France opposes current GE offer for Alstom assets

PARIS (Reuters) - The French government cannot give its backing to General Electric's (GE.N) bid for Alstom's (ALSO.PA) energy assets in its current form, the industry ministry said on Monday.

However, the government would look positively on an offer that combined GE's rail business with Alstom's, Industry Minister Arnaud Montebourg wrote in a letter to GE CEO Jeff Immelt.

Alstom (ALSO.PA) said last week it was reviewing a binding $16.9 billion bid from the U.S. conglomerate for its energy arm, though it has also left the door open to a rival offer from Germany's Siemens. (SIEGn.DE) [ID:nL6N0NM15R]

"In its current form, we unfortunately cannot give backing to the proposals that you have made based solely on the purchase of Alstom's energy activities," Montebourg wrote in the letter, a copy of which has been seen by Reuters.

Montebourg said that the government was concerned that Alstom's rail transport business, which makes 26 percent of the company's revenues, would be isolated if it were hived off.

"That's why it would be highly desirable to ensure a clear global future for Alstom Transport by selling General Electric's transport activities to it," he added.

Montebourg said the GE activities in question included its freight train and signaling businesses, with revenues of $3.9 billion.

The government sees Siemens as a possible white knight after the German group said last week it would make a formal offer for Alstom, most likely in the form of a swap of power and rail assets.

(Reporting by Yann Le Guernigou and Leigh Thomas; editing by Geert De Clercq and Keiron Henderson)