* Siemens eyes Alstom's gas turbines business
* Formal offer would give govt more leverage against GE
* Siemens & MHI chiefs face French lawmakers on Tuesday
(Adds more on GE talks with French government, paragraph 23)
By Jens Hack and Natalie Huet
MUNICH/PARIS, June 16 Germany's Siemens and
Japan's Mitsubishi Heavy Industries presented a joint offer to
France's Alstom on Monday that included 7 billion euros ($9.5
billion) in cash, challenging a bid by General Electric.
Under the deal, Siemens offered to buy Alstom's gas turbines
business for 3.9 billion euros in cash, and MHI to buy stakes in
Alstom power assets including hydroelectric power equipment and
grid, to be held in separate joint ventures.
MHI would inject 3.1 billion euros in cash into Alstom and
offer to take a stake of up to 10 percent in the French firm
from shareholder Bouygues.
"Alstom would remain an independent energy and transport
player with a strong brand," Siemens Chief Executive Joe Kaeser
said. "Its energy business would be strengthened through the
partner MHI and we intend to explore opportunities with Alstom
to create a European rail champion for the world market."
Alstom said it would review the proposal in the coming days.
Sources familiar with the matter said the offer would be
worth over 1 billion euros more than GE's, taking into account
the value of the parts of the power businesses that would remain
under Alstom's control.
Mitsubishi would like to buy the Alstom stake alongside the
French government but would not walk away from the deal if
Bouygues was unwilling to sell, the sources said, adding that
Bouygues would be contacted very soon.
GE said it had made progress in its discussions with
the French government on its offer for Alstom's energy business,
which included "proposing alliances in energy and transport". A
spokeswoman said GE would not however be drawn into a bidding
The race to acquire power activities from the French train
and turbine maker has entered a crucial week, ahead of a June 23
deadline set by GE for its 12.4 billion euro bid for all of
Alstom's energy arm, which includes its thermal power, renewable
power and grid businesses.
The French government has criticized GE's proposal and gave
itself powers 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.
The government has also tried to negotiate better offers and
alliances to preserve Alstom as a player in both transport and
energy, seeing both as vital national industries at a time when
unemployment is stuck above 10 percent and voters are
increasingly turning towards the far-right.
French Finance Minister Michel Sapin said Alstom and the
government would examine both offers once they are on the table
and base their decision on that.
Alstom, best known overseas for making TGV high-speed
trains, employs 18,000 people in France, around a fifth of its
workforce. It was rescued from near bankruptcy by the state a
decade ago and has since largely relied on public orders for
power and rail equipment.
A rival offer gives France more leverage against GE as it
seeks more job guarantees and a promise to keep major offices in
France to secure the nation's energy independence. Alstom is a
supplier of turbines for nuclear plants worldwide, and Paris
fears that having these fall under U.S. control could jeopardise
exports in the atomic power industry.
However, it is far from certain whether the government,
Alstom and its top shareholder Bouygues would genuinely support
a Siemens-Mitsubishi offer over that of GE.
Bouygues said it had not yet been approached by Mitsubishi
or the government about its 29 percent Alstom stake, but it
would support whichever proposal was favoured by Alstom's board.
Siemens CEO Kaeser and MHI's chief Shunichi Miyanaga will
present their plan to France's lower house of parliament at 1500
GMT on Tuesday, and are likely to face tough questions from
lawmakers worried about national interests.
The government has already secured a pledge from General
Electric to create 1,000 new jobs in France within three years
of a deal, but Sapin said on Sunday he expected the U.S.
conglomerate to further improve its offer.
Siemens followed suit, saying on Monday it would offer a
three-year job guarantee for workers at the gas business in
France and Germany and said the alliance between Alstom and MHI
would create more than 1,000 jobs in France.
GE is ramping up its charm offensive in the French press
with ads saying its proposed "alliance" with Alstom would create
a global energy leader based in France while strengthening
Alstom's transport business.
"Tomorrow is made in France," the ads read, below a drawing
of a plane - a hint at the jet engines GE makes via the
U.S.-French venture CFM - flying over a field of wind turbines.
GE 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. GE
is also considering a tie-up in rail signalling that would give
Alstom control of that business, he said.
A source close to the U.S. conglomerate said "there is
flexibility" in ongoing talks with the French government on the
topic of job creation, the possibility of public or private
investment in Alstom's hydroelectric and offshore wind unit as
well as the rail signalling area and the possibility of
maintaining French access to its nuclear steam turbine business.
The government is worried that Alstom would be too weak once
reduced to its smaller transport arm, and has played up an
alternative tie-up with Siemens, which also makes trains, as an
opportunity to create a European rail champion.
But Alstom has not shown interest in Siemens's rolling
stock, and Siemens, while saying it would discuss the
possibility of combining transport operations, made no promises
that a deal would happen.
"Siemens intends to discuss diligently and in good faith
solutions which create a strong European champion with global
reach and sustainable business strategies going forward in the
fields of mobility in the best interest of all parties
involved," it said.
($1 = 0.7345 Euros)
(Additional reporting by Elizabeth Pineau, Benjamin Mallet,
Matthieu Protard and Ingrid Melander in Paris and Christian
Plumb in New York; Writing by Maria Sheahan and Natalie Huet;
Editing by Sophie Walker and Giles Elgood)