German engineering company Siemens AG and Japanese peer Mitsubishi Heavy Industries Ltd. were close on Sunday to finalizing an offer for much of Alstom SA ALO.FR +0.08%  's energy business, potentially entering a bidding war with General Electric Co. for one of France's industrial jewels, said people familiar with the companies' plans.

As part of the potential offer, Mitsubishi aims to buy as much as 10% of Alstom from Bouygues SA, which holds a 29.3% stake, two of the people said. French public investment bank BPI France would buy another portion of the Bouygues stake, possibly alongside the French government, these people said.

Talks were continuing late Sunday in Europe, these people said, and the final structure of the deal wasn't set.

A Bouygues spokesman said Sunday that Mitsubishi hadn't approached the company to discuss buying its Alstom holdings. He reiterated that Bouygues is committed to keeping its Alstom stake for the long run.

Under the planned bid, which could be unveiled as soon as Monday, Siemens would buy Alstom's gas turbine business for around €4 billion ($5.41 billion) in cash. Mitsubishi and Hitachi Ltd., with which Mitsubishi already has an energy joint venture, would buy a stake of roughly 40% in Alstom's steam and nuclear-turbine business to form a strategic alliance, said a person familiar with the matter.

Separately, Mitsubishi intends to cooperate with Alstom's energy-grid operations and take a stake of around 20% in that business, this person said.

The proposed joint bid calls for Siemens to transfer its rail-technology operations to Alstom, the person said. The German and Japanese companies would commit to job guarantees in France and Germany for three years after closing the deal.

The planned offer is aimed at winning over the French government and Alstom managers by enabling France to build a European champion in train construction and rail engineering, the people familiar with the talks said. It would leave Alstom's structure largely intact, but with strong foreign partners in specific divisions.

Such a bid could derail an earlier offer from U.S.-based GE, whose $17 billion bid for Alstom's energy assets has been tentatively approved by the French company. The board's approval doesn't mean GE has won the Alstom assets. GE has set June 23 as a deadline for Alstom to formally approve its offer.

French Economy Minister Arnaud Montebourg has criticized the GE bid, saying it was unacceptable and threatened France's economic sovereignty. Mr. Montebourg has encouraged Siemens to make its own offer for Alstom's businesses, which includes a rail division that manufactures TGV high-speed trains.

GE is continuing to press its case in meetings with French officials. The company has stationed top executives in Paris, and plans more talks with those officials in coming days.

A person familiar with GE's thinking said it had no plans to raise the dollar value of its bid, but that its first offer has continued to evolve. Since first presenting the offer, GE has added a 1,000-job guarantee and offered to develop partnerships that would allow French investment in some of Alstom's energy business. GE also is discussing the creation of a unit that would preserve French ownership of Alstom's steam turbines for nuclear-power plants, a key concern of Mr. Montebourg.

And the Alstom name will live on in the energy business under GE's proposal, this person said. The structure of a deal preserving French control of some Alstom's assets still is being negotiated, including the possibility of French investment.