Alstom to sell steam components unit to Triton for $1 billion
Paris: Alstom SA, the French maker of trains and power equipment, agreed to sell its steam auxiliary components unit to investment firm Triton for about €730 million ($1 billion) as it seeks to shore up its balance sheet.
“The business, which makes air preheaters and gas heaters for thermal power plants, heat transfer technology for petrochemical and industrial processes, and grinding mills, generated about €430 million in revenue and a double-digit operating margin in the fiscal year ended yesterday,” the company said on Tuesday in a statement.
“This transaction highlights the strength and value of Alstom portfolio of activities, and illustrates the group’s ability to deliver on its strategy of selective, value-enhancing disposals,” Alstom chief financial officer (CFO)Nicolas Tissot said in the statement.
Chief executive officer (CEO) Patrick Kron outlined plans in November to cut costs and sell as much as €2 billion in assets, including a minority stake in Alstom’s rail division, by the end of 2014 to curb debt and regain strategic mobility. Alstom, based in the Paris suburb of Levallois-Perret, is responding to slowing demand for power plants and price pressure that’s hurting profit from onshore wind turbines and power-transmission gear.
“The sale of the steam-components business is expected to be completed before the end of the first half of the fiscal year that started today,” the French manufacturer said.
Alstom rose as much as 6%, the steepest intra-day gain since 6 November, and was trading up 5.5% at €20.90 as of 9:03 am in Paris. That pared the stock’s decline in the past year to 21%.
Alstom, which reduced its workforce in Europe and the US as utilities’ demand for power equipment slumped after the 2009 recession, is cutting 1,300 jobs, mainly at its information technology department and the boiler unit, to reduce costs by as much as €1.5 billion by April 2016. The French company is pushing for savings in Europe while investing in partnerships and plants in countries such as China, Russia, Brazil, India and South Africa to tap local demand for trains and turbines.