Power Engineering - Siemens buys Alstom industrial turbines business for €1.1bn

28 April 2005 - Alstom said today it has signed binding agreements to sell its small gas turbines business and its medium-sized gas turbines and industrial steam turbines businesses in two transactions to Siemens Power Generation Group, part of Siemens AG.

The total enterprise value of the two transactions is €1.1bn. ($1.2bn) Net cash proceeds to Alstom are expected to be approximately €950m after deduction of debt transferred and certain other adjustments for cash items. The sales are an important part of Alstom's continuing disposal programme, aimed at reducing debt.

The first transaction will cover the small gas turbines business, and the second transaction will cover the medium-sized gas turbines and industrial steam turbines businesses.

The industrial turbines businesses being sold account for approximately 10 per cent of Alstom's Power sector revenues and sales are typically to specialist industrial customers, for example in the oil and gas industry. They include:

* the small gas turbines business (3 MW - 15 MW) based principally in the UK;
* the medium-sized gas turbines business (15 MW - 50 MW) based principally in Sweden;
* the industrial steam turbines (up to about 100MW) business with manufacturing sites in Sweden, Germany and the Czech Republic, and global customer service operations.

In the year ended 31 March 2003, Alstom's industrial turbines businesses generated sales of approximately €1.25bn and an estimated EBIT margin of approximately 7 per cent. They employ some 6500 people.

"Following the successful integration of Westinghouse and Demag Delaval, the acquisition of Alstom's business is a very important step in strengthening our product line," noted Klaus Voges, President of Siemens Power Generation. He stressed that the drive to focus on fossil power generation has made excellent progress over the past several years.

"By combining the resources and technologies of Siemens and Alstom, Siemens Power Generation will become one of the world's leading vendors of industrial energy solutions. The acquisition will expand the scope of our product range to include small and medium-sized gas turbines, and will enable us to offer our customers in the industrial sector a complete range of products and services from one hand," stressed Voges.

Commenting on the sales, Patrick Kron, Chairman and CEO of Alstom said:
"These transactions constitute a key milestone in our action plan to strengthen our financial base. We thank all our employees in the industrial turbines businesses for their support and are confident that they will have a successful future within the Siemens Group."

The Power Generation Group of Siemens AG is one of the largest companies in the international power generation sector. In fiscal 2002 (ended September 30), Siemens PG posted sales amounting to €9.4 billion and received new orders totalling €10.6 billion. Earnings before interest and taxes (EBIT) amounted to €1.582bn. On September 30, 2002, Siemens PG had a workforce of around 26 000 worldwide.

The closing of the acquisitions is subject to approval by the relevant antitrust authorities. After completion of the transactions, Siemens Power Generation Group's Industrial Applications Division will have a business volume of €2bn and some 10000 employees. The Division's headquarters will remain in Duisburg, Germany.

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