30 November, 2009
UPDATE 2-Areva picks Alstom/Schneider for T&D sale talks
* Alstom/Schneider bid price for T&D 4.09 bln euro
* French government supports decision
* French government expects sale to complete in 2010 (Confirms exclusive talks, adds GE comment)
By Nina Sovich and Leila Abboud
PARIS, Nov 30 (Reuters) - Nuclear reactor maker Areva (CEPFi.PA) will hold exclusive talks to sell its transmission and distribution (T&D) unit to a French consortium, dismissing foreign offers to keep the business in domestic hands.
French Economy Minister Christine Lagarde immediately supported the decision on Monday, saying the 4.09 billion-euro ($6.15 billion) offer was the best solution for Areva's "patrimonial interests," industry and jobs.
The decision to pick the French group over rival offers from Toshiba (6502.T) and General Electric (GE.N) underlines President Nicolas Sarkozy's keenness to keep the strategic nuclear and electricity industries in French ownership. The state owns 93 percent of the company.
"At the end of the day France Inc. is energy. It's nuclear," a banker close to the deal said. "They don't want to sell that to anyone."
The government had stressed that it did not have a preference.
All three offers were "relatively similar in value," Areva said in a statement.
But a source close to Toshiba told Reuters that the three offers were not similar in value.
GUARANTEES
Alstom and Schneider offered 2.29 billion euros in equity, and the bid included a commitment to maintain all European sites for a three-year period, Areva said.
The buyers also promised not to lay off any workers unless the economy deteriorated significantly.
The government is forcing Areva to sell T&D, despite objections by Chief Executive Anne Lauvergeon, as a way to fund Areva's 11 billion-euro expansion plan and solidify its position as a global leader in nuclear technology.
Areva T&D is active so-called smart-grids for power companies that are greener and more reliable than older grids and it competes with ABB (ABBN.VX) of Switzerland and Siemens (SIEGn.DE) of Germany amongst others.
The announcement follows weeks of closed-door talks between the consortium of Alstom and Schneider and the French government, which wanted the duo to bring its bid in line with more lucrative offers from foreign bidders.
Last week, the Japanese conglomerate made the highest bid with an equity offer of 2.58 billion euros, the source said. The bid had a total value of some 4.5 billion euros.
A government source told Reuters that General Electric made a bid with an enterprise value of 4 billion euros.
"GE made a strong, competitive bid for the Areva T&D business, addressing the financial, industrial, and social aspects of the sale," the world's largest maker of electricity-generating turbines said. "GE was committed to a fair and open bidding process and complied with the requirements throughout the bidding."
UNCONVENTIONAL AUCTION
Unlike conventional auctions, the French government fitted a safety valve into the process, saying it would evaluate offers not just on price, but industrial and employment policy as well.
But the process angered some.
"These were always negotiations between Alstom and Schneider and the government," a source close to Toshiba said. "They cannot pretend this was a fair process."
The source added that Toshiba was considering bringing legal action before France's Council of State to contest the manner in which the auction was held.
The perception that the bid had been handled unfairly prompted Prime Minister Francois Fillon to defend the sale last week.
"The government is not leaning toward any particular solution," he told reporters at the time.
Alstom once owned Areva's transmission and distribution business, selling it to the nuclear reactor maker in 2004 for 920 million euros to pay down crippling debt.
Despite Alstom and Schneider's concessions on jobs, analysts say the bid falls short on several counts, both financially and industrially since the French duo plan to split the business between them.
"There is no reason to break up T&D, certainly not operationally," a Paris-based analyst who declined to be named said. ($1=.6650 Euro) (Additional reporting Julien Ponthus. Marie Maitre, Anna Willard and Benjamin Mallet; editing by Marcel Michelson, James Regan, Leslie Gevirtz) ((nina.sovich@thomsonreuters.com; +33 1 4949 5145))
Source: http://www.reuters.com
UPDATE 2-Areva picks Alstom/Schneider for T&D sale talks Added: (30.11.2009)
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