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Battle brewing for Alstom after Siemens-Mitsubishi offer

A battle was shaping up on Tuesday to take control of French industrial jewel Alstom after Siemens and Mitsubishi unveiled their counter-offer to a bid from US giant General Electric.

PARIS: A battle was shaping up on Tuesday to take control of French industrial jewel Alstom after Siemens and Mitsubishi unveiled their counter-offer to a bid from US giant General Electric.

The Siemens-Mitsubishi offer unveiled late on Monday valued the energy division of French group Alstom at 14.2 billion euros ($19.2 billion) -- 2.0 billion euros more than US giant General Electric.

The chief executive of Siemens, Joe Kaeser, told a press conference after the German and Japanese companies had met French President Francois Hollande on Tuesday that their offer was more competitive.

GE has made a firm offer of 12.35 billion euros to buy the power division of Alstom, which accounts for about 70 percent of its activities. It expires on Monday.

The US-based group responded swiftly to the Siemens-MHI offer on Monday by saying it would not engage in a bidding war.

But a source close to the deal said GE was working behind the scenes to make its offer more attractive.

GE is considering the possibility of creating a joint venture in transport with Alstom and, similar to MHI's proposal, an industrial alliance in steam turbines, the source said.

Alstom, which builds power-generation systems and railway equipment, including the TGV high-speed train, says it is not strong enough in the world market for power stations and it is suffering from weak demand in Europe.

- "European rail champion" -

When the advanced state of negotiations by the Alstom board to sell the power division to GE became known, the French government objected, fearing a loss of jobs and influence over a company which also makes turbines for nuclear reactors.

Paris encouraged a counter-offer by Siemens, which has huge power interests and also has big rail activities.

"As far as possible, we hope that the offers can be improved," said the French government.

Cromme and the chief executive of Japanese group Mitsubishi Heavy Industries met with Hollande to explain their proposals for acquiring parts of Alstom.

In a nod to the government's interests, the president of Siemens' supervisory board Gehrard Cromme said on Tuesday it would create a European "champion" in railway equipment by forming a joint operation headed by Alstom.

- "Sceptical" -

Analysts said the German-Japanese offer was too complex and would break up Alstom.

Investors had expected the two firms to make a joint bid to compete with terms offered by GE, but instead interpreted the Siemens-MHI offer as a complex attempt to break up Alstom.

The GE bid had the merit of being "clear and coherent," said analysts at brokerage Aurel BGC commented.

"MHI-Siemens offer has been conceived to seduce the government and not the French group."

Shares in Alstom fell 1.84 per cent to 28.79 euros in afternoon trading, compared to an overall rise of 0.35 per cent in France's main index.

Under the terms unveiled Monday, Siemens offered to pay 3.9 billion euros for Alstom's gas turbine business.

MHI would buy from French conglomerate Bouygues up to 10 per cent of Alstom, offering to create three joint businesses in steam turbines, hydraulic turbines, and electricity networks in which it would hold minority stakes.

The Japanese company would also inject 3.1 billion euros in cash

Bouygues had said after the closing of stock trading on Monday that it was not interested in selling Alstom shares.

"We are sceptical" about the MHI-Siemens offer said Aurel BGC.

"MHI would not contribute assets and is proposing a complex solution which would result in the Japanese company holding different stakes in various activities of the energy division, while remaining a competitor to Alstom."

Jeal-Luc Gaffard, director of the French Economic Observatory (OFCE), expressed concern about the government playing too great a role in business deals.

"What was done in the past was not a great success. Politicians are not the best to judge the relevance of industrial processes," he added.

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