French state owned nuclear power giant Areva is in the works to sell off a part of it to raise funds for expansion of its nuclear business at a time when demands for nuclear plant construction are booming. The T&D Unit, expected to fetch about $6 billion, has seen bids by both Toshiba and GE. However, it seems that the government has been leaning towards a joint bid by French companies Schneider Electric and engineering group Alstom.
Areva is not happy about this. On the 25th of November they published a statement in a French newspaper stating a break up of the division would cripple it: “”Wouldn’t it better serve our country to accept an alternative offer from a foreign buyer that would guarantee the integrity of a French industrial champion?”
Areva’s top management had no comment on this controversy. Chief Executive Anne Lauvergian has expressed her opposition to this break up however, and French labor unions fear such a move could endanger the jobs of the 31,000 employed at this unit.
There might be political repurcusions with GE’s bid if they win- it would dash the hopes of Scheider Electric in becoming a global champion in the business of low-voltage electric systems.
The new head of Electricité de France, Henri Proglio has also been taking shots at Areva, suggesting that EDF, its biggest customer, should take a stake in the company. However Finance Minister Christine Lagarde said in a Nov. 20 radio interview that the new EDF chief already had “a lot on his plate” and should concentrate his efforts on his own company.
Many companies are interested in this T&D division as it produced half of Areva’s $1.7 billion operating profit last year alone. Per Lakender, head of utilities research at UBS London said: “this whole process was very poorly planned. There is a big chance that this is not going to be settled soon,” he says.