Alstom-Schneider wins bid for France's Areva

Transmission and distribution, which builds and operates electricity grids, accounted for 38.5 percent of Areva's sales last year. The global economic slump and startup costs for plants in India and China narrowed the operating margin at the unit to 7.1 percent in the first half from 11.1 percent a year earlier, Areva said on Aug. 31.

“Regaining control of Areva Transmission would enable Alstom to again provide a complete power offering to its utility customers by also connecting the new power plants built to the grid,” Societe Generale analysts Gael de-Bray and Roderick Bridge said in a note. They advise investors hold Alstom shares, and rate Siemens as their preferred stock.

Areva Chief Executive Officer Anne Lauvergeon wants to raise as much as 10 billion euros to expand its nuclear business in the next two years. The company, which built 91 of the world's 439 active nuclear reactors, predicts global demand for nuclear power will grow 5 percent each year until 2030, almost tripling from present levels, and targets building one third of new reactors.

'Strategic Error'

To help raise funds, Areva plans to sell a 15 percent stake to investors after the sale of the unit. The company reiterated yesterday it will seek new partners in return for funds.

The disposal of transmission and distribution drew internal opposition. The unit's CEO, Philippe Guillemot, and other members of the division's executive committee wrote in an open letter printed in Les Echos newspaper on Nov. 25 that the sale would benefit Siemens and ABB.

None of the offers “take into account the employees considerations,” the European Works Council representing 15,000 Areva employees said. The sale is a “strategic error” and makes no financial sense, council secretary Maureen Kearney said at a press briefing in Paris today. Workers will consider ways to challenge the transaction, representative Mick Holmes said.

Alstom has undertaken “strong commitments” with Schneider regarding employees at Areva's power-grid subsidiary, it said in a statement today. There will be no site closures at the transmission and distribution unit up until 2013 and there is “no mass redundancy plan,” it said.

GE spokesman Jim Healy declined to comment. Toshiba spokesman Keisuke Ohmori said the company is informed on Areva's decision and declined to comment further.

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