Alstom shares were up 7 percent in early trading, the top-performing stock on France's SBF-120 index .SBF120, touching their highest level since July 2011.
Siemens shares advanced 1.2 percent.
“Alstom shareholders are to receive two extraordinary dividends totalling 8 euros ($9.40). If successful, this deal should in our view create significant value for both parties,” Barclays analysts wrote in a research note.
Reporting by Sudip Kar-Gupta, editing by Louise Heavens