The Areva Supervisory Board has announced its decision to enter into exclusive negotiations with Alstom and Schneider Electric for the acquisition of the activities of its transmission and distribution business, Areva T&D.
Schneider Electric and Alstom are satisfied with the decision of Areva to retain their offer for exclusive negotiations. The aim of these negotiations is to finalise the disposal agreement which would ultimately need several mandatory official approvals.
A project which places T&D at the core of the strategy of the two groups and creates two global specialists in the upstream and downstream sectors of the electricity market
The proposed integration of Areva T&D's activities, currently number three worldwide, with Transmission moving to Alstom (around two thirds of the business) and Distribution to Schneider Electric (about one third), would transform Schneider Electric and Alstom into two of this market's global leaders with an upstream pole, with power generation provided by Alstom (turnkey power plants, turbines and generators), completed by transmission (very high and high voltage) transferred from Areva T&D to Alstom; a downstream pole, with power distribution (medium and low voltage) provided by Schneider Electric, bolstered by the medium voltage activities of Areva T&D.
Alstom and Schneider Electric are opening up possibilities for industrial, commercial and technological synergies which, up until now, have not been available to Areva T&D: the link with power generation, the acquisition of critical size in the medium voltage market, access to wider markets and innovation for the entire electricity market.
Alstom and Schneider Electric will preserve and develop the links between transmission and distribution in all areas: commercial, through cross-purchasing agreements, technological, via the adoption of identical standards (hardware
and software) and on innovation through an ambitious common R&D programme on the "Smart Grid" concept.
Alstom and Schneider Electric will considerably extend the capabilities of Areva T&D in turnkey projects (currently €1.6 billion just for transmission and distribution) to more than €8 billion for the complete electricity market with the addition of the capabilities of Alstom and Schneider Electric.
Alstom and Schneider Electric have submitted a bid which maximises the value of Areva T&D. They propose jointly acquiring Areva T&D for an equity value of €2,290 million. On 30 June 2009, the net debt of Areva T&D was around €1,050 million.
After the closing of the transaction, Schneider Electric and Alstom plan to acquire the shares of Areva T&D via a joint legal vehicle, from which the activities will then be progressively transferred to Schneider Electric and Alstom.
In a nutshell
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Transmission accounts for two-thirds of Areva T&D's current value, while distribution accounts for one-third
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Transmission activities of Areva T&D will go to Alstom. Along with its existing expertise in the power generation business, Alstom gets vertical integration with Areva's high and ultra high transmission business.
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Distribution activities of Areva T&D will go to Schneider. The existing power distribution (low and medium voltage) distribution business of Schneider will get bolstered by the medium voltage distribution of Areva T&D.
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Alstom and Schneider Electric will extend the capabilities of Areva T&D in turnkey projects to more than €8 billion.
Areva: Quick Facts
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Areva T&D represents the erstwhile T&D business of Alstom that was sold in January 2004 for around €920 million.
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Areva is selling off its T&D business now as it wants to focus on nuclear energy
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Areva is present in India through a listed company Areva T&D India Ltd in which the parent holds 72 per cent stake.
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After the proposed sale of Areva's T&D business, Areva T&D India Ltd would not be dismantled; it would only have a new ownership.
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