* GE says offer is worth total $16.9 bln
* Alstom says committee to review offer before end-May
* Alstom says would refocus on transport, repay debt
* French govt says GE a "serious company"
* Alstom shares up close to 10 pct, top gainer on CAC 40
(Adds GE on funding, government, analyst comment, unions)
By James Regan and Benjamin Mallet
PARIS, April 30 Cash-strapped French engineering
group Alstom said on Wednesday it would explore a
$16.9 billion offer from General Electric for its energy
arm while leaving the door open to a rival bid from Germany's
Alstom gave Siemens until the end of May to propose its own
deal after the government of President Francois Hollande balked
at the U.S. group's overtures last week, insisting any outcome
must safeguard jobs at the one-time champion of French industry,
while ensuring the nation's energy independence.
But GE led the race to secure assets which would boost its
position in producing steam turbines for power stations and
technology for electricity grids. Economy Minister Arnaud
Montebourg - furious when news of the deal emerged last week -
softened his tone towards GE, calling it a "a serious company".
"We have a good relationship with GE," Montebourg told a
parliamentary committee after Alstom confirmed in a statement it
was reviewing the GE offer.
"We are ready to discuss alliances, not an absorption. We
prefer an equal alliance," he said, citing GE's 40-year-old CFM
jet engine venture in France with a unit of Safran as a
good example of Franco-U.S. cooperation.
Reuters reported on Tuesday that GE Chief Executive Jeff
Immelt had relied on the success of the engine supplier, whose
existence dates back to a deal between the late presidents
Georges Pompidou and Richard Nixon, as a possible trump card in
presenting the bid.
GE said its all-cash offer for Alstom's thermal power,
renewable power and grid businesses - valued at 7.9 times pro
forma earnings before interest, taxes, depreciation and
amortization (EBITDA) - was based on an enterprise value of
$13.5 billion and $3.4 billion of net cash.
In a slide presentation, GE said it would fund the deal with
$9.5 billion in cash and $4 billion in debt and that the accord,
if it went through, would complete the allocation set aside for
merger and acquisition activity this year.
MOVE TO TRAINS
Alstom's power assets account for around 70 percent of
turnover, which was 20.3 billion euros ($28 billion) last year.
Considered by many analysts too small to survive alone in
the energy sector, Alstom said a GE deal would allow it to
re-focus on transport including making TGV high-speed trains.
"Alstom would use the sale proceeds to strengthen its
transport business and give it the means of an ambitious
development, pay down its debt and return cash to its
shareholders," the group said in a statement.
Alstom shares, suspended since last week, were up 9.5
percent at 29.55 euros at 1330 GMT after trading resumed. They
had halved in value over the last four years on concerns about
its cash flow since the 2008 economic crisis hit order books.
Immelt said talks with the French government on GE's offer
had been productive. "We think we've got a good deal and it's
going to be executed," he told reporters in Paris. "We think net
employment in France will grow around the Alstom assets."
Industry sources note Alstom is strong in steam turbines
used by the nuclear industry, while GE is a top player in gas
turbines. A deal would enable GE to expand into grid technology.
With the Alstom deal, GE expects its industrial businesses
to contribute about 75 percent of company operating earnings by
2016, up from about 55 percent last year.
Alstom was bailed out by the French state in 2004 and relies
heavily on orders from national rail operator SNCF and utility
EDF. It employs 18,000 people in France, half of them
in the power business, out of 93,000 worldwide.
Alstom said its board also noted a declaration of interest
from Siemens on an alternative deal and that the German company
would have access to information needed to make a binding offer.
It added that French group Bouygues, which has a
29 percent stake in Alstom, had promised not to sell its shares
until the deal had won final approval of shareholders.
The agreement means Alstom cannot solicit offers from third
parties to purchase all or part of its energy business, but can
respond to unsolicited offers for the entire energy arm. If it
recommends GE's offer, Alstom would pay a fee of 1.5 percent of
the purchase price if it then backed another offer.
Siemens said it had decided to make an offer provided it was
given access to Alstom's data, as well as "permission to
interview the management during a period of four weeks".
Industry veterans say Alstom and Siemens have very different
corporate cultures, and have competed aggressively against one
another for decades, while analysts questioned whether there was
any real sense in Siemens going up against a binding bid.
"It makes sense (for Siemens) to take this opportunity to
learn about Alstom's activities," said analyst Pierre Boucheny
of financial services group Kepler Cheuvreux. "This position
doesn't imply necessarily the offer will be made."
Siemens declined to comment on Alstom's statement on the GE
offer. German magazine Der Spiegel reported that Siemens had
written to Alstom to complain about a lack of cooperation on the
part of its chief executive Patrick Kron, who they said was not
interested in direct talks.
Montebourg told parliamentarians his objections had halted
what he called an over-hasty rush by GE and Alstom to clinch a
deal. But he was more circumspect on how the government would
seek to influence the review period for the U.S. offer.
He noted explicitly Alstom's promise that the review would
take into account "all stakeholders' interests including the
French state" and said it would examine a request by unions to
raise its small 1 percent stake in the group - an option which
the government spokesman later said was not on the table.
However, he said the readiness of GE to leave under French
control turbine assets vital to France's nuclear sector - which
generates 75 percent of the country's power needs - meant France
could not invoke strategic interests to block the deal.
Hollande, whose poll ratings are at record lows due to his
failure to tackle unemployment stuck at above 10 percent, has
said the government will place a priority on preserving jobs.
But unions remained unconvinced. "This dismantling is
totally unacceptable," said Laurent Santoire, a delegate for the
CGT trade union among those protesting outside Alstom's HQ near
Paris. "We are asking for the state to increase its stake in
($1 = 0.7237 Euros)
(Additional reporting by Lewis Krauskopf in New York, Maria
Sheahan in Frankfurt,; Nicholas Vinocur in Paris; Writing by
Mark John; Editing by Tim Hepher, Gareth Jones and David Stamp)