Bouygues taking a stake in ALSTOM
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With Bouygues taking a stake in ALSTOM, ALSTOM is planning broad cooperation with Bouygues.
At the commercial level, the two companies are planning cooperation of their sales networks to maximise their strengths on the markets and develop together integrated projects as opportunities arise. Bouygues and ALSTOM can provide a joint response to market demands by offering solutions that combine Bouygues civil engineering with ALSTOMs equipment. It has been agreed that the cooperation between Bouygues and ALSTOM should not be exclusive: in the interest of their customers, the two companies will continue to work with the most suitable partners and suppliers for each project.
Exchanges at the operational level would involve the improvement of project execution by sharing best practices in organisation and project management, setting up joint training programmes for project directors and optimising costs on common projects.
Bouygues also intends to take a 50% equity share in ALSTOM's hydro power equipment business; the corresponding terms are under discussion. This operation would allow ALSTOM to fulfill the commitment made to the European Commission to set up a joint venture in this sector. ALSTOM is the world's number one hydro power equipment supplier and service provider.
The necessary procedures have been or will be implemented to inform and/or consult the various bodies representing ALSTOM personnel about the project.
(1) Under the agreement with the European Commission, the State is required to withdraw from ALSTOM' s equity by 2008 at latest.
ALSTOM had previously confirmed to the French State and Bouygues that the results for fiscal year 2005/2006 which will be published on 17 May would be in line with the objectives set, i.e. increase in orders of more than 5% on a comparable basis, increase in sales of more than 7% on a comparable basis, an operating margin of more than 5%, positive free cash flow and net income, after taking into account the disposal of the Marine activity, of more than 150 million. ALSTOM also confirmed its objective of achieving an operating margin between 6% and 7% in March 2008 and indicated it should exceed these levels in March 2009.
Patrick Kron, Chairman and CEO of ALSTOM, stressed 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. Bouygues is a great company that shares our conviction that our energy and transport markets have a very bright outlook for the future and considers ALSTOM as ideally positioned to fully benefit from this growth. The envisaged cooperation with Bouygues will strongly support our strategy focused on improvement of performance and profitable growth."