Alstom and Schneider for Areva T&D

01 December 2009

Areva looks set to sell its Transmission & Distribution (T&D) business to Alstom and Schneider Electric, strengthening their positions and allowing Areva to concentrate on its nuclear projects.

Areva has formally chosen to enter into exclusive negotiations with Alstom and Schneider Electric, selecting the French consortium over two rival bids from General Electric and a Toshiba/Innovation Network Corporation of Japan (INCJ) joint venture. The successful bid is for €2.29 billion ($3.46 billion) in equity value, which Areva says is equivalent to an enterprise value of €4.09 billion ($6.17 billion). Areva T&D had a net debt of around €1.05 billion ($1.58 billion) as of June 2009.

 

According to Areva, all three bids were "relatively similar in value" and represent more than four times the price it paid for the T&D business when it purchased it from Alstom in 2004 for €920 million ($1.39 billion). A winner was first expected for selection in mid September. 

The sale will require approval from European competition authoirities and from France's Commission de la Participation at des Transferts (Holdings and Transfers Commission). After the acquisition is completed through a joint legal vehicle, the buyers intend to transfer the transmission section to Alstom and the distribution section to Schneider Electric, complementing those companies' existing operations and, they claim, turning them into two of the market's global leaders. Alstom will be focused on the 'upstream' side of the operation, with the power generation provided through its turnkey power plants, turbines and generators added to the very high and high voltage transmission business from Areva. Meanwhile, Schneider Electric will become the 'downstream' specialist with its medium and low voltage power distribution business bolstered by the medium voltage activities from Areva.

In addition, according to Alstom and Schneider Electric's joint statement, the acquisition will "open up possibilities for industrial, commercial and technological synergies which, up until now, have not been available to Areva T&D."

Jobs safe

The two partners have said that they do not foresee the need for any restructuring linked to the acquisition, and have gone so far as to guarantee that they will not announce any new European site closures for the next three years. They have also promised not to make any mass redundancies apart from voluntary redundancies, "except if there is a significant downturn in the general economic conditions."

Areva T&D was officially formed in 2004 when Areva acquired Alstom's transmission and distribution activities, to add to other T&D acquisitions made in the 1980s and 1990s. Boasting a workforce of 31,000, and 30,000 customers in 160 countries, the division supplies products, systems and services for electricity transmission and distribution from the power plant to the final user. Earlier this year Areva announced it would be selling off Areva T&D, which represents over a third of the company's annual turnover, in a major cash-raising effort to finance its long-term development plans.
 

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