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Siemens' Alstom Proposal Struggles to Gain Traction

NEW YORK (The Deal) -- The board of Alstom is likely to opt for General Electric's (GE) cash offer for its energy division unless a rival all-asset bid for the unit from Siemens  (SI) is improved, according to two sources with knowledge of the situation.

Alstom said Sunday, April 27, that it is considering its options and expects to make an announcement between now and Wednesday morning. GE's offer, which emerged on Thursday, is both the only firm bid and the only one to answer Alstom's preference for cash over Siemens' offer of its high-speed and freight rail divisions, both of which are of little interest to the French industrial conglomerate.

"Siemens' high-speed train technology is three years behind Alstom's, so there is no use for it," said a source who asked not to be named as talks are ongoing. "Its freight trains are something that not even Deutsche Bahn wants so there isn't much of interest there either."

Details of GE and Siemens' offers have not been made public. Fairfield, Connecticut-based GE's offer values Alstom's energy business at about $13 billion, according to a source who confirmed earlier reports.

The CEOs of the rival bidders are scheduled to meet French President Francois Hollande on Monday to discuss their bids. Martin Bouygues, chairman of Bouygues, which owns 29.4% of Alstom and was reported to be close to agreeing a deal with GE, is also scheduled to meet the president on Monday.

GE CEO Jeff Immelt, who was due at the Elysee Palace at 9:30 a.m., has found himself under pressure to address political concerns surrounding his bid after French politicians, including Industry Minister Arnaud Montebourg, appeared to line up against the U.S. giant's maneuver.

"French companies are not prey," Montebourg said in an interview on French radio station RTL, adding that he refused "to accept the inevitability" of a sale of Alstom's electricity division to General Electric. The comments followed a meeting Sunday night between Hollande, Montebourg, France's recently appointed Prime Minister Manuel Valls and Energy Minister Segolene Royal.

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