Siemens-A Third Wheel For Alstom

French industrial conglomerate Alstom is determined to join forces with state-owned engineering company Areva, even if it means dislodging Germany's mighty Siemens as a stakeholder.

Alstom (other-otc: AOMFF - news - people ) Chief Executive Patrick Kron told French newspaper Les Echos that a merger with Areva would not be weakened if Siemens (nyse: SI - news - people ) sold its 34% stake in Areva (other-otc: ARVCF - news - people )'s nuclear power subsidiary. He said that Alstom had a strong enough presence in Germany, having supplied 35% of the country's power capacity, to support the combined entity's market position.

Shares in Areva gained 10.05 euros ($14.78), or 1.4%, to 756 euros ($1,111.86 euros), during afternoon trading in Paris. Alstom rose 1.68 euros ($2.47), or 1.1%, to 159.01 euros ($233.89), while in Frankfurt Siemens fell 1.99 euros ($2.93), or 1.8%, to 106 euros ($155.92).

The French government has reportedly been studying a possible tie-up with Alstom to enlarge its national champion, in the hope that it will increase Areva's size to its full competitive potential. The same mentality saw the state work to combine utilities Gaz de France and Suez (nyse: SZE - news - people ) earlier this year. (See "Gaz de France, Suez Ink Marriage Of Almost Equals")

But Areva Chief Executive Audrey Lauvergeon has criticized plans to merge her company with Alstom, telling Les Echos last month that it would lead to "quite significant negative synergies." She has insisted that Siemens' departure as a stakeholder would hurt sales, and believes that Areva should be developed "according to its own strengths."

Siemens confirmed on Tuesday that it wanted to keep its stake, declining to comment on previous reports that it planned to increase it.

The French government proved its ability to win Areva lucrative contracts on Tuesday, when President Nicolas Sarkozy unveiled preliminary agreements with Libyan leader Moammar Gadhafi to supply at least one nuclear reactor for a water desalination project.