* GE's Immelt to meet France's Montebourg Thursday -sources
* Alstom board decision expected by Monday
* Govt eager for GE to formalise pledge on jobs -source
* Other key points include rail, nuclear, renewables
(Adds detail on Montebourg-Immelt meeting Thursday, sticking
points of the talks)
By Natalie Huet and Benjamin Mallet
PARIS, June 18 General Electric's chief
executive will on Thursday unveil to the French government and
unions an improved offer for the energy arm of Alstom, a source
close to the U.S. conglomerate said of its efforts to fend off a
Alstom's board is due to announce by Monday its choice
between GE's 12.4-billion-euro ($16.8 billion) cash offer and a
competing proposal by Germany's Siemens and Japan's
Mitsubishi Heavy Industries (MHI).
The fight for the power business of the 86-year-old French
company has turned into one of Europe's fiercest industrial
tug-of-wars for years, drawing in a French Socialist government
which has given itself powers to veto any deal in the name of
protecting local jobs and influence over a key sector.
"GE is seeing the government and the Alstom unions
tomorrow," the source close to GE said on Wednesday. "The offer
will, of course, be improved."
A separate source close to the matter confirmed the meeting
and added that Economy Minister Arnaud Montebourg was set to
meet GE management around midday on Thursday, before meeting
with Alstom unions in the afternoon.
Almost immediately after Siemens and MHI presented their
rival plan on Tuesday, President Francois Hollande's government
told both sides to come up with better offers.
Siemens says its proposal with MHI values Alstom's power arm
at 14.2 billion euros - nearly two billion euros more than GE's.
But the two offers are very different in nature. Whereas the
former involves Siemens buying just the gas turbines arm of
Alstom and MHI taking minority stakes in its other power
activities, the GE offer is for all Alstom's energy arm, which
includes its thermal power, renewable power and grid businesses
and accounts for 70 percent of its revenue.
An ad hoc committee of independent board directors, led by
former chairman of PSA Peugeot Citroen Jean-Martin
Folz, is due to give a recommendation on the merits of the two
proposals to the Alstom board, likely on Friday, according to a
source close to Alstom.
Both GE and Siemens-MHI have stressed their commitments to
keeping and creating jobs in France to win political favour.
GE has said a deal with Alstom would create 1,000 French
jobs within three years but the government is eager for it to
formalise the pledge on paper. GE is also expected to address
concerns over French access to strategic assets such as power
equipment used in nuclear plants, wind and hydro turbines, as
well as the fate of Alstom's remaining rail arm.
GE has been discussing those parts of the deal with the
government over the past weeks.
GE's Chief Executive Jeff Immelt told French lawmakers last
month his group would set up global headquarters for the grid,
hydro, offshore wind and steam turbines businesses in France.
Immelt also said GE was considering a tie-up in rail signalling
that would give Alstom control of that business.
The Wall Street Journal reported on Tuesday that GE was now
considering selling the unit to Alstom.
Montebourg has said he would not let Alstom be "devoured"
and is worried that the group, an innovator and big private
employer in the country, would be weakened if reduced to its
rail arm, which accounts for a quarter of group revenue.
A source familiar with the matter said the government was
looking for GE to offer more balanced "alliances".
"Alliances can take various forms... It can be capital
alliances, industrial tie-ups, it can be joint-ventures,
shareholdings," the source said.
The same source said the government would make its view
known at least to Alstom before its decisive board meeting.
BOUYGUES QUESTION MARK
After a meeting with Montebourg on Tuesday, some Alstom
unions welcomed the Siemens-MHI plan, saying that it would
better preserve Alstom.
But several sources close to Alstom told Reuters they were
concerned about the relative complexity of the Siemens-MHI plan
and that, unlike the GE offer, they did not consider it as
having binding status.
Those sources familiar with Alstom's thinking are sceptical
that the Siemens-MHI plan can address Alstom's core problems:
its lack of critical mass in a tough power market and the need
to inject cash into its more promising transport arm.
An all-cash purchase by GE of the power arm could return an
exceptional dividend to Alstom shareholders and allow the
company to refocus on its transport arm known for making
France's iconic TGV bullet trains.
Ratings agency Moody's said in a note that the Siemens/MHI
offer had the potential to strengthen Alstom financially and
bring its debt down.
"It would however also leave Alstom in control of
structurally declining (coal power generation) or competitive
and oversupplied (power grid) businesses, whose further
development could prove challenging," Moody's said.
Further question marks remain over the intentions of
29-percent shareholder Bouygues. The group has publicly stated
it would support any decision made by Alstom's board and wanted
to keep its shareholding at 29 percent in the long term.
However one source familiar with the conglomerate's thinking
said it wanted a significant stake in a group which it believes
has a future - with a stake of over 20 percent that enables it
to consolidate related earnings - but would not want a diluted
stake in a business it sees as wobbly.
A spokesman for Bouygues said on Wednesday morning that MHI
had offered to take a stake of up to 10 percent in Alstom by
buying up some of its stake along with French public investment
bank BPI. However he said Bouygues had not been approached by
the state or BPI at this stage.
($1 = 0.7383 Euros)
(Additional reporting by Matthieu Protard and Gilles Guillaume
in Paris, Sophie Sassard in London, Alexander Huebner in
Frankfurt; Editing by Mark John and Elaine Hardcastle)