M&A

26 November, 2009

WRAPUP 1-France defends Areva T&D sale; Toshiba 'top bidder'

* Fillon says offers are being studied, no favourite

* Sources close to Toshiba say it bid highest at $6.8 bln

* Source says French govt continues to favour French bidders

PARIS, Nov 26 (Reuters) - The French government defended itself against claims of partiality in the sale of Areva's (CEPFi.PA) transmission and distribution (T&D) unit on Thursday as the politically charged auction looked to be drawing to a close.

The case, which pits a domestic bid against two foreign ones, could be a litmus test for France, which has a long history of intervening in mergers that affect French companies and been criticised for 'economic patriotism'. [ID:nLK630671]

Toshiba (6502.T) submitted the highest bid for the business at 4.5 billion euros ($6.8 billion), two sources close to the Japanese firm said. But one source close to Toshiba said the government was continuing to favour the French bid from Alstom (ALSO.PA) and Schneider Electric (SCHN.PA).

"It seems like French president (Nicolas Sarkozy) really wants the French to win and this is becoming extraordinarily difficult for them (the French government) to do, as the others are ahead on all (counts)," the source said.

Prime Minister Francois Fillon said claims of bias were not justified.

"The government is not leaning towards any particular solution," he told a press conference at an EDF (EDF.PA) plant in Flamanville. "An analysis is under way and a decision will be made based on this."

At stake is Areva's most profitable unit, which analysts have valued at between 4 and 5 billion euros. The French government is forcing the state-owned firm to sell to fund an 11 billion-euro expansion plan designed to cement its leadership in the global nuclear power market.

Three players have made binding offers for T&D--Toshiba, General Electric (GE.N) and Alstom-Schneider. GE's bid is 4 billion euros, according to a government source.

Alstom-Schneider's offer is also around 4 billion after the duo recently dropped a clause that would have tied payment of 400 million euros of the bid price to T&D's performance [ID:nGEE5AN1VY].

With Toshiba's bid coming in highest at 4.5 billion euros, of which 2.4 billion is equity financing, the source said it would be surprising if the Japanese didn't win.

With a decision near, the companies are all making their case in the press and in the halls of government. [ID:nGEE5AO27V]

On Thursday French Finance minister Christine Lagarde seemed to reinforce Fillon's stance that all the bids were still in play and that the deal was being handled fairly and objectively.

"The dossier is being studied. Nothing is closed yet," she told Reuters on the sidelines of a conference in Lyon.

(Reporting by Nina Sovich; Editing by Leila Abboud, John Stonestreet)

((nina.sovich@thomsonreuters.com; +33 1 49 49 51 45; Reuters Messaging: nina.sovich.reuters.com@reuters.net)) ($1=.6625 Euro)

Source: http://www.reuters.com