and would be willing to sell Alstom's
wind turbine activities to French investors.
GE also offered France a representative for its board, and offered
to look into the possibility of a transportation joint-venture with
the remaining transport activities of Alstom, which are widely
considered to be too small to survive independently.
DEFENSIVE MOVE
France's Socialist government has declared that it must have a say
in the outcome of the bidding war, as thousands of jobs are at stake
and state-owned utility EDF <EDF.PA> and the national railways are
major clients of Alstom.
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"There aren't only financial interests at stake in this matter;
there are also industrial, social and human interests," Economy
Minister Arnaud Montebourg said after a meeting with unions. "The
government does indeed intend to defend our country's interests."
Alstom CEO Patrick Kron informed Montebourg of GE's interest last
week.
Just over a week before Siemens boss Joe Kaeser presents his future
vision for the Munich-based conglomerate, investors in Siemens were
sceptical about a potential deal.
"We would have preferred a less risky strategy of organic growth,"
said Tim Albrecht, fund manager at DWS Investment.
A fund manager who declined to be named said: "Until last week,
Alstom was seen as dead, and its products were not thought to be
competitive."
He said a purchase would be a 180-degree turn and Siemens would need
very good arguments to justify it strategically.
Some investors may also be wary of a French-German deal, given
problems with previous cross-border tie-ups, such as defence and
aerospace company EADS <AIR.PA> and drugmaker Aventis, which have
both been plagued by battles for control.
Many analysts and investors said they believed the Siemens move was
primarily defensive.
Rob Virdee, analyst at Espirito Santo Investment Bank, said the
offer looked like a move to stop GE's expansion in Europe.
Industry veterans say Alstom and Siemens have very different
corporate cultures, and have competed aggressively against one
another for decades.
An industry insider told Reuters that no one at Alstom wants a deal
with Siemens because everyone, from the low-level worker to Kron,
recalls how Siemens lobbied aggressively against state aid for
Alstom when it almost went belly-up in 2004.
Siemens shares closed up 0.6 percent compared with a 1.5 percent
rise in shares on the blue-chip DAX <.GDAXI> index.
($1 = 0.7237 euro)
(Additional reporting by Arno Schuetze and Sabine Wollrab in
Frankfurt, Irene Preisinger in Munich, Benjamin Mallet, Mark John,
Geert De Clercq and Gregory Blachier in Paris, Lewis Krauskopf in
New York, and Sophie Sassard in London; writing by Andrew Callus,
Mark John, Madeline Chambers and Geert De Clercq; editing by Will
Waterman and David Gregorio)
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