Bloomberg News

Alstom Won’t Harm Shareholders With Risky Deals, CEO Says

March 15, 2012

Alstom SA (ALO) Chief Executive Officer Patrick Kron discredited reports about acquisition plans to bulk up in wind power, describing recent newspaper articles as speculation and saying he won’t sell shares in “unfavorable conditions” to fund a deal.

“I have repeatedly stated that I will not harm our shareholders through adventurous deals which would imply raising equity in unfavorable conditions,” Kron said at an analyst meeting near Paris today.

At the gathering, Kron opened his remarks by downplaying a Financial Times Deutschland report that Alstom, which lags the top 10 global suppliers of wind turbines, may weigh an offer for Suzlon Energy Ltd. (SUEL)’s German wind power unit. The newspaper said March 13 that Suzlon may be willing to sell its Repower Systems SE division for 1.5 billion euros ($2 billion).

“Suzlon denied, qualifying the press report as speculation,” Kron said. “That closes the issue.”

The French maker of power equipment and trains may also be interested in Vestas Wind Systems A/S (VWS) and Gamesa Corp. Tecnologica SA, Les Echos reported today.

“There is nothing more to report on Repower than on Vestas, Gamesa, Nordex and a number of others,” according to Kron. “We will look at opportunities in wind, in renewables in general, in signaling, in smart grid, etc.”

Wind-Farm Boom

The “rumors” on Gamesa and Repower were kindled by “agitations by banks,” Kron said. “I’m expecting some more on other companies in the future,” he told reporters and analysts.

The company aims to develop its product range and geographical reach in wind power, he said.

“Any acquisition of Repower’s size would likely require a rights issue, equivalent to 10 percent to 15 percent of Alstom’s market capitalization,” Gael de Bray, an analyst at Societe Generale in Paris, said in a research note today.

A half-decade boom in wind-farm installations in the U.S., Europe and Asia fueled competition among turbine makers, forcing them to cut prices when the machines flooded the market. Vestas, the Danish company that ranks as the world’s biggest producer, and Suzlon reported wider-than-expected losses last month.

“The wind industry today is characterized by excess capacity, pricing pressure and the emergence of new low-cost competitors, so we fear that such a deal could eventually further add to Alstom’s existing issues,” De Bray wrote.

Kron said in January that he wants the company, 31 percent- owned by Bouygues SA, to be “cash neutral” at the top of the industry’s cycle. Alstom’s net debt climbed to 2.75 billion euros at the end of September, up from 1.47 billion euros a year earlier, as sales fell and spending increased to start new plants and partnerships in Russia and India.

To contact the reporter on this story: Francois de Beaupuy in Paris at

To contact the editor responsible for this story: Benedikt Kammel at

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