Tue May 6, 2014 11:39am EDT
<span id="articleText"/> (Adds GE, analyst comment, paragraphs 7-13)
<span id="midArticle_0"/> PARIS May 6 (Reuters) - French President Francois Hollande said General Electric's bid for Alstom's energy business is not acceptable as it stands and that the government's aim is to get better offers.
<span id="midArticle_1"/> "The bid is not good enough, it's not acceptable," Hollande told RMC radio on Tuesday.
<span id="midArticle_2"/> Asked whether it was possible that the state, which currently holds around 1 percent in Alstom, could itself increase its stake in the ailing engineering group, he said: "For now I would prefer to get better offers."
<span id="midArticle_3"/> Alstom said last week it was reviewing a binding $16.9 billion bid from GE for its energy arm, although it has not turned down a rival offer from Germany's Siemens.
<span id="midArticle_4"/> French Economy Minister Arnaud Montebourg also came out against the GE offer on Monday but opened the door for a deal that would also combine the two companies' rail businesses.
<span id="midArticle_5"/> "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 a letter to GE Chief Executive Jeff Immelt.
<span id="midArticle_6"/> GE reiterated its statement from Monday, when it said: "We believe our proposal is good for France, for Alstom and for GE," adding that "we are open to continuing dialogue."
<span id="midArticle_7"/> Some analysts doubted the logic behind combining Alstom and GE's transport businesses.
<span id="midArticle_8"/> GE's transportation unit sells diesel-electric locomotives mainly used for freight rail applications, which is a "completely different market" than Alstom's business that focuses on passenger transit, William Blair analyst Nick Heymann said in a research note.
<span id="midArticle_9"/> Heymann said the idea "makes little strategic sense."
<span id="midArticle_10"/> A source close to the talks said the comments from the French government underscored the fact that there was no real alternative to GE's offer.
<span id="midArticle_11"/> "That's why the government is fretting so much, to twist the arm of the only one able to offer anything," the source said.
<span id="midArticle_12"/> Shares in Alstom fell 1.9 percent, while GE shares were off 1 percent.
<span id="midArticle_13"/> (Reporting by Mark John, Ingrid Melander, Benjamin Mallet and Natalie Huet in Paris, and Lewis Krauskopf in New York; Editing by James Regan and David Gregorio)
<span id="midArticle_14"/>
<span id="articleText"/> (Adds GE, analyst comment, paragraphs 7-13)
<span id="midArticle_0"/> PARIS May 6 (Reuters) - French President Francois Hollande said General Electric's bid for Alstom's energy business is not acceptable as it stands and that the government's aim is to get better offers.
<span id="midArticle_1"/> "The bid is not good enough, it's not acceptable," Hollande told RMC radio on Tuesday.
<span id="midArticle_2"/> Asked whether it was possible that the state, which currently holds around 1 percent in Alstom, could itself increase its stake in the ailing engineering group, he said: "For now I would prefer to get better offers."
<span id="midArticle_3"/> Alstom said last week it was reviewing a binding $16.9 billion bid from GE for its energy arm, although it has not turned down a rival offer from Germany's Siemens.
<span id="midArticle_4"/> French Economy Minister Arnaud Montebourg also came out against the GE offer on Monday but opened the door for a deal that would also combine the two companies' rail businesses.
<span id="midArticle_5"/> "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 a letter to GE Chief Executive Jeff Immelt.
<span id="midArticle_6"/> GE reiterated its statement from Monday, when it said: "We believe our proposal is good for France, for Alstom and for GE," adding that "we are open to continuing dialogue."
<span id="midArticle_7"/> Some analysts doubted the logic behind combining Alstom and GE's transport businesses.
<span id="midArticle_8"/> GE's transportation unit sells diesel-electric locomotives mainly used for freight rail applications, which is a "completely different market" than Alstom's business that focuses on passenger transit, William Blair analyst Nick Heymann said in a research note.
<span id="midArticle_9"/> Heymann said the idea "makes little strategic sense."
<span id="midArticle_10"/> A source close to the talks said the comments from the French government underscored the fact that there was no real alternative to GE's offer.
<span id="midArticle_11"/> "That's why the government is fretting so much, to twist the arm of the only one able to offer anything," the source said.
<span id="midArticle_12"/> Shares in Alstom fell 1.9 percent, while GE shares were off 1 percent.
<span id="midArticle_13"/> (Reporting by Mark John, Ingrid Melander, Benjamin Mallet and Natalie Huet in Paris, and Lewis Krauskopf in New York; Editing by James Regan and David Gregorio)
<span id="midArticle_14"/>
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