PARIS (The Deal) -- General Electric (GE) said it is willing to discuss its 11.4 billion euros ($15.9 billion) bid for Alstom's power unit with the French government after officials told the Fairfield, Conn. -based bidder that the state would not give its blessing to an all-cash deal.
The French government has told GE it should offer its own freight train and rail signaling operations in its bid for Alstom's power business, claiming that bolstering the French group's transport operations was vital to Alstom's long-term future.
"In its current form, we unfortunately cannot give our backing to the proposal you have made," Industry Minister Arnaud Montebourg wrote in a letter to GE CEO Jeff Immelt. "It would be highly desirable to ensure a clear global future for Alstom Transport by selling General Electric's transport activities to it."
Under French law the government has the option to block a GE acquisition of Alstom's unit if it rules that the bid threatens operations that are of a strategic value to France. That remains unlikely, though Alstom said last week that it would take the state's position into account when deciding whether to accept the GE bid.
GE is offering 12.35 billion euros for Alstom's thermal power, renewables and grid operations, including about 1.9 billion euros of cash and 900 million euros of debt on the operations' books. Alstom has given its tentative backing to the offer but will wait to receive a promised bid from Siemens AG, of Germany, before making a final decision.