Alstom Said to Mandate Goldman for Preheaters Unit Sale
Alstom SA, the French builder of trains and power plants, has mandated Goldman Sachs Group Inc. to explore a sale of its air preheaters and gas-gas heaters unit, according to people familiar with the matter.
The business may draw interest from private-equity companies, said two of the people, who declined to be identified as the plan is not public. The unit has annual sales of between 400 million euros and 500 million euros ($671 million), said two of the people. More information will be sent to potential bidders in coming weeks, they said. Representatives for Alstom and Goldman Sachs declined to comment.
The products, made in the German cities of Mannheim and Dusseldorf, are used by power plants and boiler companies, according to Alstom’s website. While air preheaters are directly involved in the power-generation process, gas-gas heaters are used in the flue gas cleaning process.
Alstom, based in Levallois-Perret near Paris, said this month it will deepen a cost-cutting drive and sell as much as 2 billion euros in assets by the end of 2014 as it seeks to sustain profit. Possible disposals include a minority stake in train and railway-equipment unit Alstom Transport that may attract industry and private-equity buyers, it said Nov. 6.
Alstom shares reversed losses and gained as much as 1 percent in Paris intraday trading after Bloomberg News reported the potential sale of the preheaters and gas-gas heaters unit. The stock was up 0.5 percent as of 11:22 a.m., valuing the company at 8.3 billion euros. Before today, the stock had dropped 11 percent this year, while the French benchmark CAC 40 index gained 17 percent.
In 2011, Alstom and China’s Shanghai Electric Group Co. announced a plan to create a joint venture to sell boilers for coal-fired power plants and spare parts for services. The talks about that venture are “in a coma,” Alstom Chief Executive Officer Patrick Kron said this month.
The company also plans to reduce costs by as much as 1.5 billion euros by April 2016 as demand for gas turbines weakens and pricing pressure hurts profit from onshore wind turbines and power-transmission gear. The manufacturer plans to cut 1,300 jobs, mainly in Europe. The reductions will affect the information-technology department and the boiler unit, and may be extended to other operations if needed, Kron has said.
Moody’s Investors Service in June cut Alstom’s long-term credit rating by one level to Baa3, the lowest investment grade. Standard & Poor’s, which gives Alstom debt its second-lowest investment rating of BBB, has said it may make a similar move.
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