* GE, Siemens must both improve proposals -French presidency
* Siemens says sees no need to raise offer
* French govt willing to take 10 pct stake in Alstom -union
* GE plans to improve offer but not raise cash component
* Monday deadline for GE bid approval nears
(Adds union on government willing to take 10 percent Alstom
stake, Sapin and BPI comments)
By Natalie Huet and Elizabeth Pineau
PARIS, June 17 The French government raised the
stakes in the battle for engineering group Alstom on Tuesday,
telling rival suitors General Electric and Siemens to come up
with better offers.
President Francois Hollande's government has given itself
the power to veto a deal on the grounds it does not want Alstom
, an innovator and big employer, to sell the bulk of
its business to a foreign firm without the state having a say.
In a crunch week ahead of Monday's deadline on GE's
American bid, Germany's Siemens presented Hollande
with a joint proposal with Japan's Mitsubishi Heavy Industries
that it said valued Alstom's power arm at 14.2 billion
euros ($19.3 billion) - above GE's 12.4 billion offer.
But Hollande's government swiftly responded by saying it
expected better efforts from both bidders.
"The talks between the state and the different companies are
going to continue this week," a source in Hollande's office said
after the meeting with chief executives Joe Kaeser of Siemens
and Shunichi Miyanaga of MHI to hear their proposal.
"The offers must be improved," the source said.
However, Kaeser said he saw no reason to discuss improving a
proposal which he reckoned was already the better of the two on
the table for Alstom in terms of asset valuation, strategic
future and jobs.
"Why would a superior offer be improved if it is superior
already? There is no reason for us to discuss that question at
this time," he told a joint news conference with Miyanaga.
A source close to GE said it was still discussing parts of
the deal with the French state - notably on Alstom's rail,
nuclear and renewable energy assets - but added: "GE will not
enter a cash bidding war and will not change the June 23 cut-off
Under the Siemens-MHI offer, Siemens would buy Alstom's gas
turbines business for 3.9 billion euros in cash while MHI would
buy minority stakes in various Alstom power activities, to be
held in three separate joint ventures, for 3.1 billion in cash.
MHI is also offering to take a stake of up to 10 percent in
Alstom from 29-percent shareholder Bouygues.
Kaeser and Miyanaga told reporters and lawmakers that their
plan gave Alstom a future in both power and transport and aimed
to make a "proud French icon" even stronger. Alstom makes
France's distinctive TGV high-speed trains and supplies power
equipment used in around 40 percent of nuclear plants worldwide.
Miyanaga also told French members of parliament he wanted
France to take a matching 10-percent public stake in Alstom to
demonstrate that the group would remain French. The government
is willing to do so via state bank BPI, said an Alstom trade
unionist who met Economy Minister Arnaud Montebourg on Tuesday.
Finance Minister Michel Sapin told Reuters he was not aware
of such a plan. Bouygues said it had been contacted by MHI to
take a stake alongside BPI, but that it had been approached
neither by BPI nor the state. BPI declined comment. Montebourg's
office did not respond to requests for comment.
Montebourg told trade unionists last week that the state and
MHI were looking to take equal stakes in Alstom and a source
familiar with the situation said BPI was "ready to be involved
in any scenario", whether with Mitsubishi or GE.
Some labour representatives welcomed the Siemens-MHI plan,
saying that, compared to the GE proposal, it would better
preserve Alstom as a whole and came with a commitment to create
1,000 French jobs within three years and 1,000 apprenticeships.
In a statement, the CFE-CGC union said GE would now have to
offer a more balanced deal with Alstom that would not dismantle
the French group.
GE has meanwhile ramped up its charm offensive in the French
media with ads saying an alliance with Alstom would create a
global energy leader. It is offering to buy all of Alstom's
energy arm, which includes its thermal power, renewable power
and grid businesses and accounts for 70 percent of its revenue.
Alstom said it would examine the Siemens-MHI proposal in the
coming days. A source close to the company said the Alstom board
would make a decision by Monday, June 23, at the latest. The
source further noted the GE proposal had the status of a binding
offer, unlike the Siemens-MHI proposal.
Hollande's Socialist government has sought to negotiate
better offers to preserve Alstom as a player in transport and
energy, seeing both as vital national industries when
unemployment is stuck above 10 percent and voters are
increasingly turning towards the far-right.
Last month, it assumed new powers to block foreign takeovers
in sectors deemed strategic.
The government's call for better offers comes as it battles
with U.S. authorities to reduce penalties on France's biggest
bank, BNP Paribas, for breaching U.S. sanctions on
Iran and other states. However, French officials have not drawn
a link between the two issues, in public at least.
Alstom shares closed down 1.24 percent, weighed down by the
government intervention and uncertainty over a deal. Investors
had initially welcomed GE's offer as a quick fix for Alstom's
lack of critical mass in the international power market.
On Tuesday, some analysts said the Siemens-MHI offer could
be more attractive for Alstom in valuation terms and noted it
would leave the company controlling most of its existing power
arm. Yet others argued the offer would result in a more complex
outcome that gave priority to political concerns.
"GE's offer has the merit of being clear and coherent,
something the Alstom board should appreciate," Aurel BGC
strategist Tangi Le Liboux wrote in a note to clients. "The
MHI-Siemens offer is designed to win over the government."
Union Investment fund manager Christoph Niesel said the
current state of play was a "win-win situation" for Siemens,
which stands to take Alstom's gas turbine arm: "Either it gets
the gem of the portfolio at an acceptable price," he said.
"Or it has an elegant exit strategy."
($1 = 0.7345 Euros)
(Additional reporting by Benjamin Mallet, Jean-Baptiste Vey and
Yann Le Guernigou in Paris and Joern Poltz in Munich; Writing by
Mark John and Natalie Huet; Editing by Sophie Walker and