* Govt says combination of GE, Alstom rail ops "desirable"
* Siemens also in the running for Alstom assets
(Adds details, background)
PARIS May 5 The French government rejected
General Electric's current bid for Alstom's
energy assets on Monday, but opened the door for a deal that
would also combine the two companies' rail businesses.
Alstom said last week it was reviewing a binding
$16.9 billion bid from the U.S. conglomerate for its energy arm,
although it has not turned down a rival offer from Germany's
"In its current form, we unfortunately cannot give backing
to the proposals that you have made based solely on the purchase
of Alstom's energy activities," French Industry Minister Arnaud
Montebourg wrote in a letter to GE Chief Executive Jeff Immelt.
Montebourg said that the government was concerned that
Alstom's rail transport business, which makes 26 percent of the
company's revenues, would be isolated if it were hived off.
"That's why it would be highly desirable to ensure a clear
global future for Alstom Transport by selling General Electric's
transport activities to it," he added.
Montebourg, who has clashed in the past with foreign
industrial titans over their French investment plans, said the
GE activities in question included its freight train and
signalling businesses, with revenues of $3.9 billion.
In reaction to his letter, GE said in a statement: "We
believe our proposal is good for France, for Alstom and for GE."
It added: "We are open to continuing dialogue."
Immelt said last week in a French TV interview that the
offer was only the start of the process and that there would be
opportunities to adapt it.
Though much smaller than Alstom's power plant turbine and
grid business, its rail arm has a higher profile in France as
the maker of most of the elegant TGV trains that have travelled
the country at high speed for decades.
Siemens has emerged as a possible white knight after the
German group said last week it would make a formal offer for
Alstom, most likely in the form of a swap of power and rail
While Paris would be keen to see a new Franco-German
industrial champion, analysts say that overlaps between Siemens
and Alstom means job losses at Alstom would be hard to avoid.
(Reporting by Yann Le Guernigou and Leigh Thomas, additional
reporting by Lewis Krauskopf in New York; editing by Geert De
Clercq and Keiron Henderson)