France is continuing to press for guarantees from contenders to buy energy assets from Alstom, as Siemens and Mitsubishi Heavy Industries consider a joint move to challenge a formal offer from General Electric.
The race to acquire power activities from Alstom, better known for its high-speed TGV trains, is entering a crucial week, with Siemens due to present an offer by Monday ahead of a June 23 cut-off date set by GE for its 12.4 billion euros ($16.88 billion) bid for all of Alstom's energy assets.
The French government has already secured a pledge from GE to create 1,000 new jobs in France within three years of a deal, according to sources close to the discussions, and Finance Minister Michel Sapin said on Sunday he expected the U.S. conglomerate to improve its offer further.
"Mitsubishi forming an alliance with Siemens improves Siemens' offer," Sapin said in an interview broadcast on Europe 1 radio and news channel iTele. "I think that GE is also going to improve its offer."
GE said in an emailed statement it had "made progress in our discussions with the French government, including expanded alliances in the energy businesses with French investors as well as a global partnership with Alstom on transport."
Siemens and Mitsubishi are putting the finishing touches on an offer for Alstom's turbine businesses, including a cash element of roughly 9 billion euros ($12.3 billion), according to sources close to the bidders.
Siemens' supervisory board was due to meet at 1600 GMT to consider an offer for Alstom. The German group has not commented on its discussions with Mitsubishi, but has said it would unveil a formal bid for Alstom assets by June 16.
In the move being considered by Siemens and Mitsubishi, the German firm would acquire Alstom's gas turbines business while the Japanese group would inject cash and industrial assets into a joint venture in steam turbines, sources said.
Under the deal, Mitsubishi and the French state would take equal stakes in Alstom, acquiring part of the 29 percent holding of French group Bouygues, union representatives said after meeting Economy Minister Arnaud Montebourg.
This could involve French state bank BPI acquiring a stake in Alstom alongside Mitsubishi, the Wall Street Journal reported on Sunday. But a source familiar with the situation said BPI was "ready to be involved in any scenario", including with Mitsubishi or GE.
A Bouygues spokesman said the group had not been approached by any party regarding a sale of its stake in Alstom, adding: "Bouygues wishes to remain a long-term shareholder in Alstom with a 29.3 percent stake."
Bouygues would support the proposal recommended by the Alstom board, he said.
In a second step, separate to a turbines deal, Siemens is also proposing to combine its rail activities with Alstom's, sources said.
An Alstom spokeswoman declined to comment.
Finance Minister Sapin said he did not have "any preference" for a bidder, but France would defend jobs and investment through a new decree extending the government's powers to block foreign takeovers in sectors deemed strategic.
Alstom is a big private-sector employer in the country and was bailed out by the state a decade ago.
"We will not decide for (Alstom) but we will use our weight," Sapin said.
French President Francois Hollande will host a meeting on Alstom on Tuesday morning, according to his official diary, while Siemens Chief Executive Joe Kaeser is due to appear before a French parliamentary committee later that day.
Montebourg reiterated in a newspaper interview on Friday that he favored an alliance that preserved Alstom's identity, industrial sites, decision centers and jobs.
He said a tie-up with Mitsubishi would be "a serious alternative" to GE's proposal.