Acquisition project of Areva Transmission & Distribution
Press conference
2 December 2009
All forward-looking statements are Alstom and Schneider Electric
management’s present expectations of future events and are
subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described
in the forward-looking statements.
Disclaimer
3Press Conference - Alstom / Schneider Electric – 2 December 2009 3
Introduction04
33 Conclusion
13 Schneider Electric & Areva D
20 Alstom & Areva T
29 Social commitments
4Press Conference - Alstom / Schneider Electric – 2 December 2009 4
Introduction04
33 Conclusion
13 Schneider Electric & Areva D
20 Alstom & Areva T
29 Social commitments
5Press Conference - Alstom / Schneider Electric – 2 December 2009 5
The electrical industry is transforming
Production Transmission Distribution Consumption
► Environmental pressure► Decentralized renewable energies► Deregulation► Interconnections► Supply demand response► Energy efficiency► Electric vehicles
Production Transmission Distribution Consumption
6Press Conference - Alstom / Schneider Electric – 2 December 2009 6
Consumers
EnR Storage Backup
The smart grid is changing all stages of the electrical value chain
Centralised Generation
DistributionTransmissionTransport
Residential
Commercial
Industry
Smart & flexible transmission network
1
2
3 Distribution and consumption:energy efficient, communicating, electricity intensive
Communication and software at all levels“Smart Grid”
4Renewable Energies Decentralized and irregular
7Press Conference - Alstom / Schneider Electric – 2 December 2009 7
Two poles of specialization, with two different sets of dynamics
Renew-able
On-siteStorage
BackupPowerCentralized Generation
Transportation
Residential
Commercial
Industrial
• Global and regional players
• Equipment and product sale
• Multi-clients
• Major global players
• Large projects
• Focused on utilities
Production Transmission Distribution Consumption
8Press Conference - Alstom / Schneider Electric – 2 December 2009 8
Production Transmission Distribution Consumption
The offer by the consortium would lead to the creation of two global specialists
2008 proforma sales 2008 proforma sales
€22 Bn
AlstomPower
Areva T
>€11 Bn €3.3 Bn
€20 Bn
Areva DSchneider
ElectricMV / LV
€1.7 Bn >€10 Bn
Upstream Specialist Downstream Specialist
9Press Conference - Alstom / Schneider Electric – 2 December 2009 9
We would maintain and develop the synergies between transmission and distribution
• Commercial agreement between Alstom and Schneider Electric to develop the current flows (<€200M)
• Common smart grid communication and software standards
• Joint R&D program on smart grid
€20 Billion€22 Billion
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We would create new synergies for transmission and distribution businesses
• Innovation by connectinggeneration and transmission
• €500m of transmission purchase by Alstom in 2008
• Innovation by connectingdistribution and consumption in real time
• €1bn of medium-low voltage packages in 2008
• Access to diffuse markets
• Critical size in medium voltage
€22 Billion €20 Billion
Strong capability for the smart grid
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A drastic increase of turnkey project capabilities
Areva T&Dproject sales
€ 1.6 bn
HV equipments
MV equipments
Utilities Transmission & DistributionUtilities Generation
HV equipments
Alstomproject sales
€ 4.5 bn
MVequipments
Turbines
Utilities Generation & Transmission
HV equipments
Alstomproject sales
€ 5.8 bn
MVequipments
Turbines
Utilities Distribution, Industry, Buildings
Schneider Electricproject sales
€ 2.0 bn
MV equipments
Utilities Distribution, Industry, Buildings
Schneider Electricproject sales
€ 2.3 bn
MV equipments
12Press Conference - Alstom / Schneider Electric – 2 December 2009 12
Value of the transaction
Enterprise value
PensionsNet debtas at
30.06.2009
Equity valuecommitted
to Areva
~ €400m
€1,053m
€2,290m
• 2008 EBITDA of €587m of which minorities of ~€50m (8%)
• Alstom share ~2/3• Schneider Electric share ~1/3• Final share of each partner to
be adjusted on the basis of the respective EBITDA of the T and D businesses
• Multiple of ~8x 2009(e) EBITDA *
~ €200m
Minorities
Cash impact
* Alstom and Schneider Electric estimate
~ €3.3bn ~ €4,000m
13Press Conference - Alstom / Schneider Electric – 2 December 2009 13
Introduction04
33 Conclusion
13 Schneider Electric & Areva D
20 Alstom & Areva T
29 Social commitments
14Press Conference - Alstom / Schneider Electric – 2 December 2009 14
Areva Distribution: world #4 in medium voltage
~40 plants
Industrial and employee data
Operational figures for Areva Distribution are estimates subject to final adjustments
2006 2007 2008
Sales 2008 sales breakdown
MV distributionproducts
(incl. switchgears, transformers, substations)
Europe
North America
Asia-Pacific
Rest of world
Systems & services
€1.3bn€1.4bn
€1.7bn
Gridautomation
~11,000 employees
15Press Conference - Alstom / Schneider Electric – 2 December 2009 15
We would consolidate two complementary players in medium voltage…
MV switchgears & systems
Distribution Transformers
GridAutomation
Fill the gap with
no.1
Balance global
footprint
Complementarysmart
grid offerings
Combined sales~€ 4.6 bn
