GE radically overhauled its bid on Thursday, hoping to appease unions and politicians by transforming what had been largely a straight purchase into an offer of joint ventures similar to that of Siemens-MHI.
In response Siemens and Mitsubishi Heavy Industries (MHI) simplified the structure of their offer on Friday and raised its cash component by 1.2 billion euros ($1.64 billion) to 8.2 billion.
That values Alstom's power businesses at 14.6 billion euros, Siemens said, 400 million more than previously and still well above GE's 12.4 billion.
GE's cash component in its revamped offer has fallen to an as yet unspecified level since it said it would sell its rail signalling unit to Alstom and set up 50/50 joint ventures in grid, nuclear and renewable assets. Under this proposal GE would still end up with the lucrative gas turbines that account for roughly a third of Alstom's power business.
Siemens said its offer was "superior industrially, financially and socially," and reaffirmed pledges to create new jobs in France, a commitment GE has also made.
The new Siemens-MHI proposal still foresees Siemens buying Alstom's gas turbine arm. But MHI is now offering to buy a 40 percent stake in its combined steam, grid and hydro businesses and bundle them into a single holding company rather than three joint ventures, a plan Alstom sources had said was too unwieldy.
Siemens CEO Joe Kaeser told journalists the two partners were open to the French government taking a stake in Alstom if their bid succeeded, but noted such an option had not yet been discussed. Speculation has focused on whether France's Bouygues might sell its 29 percent stake.
The nuclear alliance proposed by GE would see the government hold a preferred share, giving it a veto and other rights over issues related to security and technology of nuclear plants—a vital point in France, which relies heavily on nuclear energy.
Alstom reaffirmed that its board would meet no later than Monday to review the offers and that it planned to make no further statement in the meantime.
'Offers keep improving'
Paris-based investment house Aurel BGC said it was becoming harder to assess which of the two bids made most sense.
"The government can at least say it has succeeded in upping the stakes but the proposals are becoming complex and more and more difficult to assess," it wrote in advice to investors.
French Prime Minister Manuel Valls told France Inter radio that the offers of the two sides were improving.
"We have more meetings today to move towards a decision in conjunction obviously with Alstom, because it ultimately must decide," he said, adding the French government's criteria were "above all the preservation of strategic interests, preserving a certain number of decision-making centers in France and Europe, and obviously jobs".
Hollande's government has congratulated itself on blocking GE's initial advances on Alstom some two months ago and forcing it to improve its offer, not only by encouraging Siemens to enter the fray but also by signing off a decree giving itself the power to block industrial tie-ups in strategic areas.
Yet sources involved in the back-room discussions over the past seven weeks said it was not clear whether there was a single government line.
Several union representatives of Alstom and political sources told Reuters the saga had drawn a divide between Montebourg, who they said lent towards the Siemens-MHI plan, and Hollande, in favour of GE.
"There are really two lines: Hollande and Valls who want to find the best solution and Montebourg who absolutely wants it to be Siemens," said one source familiar with the situation.
While no one has publicly drawn a link between the two cases, Hollande is also lobbying U.S. authorities to reduce the penalties which France's biggest lender,BNP Paribas, faces for breaching U.S. sanctions in 2002-2009, notably its dollar-financing of oil trade out of Sudan.