General Electric to Present New Alstom Offer

PARIS (The Deal) -- General Electric (GE) is planning to offer its rail signaling business to Alstom and propose that the French company retain a stake in its own power grid operations in a bid to win the French government's blessing for an 11.4 billion euro ($15.5 billion) bid for Alstom's power-equipment unit.

The new offers will be made in person by General Electric CEO Jeff Immelt, who was due to meet ministers, including French Industry Minister Arnaud Montebourg, in Paris on Thursday.

"These [the changes] are subjects that have been discussed by Mr. Immelt previously, and were raised as possibilities," said GE spokesman Greg Farrett. He confirmed Immelt's presence in Paris on Thursday but declined to comment on his schedule.

GE's tinkering with its bid comes three days after rivals Siemens and Mitsubishi Heavy Industries unveiled plans to break up Alsotm's power unit as part of a joint offer they claim is worth about 14.2 billion euros.

Immelt's changes are aimed squarely at addressing the concerns of Montebourg. The minister has said in the past that he favors an offer from Siemens as it includes the prospect of a merger of the German's transport unit with Alstom transport operations. Despite Montebourg's enthusiasm for that merger the prospect of a combination has little support within Alstom, which believes that the German's train manufacturing operation are inferior to its own.

Siemens on Monday offered 3.9 billion euros for the French company's gas turbines business and offered to discuss combining the two companies' transport operation once the turbine deal completes. Mitsubishi said it will inject 3.1 billion euros into Alstom. That includes 2.3 billion euros for a 40% stake in Alstom's steam turbine and nuclear businesses and 500 million euros and 300 million euros for 20% stakes in Alstom's power grid and hydroelectricity units, respectively.

Officially the French government, which recently changed the law to gain a veto right on the deal, has no preference between the two bidders. French President Francois Hollande on Tuesday told both of suitors that they would have to improve elements of their offers relating to employment and French energy security if they want the blessing of the state.

"The government has asked for improvements from both bidders so the expectation is that there will be some changes," said a source close to Alstom. "Alstom's focus is going to be on its transport business going forward so any option to make that operation stronger will be considered carefully."

Alstom has until June 23 to accept GE's offer.

Shares in Alstom traded Thursday morning at 29.41 euros, marginally lower than their Wednesday close.

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