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 President Francois Holland, whose government has said it will veto
any deal that does not protect jobs and industrial know-how,
consulted ministers on the proposals and is due to sit down again
with the U.S. and German firms' bosses - talks that could seal the
fate of the 86-year-old firm at the center of one of Europe's
fiercest industrial battles in years.
The government is expected to announce its preference ahead of a
decisive Alstom <ALSO.PA> board meeting due by June 23.
GE <GE.N> radically overhauled its bid on Thursday, hoping to
appease unions and politicians by transforming what had been largely
a straight purchase into an offer of joint ventures similar to that
of Siemens-MHI.
In response Siemens <SIEGn.DE> and Mitsubishi Heavy Industries (MHI)
<7011.T> simplified the structure of their offer on Friday and
raised its cash component by 1.2 billion euros ($1.64 billion) to
8.2 billion.
That values Alstom's power businesses at 14.6 billion euros, Siemens
said, 400 million more than previously and still well above GE's
12.4 billion.
GE's cash component in its revamped offer has fallen to an as yet
unspecified level since it said it would sell its rail signaling
unit to Alstom and set up 50/50 joint ventures in grid, nuclear and
renewable assets. Under this proposal GE would still end up with the
lucrative gas turbines that account for roughly a third of Alstom's
power business.
Siemens said its offer was "superior industrially, financially and
socially," and reaffirmed pledges to create new jobs in France, a
commitment GE has also made.
The new Siemens-MHI proposal still foresees Siemens buying Alstom's
gas turbine arm. But MHI is now offering to buy a 40 percent stake
in its combined steam, grid and hydro businesses and bundle them
into a single holding company rather than three joint ventures, a
plan Alstom sources had said was too unwieldy.
Siemens CEO Joe Kaeser told journalists the two partners were open
to the French government taking a stake in Alstom if their bid
succeeded, but noted such an option had not yet been discussed.
Speculation has focused on whether France's Bouygues <BOUY.PA> might
sell its 29 percent stake.
The nuclear alliance proposed by GE would see the government hold a
preferred share, giving it a veto and other rights over issues
related to security and technology of nuclear plants - a vital point
in France, which relies heavily on nuclear energy.
Alstom reaffirmed that its board would meet no later than Monday to
review the offers and that it planned to make no further statement
in the meantime.
"OFFERS KEEP IMPROVING"
Paris-based investment house Aurel BGC said it was becoming harder
to assess which of the two bids made most sense.
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"The government can at least say it has succeeded in upping the
stakes but the proposals are becoming complex and more and more
difficult to assess," it wrote in advice to investors.
French Prime Minister Manuel Valls told France Inter radio that the
offers of the two sides were improving.
"We have more meetings today to move toward a decision in
conjunction obviously with Alstom, because it ultimately must
decide," he said, adding the French government's criteria were
"above all the preservation of strategic interests, preserving a
certain number of decision-making centers in France and Europe, and
obviously jobs".
Hollande's government has congratulated itself on blocking GE's
initial advances on Alstom some two months ago and forcing it to
improve its offer, not only by encouraging Siemens to enter the fray
but also by signing off a decree giving itself the power to block
industrial tie-ups in strategic areas.
Yet sources involved in the back-room discussions over the past
seven weeks said it was not clear whether there was a single
government line.
Several union representatives of Alstom and political sources told
Reuters the saga had drawn a divide between Montebourg, who they
said lent toward the Siemens-MHI plan, and Hollande, in favor of GE.
"There are really two lines: Hollande and Valls who want to find the
best solution and Montebourg who absolutely wants it to be Siemens,"
said one source familiar with the situation.
While no one has publicly drawn a link between the two cases,
Hollande is also lobbying U.S. authorities to reduce the penalties
which France's biggest lender, BNP Paribas <BNPP.PA>, faces for
breaching U.S. sanctions in 2002-2009, notably its dollar-financing
of oil trade out of Sudan. [ID:nL6N0OZ2TY] ($1 = 0.7336 Euros)
(Additional reporting by Joern Poltz in Munich and Elizabeth Pineau
in Paris; Writing by Mark John; Editing by Sophie Walker)
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