PARIS/LONDON Alstom (ALSO.PA) is likely to give Germany's Siemens (SIEGn.DE) two to three weeks to draw up a detailed plan to buy the French engineering group's power business, sources close to the talks said on Tuesday.
Cash-strapped Alstom is due to hold a board meeting on Tuesday to study the Siemens plan, which includes cash plus the transfer to Alstom of some of the German group's train-making assets.
Sources say Alstom already has a $13 billion cash offer from General Electric (GE.N) for its power business, which generates 70 percent of its sales.
France's Socialist government has declared that it must have a say in the outcome, insisting that thousands of jobs are at stake and that state-owned utility EDF (EDF.PA) and the national railways are major clients of Alstom. Economy Minister Arnaud Montebourg urged France's AMF financial watchdog to ensure any dealings with Alstom were transparent.
"There aren't only financial interests at stake in this matter; there are also industrial, social and human interests," Montebourg said after a meeting with unions. "The government does indeed intend to defend our country's interests."
Siemens has convened its own supervisory board to discuss the matter on Tuesday. It has so far only provided a short letter outlining a proposal worth $14.5 billion. Talks on GE's offer are more advanced, the sources added.
"We have been signaled that we will get time," said one person close to Siemens. A second source close to the talks confirmed that was likely. Both GE and Siemens declined to comment, while Alstom did not return requests for comment.
The fate of power turbine and train manufacturing in France - both integral to the nation's engineering pedigree - has been at the centre of a fierce national debate since GE's interest was presented to Montebourg last week by Alstom CEO Patrick Kron. Its shares were suspended and are due to resume trade Wednesday.
As the counter-proposal from Siemens emerged at the weekend, Montebourg and President Francois Hollande arranged meetings with all parties in Paris, promising to protect French jobs and the national interest.
However, the government denied a media report of another option that would involve selling some of the state's holdings in power utility EDF (EDF.PA) to finance an operation that would include a recapitalization of the company.
The German government has said an Alstom-Siemens tie-up could offer "great opportunities". Montebourg described it as creating "two European and global champions", but Paris has not ruled out a deal with GE. President Francois Hollande met the chief executives of both suitors on Monday.
Some skeptics question why Siemens is only now expressing interest in the ailing French group and ask how that fits in with its own growth strategy.
"We have a slightly critical view of this because it seems that this is more a reaction to GE's move," said Tim Albrecht, fund manager at DWS Investment.
"The capital market, and we as well, had hoped that Siemens would focus on organic growth."
Former GE chief executive Jack Welch, who preceded Jeff Immelt as boss, told CNBC television the Alstom deal was "a great fit for a great energy company".
(Additional reporting by Arno Schuetze and Maria Sheahan in Frankfurt, Benjamin Mallet and Natalie Huet in Paris, and Lewis Krauskopf in New York; Writing by Andrew Callus and Mark John; Editing by Geert De Clercq and Will Waterman)