* France seeks to buy Bouygues' 20 pct in Alstom
* Seeks to have influence after GE-Alstom deal
* Formal deadline for GE offer for Alstom is Monday
By Laurence Frost and Marion Douet
PARIS, June 22 The French government was locked
in negotiations on Sunday over its planned purchase of a stake
in Alstom from conglomerate Bouygues, the last hurdle
in an announced tie-up between Alstom and General Electric
Talks between government officials and Paris-based Bouygues
over the price of the 20 percent holding are "on the
right track" to conclude later in the day, two sources said.
France's Socialist government has made the stake purchase a
precondition for approving the GE offer for Alstom's energy
business, which formally expires on Monday. The government wants
to ensure it has an influence in a complicated tie-up which
will, for example, see Alstom's power grid and renewable energy
businesses put in GE-controlled joint ventures in France.
Construction and telecoms company Bouygues, however, has
balked at official demands that it sell the holding at the
market price, which amounted to 28 euros per share at Friday's
close of trading.
"The negotiations are intense, but gifts to Martin Bouygues
are out of the question," Economy Minister Arnaud Montebourg
told daily Le Parisien in an interview published on Sunday -
referring to the group's chairman and CEO.
The GE-Alstom deal "will have zero cost to the French
taxpayer," he added.
Bouygues and Alstom declined to comment on the ongoing
talks. Alstom on Saturday announced unanimous board support for
the GE deal, which values Alstom's energy business at 12.35
billion euros ($16.77 billion).
The government had endorsed the proposed deal a day earlier,
rejecting a rival Siemens-Mitsubishi offer it had previously
encouraged as ministers sought guarantees on domestic jobs and
activities deemed strategic.
The announcement drew a line under a two-month battle for
Alstom that had become heavily politicised as soon as the first
reports of an agreed tie-up with GE appeared in April.
President Francois Hollande's government and the main
opposition UMP party were trading blows over GE-Alstom on
Sunday, even before the tie-up was finalised.
Luc Chatel, the centre-right party's acting head, described
the accord negotiated by Montebourg as a "lose-lose deal" for
France and questioned why public funds were being invested.
"There was an (earlier) offer on the table that would have
avoided a public investment," Chatel said.
Siemens and GE had both revised their bids before
Montebourg backed the U.S. group, also announcing that the state
would pay Bouygues the "market price" for 20 percent of Alstom.
The declaration surprised Bouygues, which values the holding
at 34 euros per share in its books - a premium of 380 million
euros or 21 percent over its 1.73 billion market capitalisation.
"Bouygues already intended to sell its stake, but they want
to get out at 35 euros," a source close to the discussions said.
"The negotiations are purely about the price."
The pressure to bow to the government's will may be
heightened by the embattled Bouygues Telecoms division's need
for supportive government reform and regulation of the sector.
Officials are examining possible deals or market measures to
shield France's weakest mobiles operator and its jobs from
low-cost rival Free. Bouygues lost out in a recent
bidding war for rival SFR despite Montebourg's backing.
The GE-Alstom deal announcement followed intensive
last-ditch talks between Montebourg, Alstom CEO Patrick Kron, GE
boss Jeff Immelt and their Siemens and Mitsubishi counterparts.
The U.S. group would acquire most of Alstom's energy
business including gas and steam turbines for power plants,
while selling its rail signalling division for $800 million to
reinforce the TGV train manufacturer's transport offering.
The tie-up also establishes GE-controlled joint ventures in
France to house Alstom's power grid and renewable energy
businesses. Strategically sensitive nuclear turbines would be
placed under French government control.
GE's 7.3 billion euro cash outlay amounts to a smaller
windfall for Alstom shareholders than earlier envisaged - with a
narrower perimeter of activities purchased outright.
Despite the concessions, granted in response to French
concerns, the revised plan "remains accretive in year one", GE
chief Immelt said on Saturday.
In an interview with France's Journal du Dimanche, Alstom's
Kron said he would stay on for an unspecified transition period
before bowing out in favour of a new management team.
The deal is scheduled to close in 2015, subject to
regulatory and shareholder approval.
($1 = 0.7366 Euros)
(Additional reporting by Jean-Baptiste Vey and Benjamin Mallet;
Editing by Mark Potter)