Mon May 5, 2014 2:53pm EDT
<span id="articleText"/> (Adds details on government position, background)
<span id="midArticle_0"/> PARIS May 5 (Reuters) - The French government cannot give its backing to General Electric's bid for Alstom's energy assets in its current form, the industry ministry said on Monday.
<span id="midArticle_1"/> 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.
<span id="midArticle_2"/> Alstom 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.
<span id="midArticle_3"/> "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.
<span id="midArticle_4"/> 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.
<span id="midArticle_5"/> "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.
<span id="midArticle_6"/> Montebourg said the GE activities in question included its freight train and signalling businesses, with revenues of $3.9 billion.
<span id="midArticle_7"/> 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)
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<span id="articleText"/> (Adds details on government position, background)
<span id="midArticle_0"/> PARIS May 5 (Reuters) - The French government cannot give its backing to General Electric's bid for Alstom's energy assets in its current form, the industry ministry said on Monday.
<span id="midArticle_1"/> 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.
<span id="midArticle_2"/> Alstom 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.
<span id="midArticle_3"/> "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.
<span id="midArticle_4"/> 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.
<span id="midArticle_5"/> "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.
<span id="midArticle_6"/> Montebourg said the GE activities in question included its freight train and signalling businesses, with revenues of $3.9 billion.
<span id="midArticle_7"/> 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)
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