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Frankfurt - Germany's Siemens is working on a formal asset-swap offer for Alstom's power business that could come as early as the next few days and see France take a stake in a resulting rail-focused French group, sources say.
Alstom is already in talks with US conglomerate General Electric over a €12.3bn bid for its power arm, which it is due to review by 2 June, but under strong political pressure, it has opened its books to Siemens so it can propose its own deal if it wants to.
Some sources familiar with the talks cast doubt on whether Alstom would be interested in the new deal sketched out by Siemens. Still, a rival offer would give the French government more leverage with GE after it gave itself the power to block foreign takeovers in "strategic sectors".
Faces reluctance
The French government has repeatedly criticised GE's bid, favouring alliance between the companies rather than a straight sale of Alstom's power arm - which accounts for 70% of the group's revenue - that would leave the French group with just its smaller transport business.
Meanwhile it has advocated an alternative European tie-up between Alstom and Siemens. Initially though, it faced reluctance from both firms, long bitter rivals.
But after several trips to Paris by CEO Joe Kaeser and nearly two weeks of access to Alstom's data, Siemens has warmed to the idea and has been refining its bid to make it more attractive to Alstom and the French government, sources said.
Proposed deal
"Siemens is presenting the following case: it will create national champions in trains and energy. Everything will be kept in Europe. It has offered some new elements, which sweeten its proposal," said a source familiar with the proposed deal.
In a short letter to Alstom late last month, Siemens had outlined a proposal worth $14.5bn, offering to exchange part of its rail business plus cash in exchange for Alstom's power assets.
Two sources familiar with the talks said Siemens was now discussing handing over all of its rail business to Alstom and setting up a joint-venture in rail signalling.
To limit the German firm's influence in the resulting transport-focused Alstom group, Siemens is also discussing with Paris and Berlin the opportunity for France - which owns 0.9% of Alstom's capital via state fund CDC - to take a more sizeable stake, political and financial sources said.
One source said the French government could take a stake of over 10% in Alstom, as it seeks to secure the domestic roots of the engineering group which received a state bailout a decade ago and is a big private employer in the country.
