Areva has selected Schneider and Alstom to buy their Transmission and Distribution business for US$6B which will allow them to focus wholly on nuclear.
This bit of the article is the best:
Nuclear Focus
Selling the transmission and distribution unit will leave Areva focused on all stages of nuclear energy production, from uranium mining to enrichment and waste disposal, as countries turn to nuclear energy to combat climate change and a possible scarcity of fossil fuels.
Alstom, Schneider May Pay 4.25 Billion Euros for Areva Business
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July 28 (Bloomberg) -- Areva SA will probably get 4.25 billion euros ($6.06 billion) for its transmission and distribution unit, a price that joint bidders Alstom SA and Schneider Electric SA can pay without raising more cash, according to analysts.
Alstom would buy 60 percent and Schneider 40 percent, according to Deutsche Bank analyst Martin Wilkie. Areva said it will decide whether to sell the unit and select a buyer by the end of the year after an open call for bids.
“Sharing the T&D assets will enable both Alstom and Schneider to avoid a capital increase, which would not have been possible in the event of a full takeover,” Francois Archambault, an analyst for CM-CIC Securities, said in a note. The joint bid also means state-owned Areva benefits from a higher purchase price, the Paris-based analyst said.
Areva, the world’s biggest builder of nuclear reactors, needs to raise as much as 10 billion euros by 2012 for investment, shutting down aging plants and for buying Siemens AG’s share of a nuclear reactor joint venture. Alstom, based in Levallois-Perret, France, sold the transmission and distribution unit to Areva five years ago, when the government helped save the train-maker and power-station builder from collapse.
The unit’s value is based on the median estimate of nine analysts in a Bloomberg survey.
Schneider, based in Rueil-Malmaison, France, will probably end the year with net debt of 4.4 billion euros and may still need to raise 500 million euros to 1.5 billion euros through a share sale to buy its part of the Areva unit, according to Wilkie of Deutsche Bank.
French Solution
Areva will still need to sell shares even after a disposal, according to Alex Barnett, an analyst with Jefferies International Ltd. with a “buy” recommendation on the stock. Though private equity groups have expressed interest in the division, he predicted a “French solution” involving Alstom and Schneider.
Areva said June 30 it would sell new shares so “strategic and industrial partners” could buy a 15 percent stake in the company. The French government currently owns about 93 percent and the remainder is traded in the form of non-voting investment certificates.
“The management of Areva wants a share sale much more than a T&D sale,” said Barnett. “It closes a funding gap, and it’s strategic to have industrial partners because they’re less political.”
Nuclear Focus
Selling the transmission and distribution unit will leave Areva focused on all stages of nuclear energy production, from uranium mining to enrichment and waste disposal, as countries turn to nuclear energy to combat climate change and a possible scarcity of fossil fuels.
Transmission and distribution, which builds and operates electricity grids, accounted for 38.5 percent of Areva’s sales last year. Alstom would take over the transmission operations and Schneider would get the distribution business, the two companies said in a joint statement on July 23.
Areva Chief Executive Officer Anne Lauvergeon said on June 30 that the asset would be sold as a single company and Areva has a minimum price it will accept. The company has already been approached by many potential buyers, she said.
To contact the reporter on this story: Gianluca Baratti in Madrid at [email protected]
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$7.89 Sentiment: LT Buy Disclosure: Held
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