Alstom - Areva Acquisition a Value Destroyer ?

Today's press release announcing that Alstom's managers will be making a bid for Areva should concern any Owner.  Here is the key language from the press release:

Schneider Electric and Alstom are considering making a joint offer to acquire Areva Transmission and Distribution (T&D), recently put up for sale by its parent company.

In order to achieve this, Alstom and Schneider Electric would create a common structure which would bid for Areva T&D and, if this offer is accepted, would ultimately transfer the transmission activities to Alstom and the distribution activities to Schneider Electric. Such a transfer of activities would have no social consequences

The high voltage Transmission (T) part of Areva T&D is very close to Alstom’s own activities in power generation. Alstom will bring to Areva T&D its expertise and knowledge in power networks and automated systems, its know-how in the management of large projects and the full benefit of Alstom’s worldwide commercial network which is particularly focused on power generation utilities, the primary market for high voltage activities.

The medium voltage Distribution (D) part of Areva T&D is a business in which Schneider Electric is very active and that it would like to reinforce. Schneider Electric would bring to Areva T&D its considerable technical and operational strengths in automation and medium voltage, its worldwide sales network, as well as a complementary access to Industry, Building and Infrastructures , major markets for medium voltage activities.

This consolidation around two major worldwide industrial groups, specialised in their own fields, would represent a considerable development opportunity for Areva T&D’s employees.

Gudovac presented his views on the subject on 8.July   when he suggested that ALS at 30 Euros was a good buy. Here were Gudovac's thoughts:

Alstom's managers could always do something truely destructive such as trying to make a big acquisition. Owners should apply a massive negative discount to Alstom if a big acquisition is even rumoured. 

Gudovac will be following these developments closely. 

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Gudovac1941@gmail.com

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