French electrical equipment maker Schneider Electric SA and the power and transport engineering company Alstom SA, also of France, have acquired the power distribution activities of Paris-based nuclear group Areva SA.
The two companies bid Ôé¼4.1 billion for the unit belonging to state-owned Areva, which was accepted over those submitted by rivals Toshiba of Japan and US-based General Electric.
The bid was not the highest, however, as the French offer values the unitÔÇÖs equity at Ôé¼2.3 billion, against Toshiba's Ôé¼2.4 billion.
The French consortium is said to have improved its bid by dropping performance conditions that would have effectively cut the value of the Ôé¼4 billion offer by up to Ôé¼400 million.
Under the terms of the deal, Schneider will take the unitÔÇÖs distribution operations and Alstom the transmission operations.
Schneider will merge the distribution operations with its medium-voltage operations, which will result in a new business called Energy, with around Ôé¼4.6 billion in sales.
Around 50 per cent of Ôé¼120 million revenue and cost synergies are expected by 2012, Schneider has said. The company will need Ôé¼1.1 billion to finance the acquisition, which it will fund with cash.
Both companies have said that splitting the unit in two will create two world class companies instead of one, with Schneider becoming the equal of market leader ABB in medium tensions; and Alstom one of the world's biggest players in the transmission equipment market.
ÔÇ£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:┬á the link with power generation, the gain of critical size in the medium voltage market, access to wider markets and innovation for the entire electricity market,ÔÇØ the two companies said in a joint statement.
It continued: ÔÇ£Alstom and Schneider Electric will considerably extend the capabilities of Areva T&D in turnkey projects (currently Ôé¼1.6 billion just for transmission and distribution) to more than Ôé¼8 billion for the whole electricity industry with the addition of the capabilities of Alstom and Schneider Electric.ÔÇØ
The two companies also sought to reassure workers that no job losses or restructuring would be necessary, saying that they were ÔÇ£committed to ensuring a professional future for each and every employee.ÔÇØ
Alstom employs more than 80,000 people in 70 countries, and had orders of Ôé¼24.6 billion in 2008/09.
Schneider Electric employs around 114,000 people and had sales of more than Ôé¼18.3 billion in 2008.
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