Chapter 814 Alstom
This time when Barron came to France, he also had another purpose, which was to prepare to acquire Alstom, the French energy and power giant.
Alstom was founded in 1928. Its business projects cover electric power, electromechanical, high-speed railway and other businesses.
Alstom has always been known as the pearl of French industry and a national treasure enterprise in France.
The famous TGV French high-speed train is built by Alstom; in China Bay, the signs of the Taipei MRT high-volume system are also made by Alstom; in mainland China, Alstom operates Projects include the Three Gorges Dam's hydroelectric generating units, the Harmony CRH5 electric multiple unit, the Ling'ao Phase II nuclear power plant, Jinling Metro Line 1 and Line 2 trains, the fully automatic signaling system of the Yanjing Airport Line, and the Magic City Metro's Trains and signaling systems etc...
In the field of energy, Alstom is the world's third largest manufacturer in the field of gas power turbines, second only to Siemens of Germany and General Electric (GE) of the United States...
In the field of power grid transmission and distribution systems, Alstom Stone is the third largest factory in the world after Germany's Siemens and Switzerland's ABB...
But for such a giant company, the current situation is not good. The reason is that Alstom has experienced before. A series of decision-making mistakes and bad luck...
In 1999, Alstom and the power giant ABB formed a joint venture in order to compete with GE (General Electric), the leading power generation equipment supplier at the time. AAP, Alstom and ABB each hold 50%.
After that, AAP Company developed the gas turbine generator sets GT24 and GT26 with the largest power (240,000 kilowatts) and the highest design efficiency (54%) in the world at that time. Once the products came out, their technical performance attracted people all over the world. Eyeballs, 76 units were sold in a short period of time.
In 2000, Alstom spent a huge sum of 5 billion euros to buy ABB's entire AAP shares from its partner ABB. Unfortunately, a generator set equipment produced by the previous joint venture AAP was found to be defective, and Alstom This resulted in additional repair costs of 2 billion euros.
It can be said that this decision-making mistake has greatly damaged Alstom's vitality...
But this is not over yet. As the manufacturer of the world's largest luxury cruise ships, Alstom in order to expand to the Caribbean Regional cruise companies sold products and designed a win-win financing plan. However, the "9·11" incident caused a sharp decrease in the business volume of Caribbean cruise companies, so they stopped paying leasing fees to the international banking syndicate, and the international banking syndicate turned to the guarantor. Alstom pressed for debt, which made Alstom even worse.
The house leaked and it rained all night. After the Channel Tunnel running the "Eurostar" high-speed train was repaired, although Alstom, as the general contractor, further established its leadership in the industry, it made budget mistakes. This resulted in high construction costs and further loss of economic benefits.
These incidents directly led to Alstom's financial crisis and its imminent bankruptcy...
As a French industrial giant, if Alstom declares bankruptcy, not only will 110,000 employees around the world lose their jobs, but it will also cause dozens of its creditor banks to go bankrupt one after another. Therefore, Alstom and the creditor banks simultaneously requested France The Ministry of Finance and Industry intervened.
Then in October 2004, the French government bought 21% of the shares to help Alstom tide over the difficulties.
In 2006, the French government sold its shares in Alstom to the French real estate giant Bouygues Group. The Bouygues Group has successively increased its shareholdings in Alstom. The group's shareholding has reached 25%...
However, Alstom, which received the new capital injection, did not rise again. Instead, it deeply locked up the Bouygues Group - the economic crisis in 2008 gave Alstom even more trouble. This caused a catastrophic blow, and the stock fell by 30% that year. After that, although attempts were made to remedy the situation through large-scale layoffs and sales of assets to increase cash flow, the downward trend still could not be stopped...
Therefore The Bouygues Group, which has been trapped now, also has the idea of selling their 25% stake in the Alstom Group... The reason why Barron is interested in Alstom is because of its two main businesses, Gas turbines, power generation turbines, and power grid transmission and distribution systems are of strategic significance to Barron's power industry, as well as ships and high-speed railways.
In terms of the acquisition of Alstom, Barron also handed over the acquisition strategy to William Weber Capital, managed by Ashley.
“Currently we have contacted the Bouygues Group and they are interested in selling their shares in Alstom...”
Ashley said to Barron:
"In addition, BNP Paribas and Natixis are all creditors of Alstom Group. We can obtain the support of these two banks in terms of the sale plan."
When Alstom Group was on the verge of bankruptcy in 2004, its main creditor banks included BNP Paribas and Natixis. So far, these two banks still own a large amount of Alstom Group's debt.
You must know that Standard Chartered Merrill Lynch, controlled by Barron, is one of the major shareholders of BNP Paribas; and the controlling party of Natixis Bank is William Weber Capital.
Therefore, as the main creditor banks of Alstom Group, these two banks are naturally able to exert influence on Alstom Group and the French government in the acquisition.
After all, in addition to Barron's side, there are several companies interested in Alstom Group - including Siemens, General Electric and Mitsubishi.
“Mitsubishi does not pose a threat here. After all, in the main business of Alstom Group, Mitsubishi is far away from it, and Mitsubishi does not have an advantage in terms of bidding...”
After listing possible competitors, Ashley analyzed for Barron:
“As for Siemens, it competes with Alstom in all aspects, whether it is the French government or Alstom. Everyone within the Stone Group is very resistant to selling Alstom to Siemens!”
The reason why Ashley said this is because the businesses of Siemens and Alstom are highly similar, which makes the French side very reluctant. It is feared that a merger of the two would lead to massive layoffs.
In addition, in 2004, when Alstom was in poor business and on the verge of bankruptcy, Siemens lobbied the French government not to come to the rescue and hoped to sell Alstom to Siemens...
Also Because of this history, everyone at Alstom expressed their unwelcome attitude towards Siemens.
"Furthermore, as the two largest electrical companies in Europe, and their businesses are fully competitive, it also means that if the two merge, they will directly form a monopoly on the industry, which is also not allowed by the EU's antitrust agencies."
(End of this chapter)