Alstom Areva Merger

The merger between Alstom and Areva is still under consideration of the government of France. Some experts opine that this merger will not be a wise move by the government. In this paper we will discuss the issues regarding this merger in detail.

In September 2007, the French government revealed their wish to merge the French rail transport and industrial power group Alstom, which produces power generating plants and equipments, and Areva, a state-owned nuclear group.

Shares of these two companies were rising gradually, on 10th September Areva's share rose up to 2.5% at 705.85 euros whereas, Alstom's was 6.5% at 134.77 euros. So the government of France sought the merger. But many business experts, for example, experts from HSBC Bank and McKinsey, think that this merger will not be able to fulfill the aims of the French government.
Before September, the government of France merged Suez and state run Gaz de France to advance the country's progress in the global energy sector. Aim of the French Government:

• The government thought that the merger would result in a global giant with a market capitalization of around 55 billion dollars.
• The combination of Areva's nuclear power business and Alstom would establish a bigger power generating plant.
• Through the merger, the French government would be able to retain the country's position in the energy and power sector across the world.

Terms and Conditions:

• The government would be holding a controlling stake in the newly formed company.
• The Chief Executive Director of Alstom would be given the leadership of the new company.
• The Chief Executive Director of Areva, who had been trying to privatize the organization as an integrated nuclear group for a long time, would loose the chair.
• Siemens is likely to keep its 34% stake on Areva's power-plant construction service.