Cash-strapped French engineering group Alstom said today it would study a $16.9 billion offer from General Electric for its energy arm but left the door open for a rival bid from Germany's Siemens.
Alstom gave Siemens until the end of May to propose its own deal after the government of President Francois Hollande balked at the US group's overtures last week.
It is insisting that any outcome must safeguard jobs at the one-time champion of French industry, while ensuring the nation's energy independence.
Yet GE remained ahead in the race to secure assets which would boost its position in producing steam turbines for power stations and technology for electricity grids.
French Economy Minister Arnaud Montebourg - who was furious when news of the deal emerged last week - softened his tone towards the US group, which he said was "a serious company".
"We have a good relationship with GE," Montebourg told a parliamentary committee after Alstom confirmed in a statement it was reviewing the GE offer.
"We are ready to discuss alliances, not an absorption. We prefer an equal alliance," he said, citing GE's 40-year-old CFM jet engine venture in France with a unit of Safran as a good example of Franco-US co-operation.
GE said its all-cash offer for Alstom's thermal power, renewable power and grid businesses was based on an enterprise value of $13.5 billion and $3.4 billion of net cash.
Alstom's power assets account for around 70% of annual turnover, which was €20.3 billion last year.
Considered by many analysts too small to survive alone in the energy sector, Alstom said a GE deal would allow it to re-focus on transport including making TGV high-speed trains.
"Alstom would use the sale proceeds to strengthen its transport business and give it the means of an ambitious development, pay down its debt and return cash to its shareholders," the group said in a statement.
GE chief executive Jeff Immelt said talks with the French government on his company's offer had been productive and expressed confidence that it would go through.
"We think we've got a good deal and it's going to be executed," Immelt told reporters in Paris. "We think net employment in France will grow around the Alstom assets."
Industry sources note Alstom is strong in steam turbines used by the nuclear industry, while GE is a top player in gas turbines. A deal would enable GE to expand into grid technology.
With the Alstom deal, GE expects its industrial businesses to contribute about 75% of company operating earnings by 2016, up from about 55% last year.
Alstom was bailed out by the French state in 2004 and relies heavily on orders from national rail operator SNCF and utility EDF. It employs 18,000 people in France, half of them in the power business, out of
93,000 worldwide.
Alstom said its board also noted a declaration of interest from Siemens on an alternative deal and that the German company would have access to information needed to make a binding offer.
It added that French group Bouygues, which has a 29% stake in Alstom, had promised not to sell its shares until the deal had won final approval of shareholders.
The agreement means Alstom cannot solicit offers from third parties to purchase all or part of its energy business but can respond to unsolicited offers for the entire energy arm. If it recommends GE's offer, Alstom would pay a fee of 1.5% of the purchase price if it then backed another offer.
Siemens said it had decided to make an offer provided it was given access to Alstom's data, as well as "permission to interview the management during a period of four weeks, to enable Siemens to carry out a suitable due diligence".
