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    ALO   FR0010220475

ALSTOM

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France wants Areva to buy Alstom wind unit if GE wins bid

05/09/2014 | 08:54am EDT
View of the Areva Tower at the headquarters of the French nuclear reactor maker Areva at La Defense in Courbevoie

PARIS (Reuters) - France wants state-controlled nuclear group Areva to take over Alstom's offshore wind turbine unit if General Electric's bid for Alstom succeeds, a French paper reported on Friday.

Areva (>> AREVA) and Alstom (>> ALSTOM) both produce offshore wind turbines and are part of different consortia to build 3,000 megawatts of wind power off the French coast in coming years.

General Electric (>> General Electric Company) made a $16.9 billion offer for Alstom's energy division last week. The U.S. firm's CEO has said in a letter to French President Francois Hollande that he would be willing to sell Alstom's wind turbine activities to French investors if GE winds the bid.

"It would make sense to have one sole French actor in this industry," Les Echos quoted a government source as saying.

Nobody was available for comment at the industry ministry and Alstom. Areva declined comment on the report.

On Wednesday, the French government awarded a 4 billion euro ($5.6 billion) tender for two offshore windfarms to a consortium led by GDF Suez (>> GDF SUEZ), for which Areva will build 124 of its new 8 megawatt turbines - some of the largest in the world - with a combined capacity of 1,000 megawatts.

In 2012, a consortium led by state-controlled utility EDF (>> EDF) won a tender for 1500 megawatts for which Alstom will build 240 of its 6 MW Haliade turbines.

HURDLES

Some industry specialists say it could make sense to combine the offshore wind operations of the two, although an Areva takeover of Alstom's offshore activities would face serious technological and financial hurdles.

Areva's turbines have gearboxes - by far the most commonly used technology - while Alstom's new 6 MW Haliade turbine uses the less common gearless direct-drive technology.

Hit by billions of euros of provisions and writedowns on a Finnish nuclear reactor project and an African uranium mine, loss-making for the past three years, and with a credit rating just one notch above junk, Areva has limited financial firepower for acquisitions.

Even together, the two French firms would still be a relatively small player in this capital-intensive nascent industry, which strongly depends on government subsidies.

European Wind Energy Association (EWA) data show there was 117.3 gigawatts (1,000 megawatts) of installed wind energy capacity in the European Union at end-2013, of which 110.7 GW on land and just 6.6 GW at sea.

A total of 2,080 offshore wind turbines with an average capacity of 4 megawatts were installed, of which 74 percent by Germany's Siemens (>> Siemens AG), 12 percent by Germany's Bard, 10 percent by Denmark's Vestas (>> Vestas Wind Systems A/S) and 4 percent by Senvion, a unit of India's Suzlon (>> Suzlon Energy Ltd), EWA data show.

Alstom and Areva's new Spanish partner Gamesa (>> Gamesa Corporacion Tecnologica SA) each had only 0.2 percent of the installed base, according to EWA.

Areva and Gamesa in January said they planned to create a 50-50 joint venture for offshore wind. In September, Vestas and Japan's Mitsubishi Heavy Industries (>> Mitsubishi Heavy Industries, Ltd.) also announced an offshore wind joint venture.

Areva has an installed offshore base of six 5 MW turbines at the Alpha Ventus wind farm in the North Sea, which has been operational since 2009.

The firm has two contracts to supply 120 turbines in Germany and expects to have more than 120 offshore turbines installed with a total capacity of 600 MW by end 2014.

French Industry Minister Arnaud Montebourg was meeting German vice chancellor Sigmar Gabriel on Friday and was expected to discuss the Alstom bid.

Siemens is also considering a bid for Alstom's energy unit, but has made no comments about what it would have in mind for the two firm's offshore wind activities.

(Reporting by Geert De Clercq; editing by Keiron Henderson)

By Geert De Clercq


ę Reuters 2014
Stocks mentioned in the article
ChangeLast1st jan.
ALSTOM -3.69% 31.07 Real-time Quote.-30.83%
BASE CO., LTD. 0.00% 5150 End-of-day quote.-16.26%
BASE, INC. 1.08% 1214 End-of-day quote.-37.81%
ELECTRICITÉ DE FRANCE -2.63% 10.385 Real-time Quote.-17.37%
ENGIE -0.79% 11.74 Real-time Quote.-5.48%
GENERAL ELECTRIC COMPANY -1.50% 99.06 Delayed Quote.16.28%
LAND CO., LTD. 8.33% 13 End-of-day quote.62.50%
MITSUBISHI HEAVY INDUSTRIES, LTD. -0.20% 3047 End-of-day quote.-3.45%
ONE STOP SYSTEMS, INC. -2.26% 5.2 Delayed Quote.33.00%
SEA LIMITED -2.00% 332.215 Delayed Quote.70.72%
SIEMENS AG -4.78% 142.52 Delayed Quote.27.23%
SIEMENS GAMESA RENEWABLE ENERGY, S.A. 0.81% 22.23 Delayed Quote.-33.15%
SUZLON ENERGY LIMITED 0.78% 6.5 Delayed Quote.0.78%
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