Bouygues buys two-billion-euro chunk of Alstom

27th April 2006, Comments 0 comments

PARIS, April 27, 2006 (AFP) - The construction and telecoms group Bouygues will buy the French state's 21.03 percent stake in engineering giant Alstom, which was rescued from financial disaster two years ago by the French government, the companies said Thursday.

PARIS, April 27, 2006 (AFP) - The construction and telecoms group Bouygues will buy the French state's 21.03 percent stake in engineering giant Alstom, which was rescued from financial disaster two years ago by the French government, the companies said Thursday.

The two-billion-euro deal, which requires European Union approval before it can go through, is also contingent on the sale of Alstom Marine shipyards to the Norwegian group Aker Yards, they said in separate statements.

The firms will harness their dominance in complementary sectors to "jointly develop integrated projects by proposing solutions that combine Bouygues' civil engineering and Alstom's equipment divisions."

That goal is likely to see the creation of a jointly-held hydroelectric power company, they said.

Alstom, which also makes high-speed trains, will transfer its hydro power activities to the new joint company, and Bouygues will commit to taking a 50-percent stake in the firm, Bouygues said.

The buyout was welcomed on the Paris stock exchange, with shares in Alstom rising by 3.37 percent to EUR 72.15 in midday trading while those of Bouyges were up by 1.02 percent at EUR 43.40.

The French finance ministry said it would reap a capital gain of EUR 1.26 billion by selling its stake for EUR 68.21 per share.

The government acquired the Alstom stake in 2004 as part of a rescue package for the cash-strapped group. In order to secure European Commission approval of the rescue, it promised to sell the stake within four years, or within 12 months of Alstom receiving an investment grade credit rating.

Bouygues, which in France owns a mobile phone network and has a large stake in the country's most popular television station, TF1, said Thursday it was committed by the terms of its deal with Alstom to hold the shares for at least three years.

Alstom chief executive Patrick Kron said in a statement that "Bouygues' investment in Alstom fully meets my objective of associating a reference shareholder with a long-term view, which will contribute to the stability of our capital structure."

Alstom reaffirmed its targets for its fiscal year to March, with sales growth expected to surpass seven percent on a comparable basis, a five percent rise in orders, and an operating margin of at least 5 percent.

Kron also said he would propose the nomination of two representatives of Bouygues to the company's board of directors, as part of the new partnership.

Martin Bouygues, chief executive of Bouygues, said he had no plans for divesting the mobile operator Bouygues Telecom as part of the group's purchase of the stake in Alstom, which will see Bouygues expand into energy production activities.

"Bouygues Telecom brings us a lot of satisfaction," Bouygues said at a press conference with Kron when asked about persistent speculation surrounding a sale of the telecom unit, the smallest of France's three main mobile operators.

"There is no question of changing the one for the other. We think we can carry on with the one and the other," he added.

Copyright AFP

Subject: French news

0 Comments To This Article