80 plants~ 22,000 employees
~45% in new economies
Extensive marketcoverage
Operational figures for Areva Distribution are estimates subject to final adjustments
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…with geographical fit in key markets and exceptional presence in new economies
Strong complementarities in new economies
Areva DSchneider Electric MV
ChinaIndiaBrazilRussiaMiddle East
Further reinforceour footprint in New Economies
Promising market trends in new economies
Industrial sites in new economiesAreva D (~20) + SE (~20) = ~40
Electrification and equipment needs
> 80% of global market growth in next ten years New economies ~43% ~47%
% of MV sales
Operational figures for Areva Distribution are estimates subject to final adjustments
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… as well as important complementarities of customer bases and technologies
Strong complementarities in technologiesStrong fit of customer bases
Areva DSchneider Electric MV
Electrical utilitiesElectro-intensive*IndustriesBuildings
Wider range of technologies Wider range of end-users
MV switchgear Areva D stronger in primary MVSchneider Electric stronger in secondary MV
Transformers Complementary footprint
Grid automation
Areva D substation automationcomplements Schneider Electricoffers in smart grid
* Notably Oil & Gas, MMM …
18Press Conference - Alstom / Schneider Electric – 2 December 2009 18
Creation of Energy: a new business with proforma sales of ~€4.6bn and 22,000 employees
Key market segments
Key product lines
• Utilities• Oil and gas
Areva D€ 1.7 bn
IT
Power
(MV +LV )
Buildings
IT
Power
Industry
Buildings
Energy
5 Businesses
critical power & cooling
LV Power
Industrial automation
Buildingautomation& security
MVdistribution
IS&C
Grid Automation
• Retail• Hotels• Hospitals• Offices
• Data centers• Bank / Insurance
• Residential• Marine
4 Businesses
€ 4.6 bn
Industry• OEMs • Water• Mining CST
19Press Conference - Alstom / Schneider Electric – 2 December 2009 19
Conclusion
Strong presence in fast growing new economies
Strong industrial rationale
A fruitful combination for the future between Areva D and
Schneider Electric
A perfect fit to our medium voltage business
A move supporting our solution approach to utilities and electro-intensive customers
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Introduction04
33 Conclusion
13 Schneider Electric & Areva D
20 Alstom & Areva T
29 Social commitments
21Press Conference - Alstom / Schneider Electric – 2 December 2009 21
Areva Transmission: a major step forward for Alstom’s growth
Alstom today : two Sectors Alstom tomorrow : a group based on three strong pillars
Sales: ~ €22 billionEmployees: ~ 100 000
Power Transport
Sales: ~ €19 billionEmployees: ~ 80 000
Stronger presence in Asia
•China: from 7000 to 10 000 employees
• India: from 4 000 to 6 500 employees
Strong technological base
•R&D spending grows to
~ €750 million
More balanced spread of activities
•Transmission: an activity combining projects and products; smaller projects; less cyclical
POWER TRANSPORT POWER TRANSPORTTRANSMISSION
22Press Conference - Alstom / Schneider Electric – 2 December 2009 22
2,42,9
3,4
-
1.0
2.0
3.0
4.0
2006 2007 2008
Sales and operating margin(in € billions)
Industrial and employee data21 000 employees65 sites
2008 sales breakdown (estimated)
Areva Transmission: World n°3 in high voltage
HV Products
Systems & Services
Grid automation
Europe
Asia-Pacific
Rest of the world
North America
23Press Conference - Alstom / Schneider Electric – 2 December 2009 23
Areva Transmission: a promising asset…
A sound long-term market
•Global population and economic growth
•Ageing installed base
•New equipment in emerging markets
•Energy efficiency and environmental regulations
A global player
•Present in 160 countries
•Leader in Europe
•Very well positioned in the Middle East
•Number 1 in India
Market leader
Gas insulated
switchgears (GIS)
Instrument transformers
Disconnectors(DSC)
Energy management
systems for the transmission grid
24Press Conference - Alstom / Schneider Electric – 2 December 2009 24
…that Alstom will develop in the future
Worldwide presence Customers
•Optimise utilities commercial base
•Develop the industrial customer base (aluminium…)
•Develop the commercial position in China
•Strengthen the presence in North America
Product and services offering
•Turnkey substations
•Power electronics HVDC/FACTS*
•Develop services and refurbishment (installed base and service network)
• High Voltage Direct Current - Flexible Alternative Current Transmission Systems
25Press Conference - Alstom / Schneider Electric – 2 December 2009 25
Technology leader strategy Priority development axes
• R&D projects and pilot installations
• Partnerships − Universities, laboratories− Start-up
• Acquisitions
Variable speed pump turbine
Energinet – management of renewables
Smart gridControl systems
Power electronics
Power management HVDC Point to point
Automation
Renewables
Shared ambitions
26Press Conference - Alstom / Schneider Electric – 2 December 2009 26
United KingdomSheringham Shoal
RussiaBogushany
IndonesiaPLN 10GW 150kV .
South KoreaKepco II HDVC
Qatar - Phase 8 Dubai - BarshaBahrain- Alba
LibyaSebha &Tobruk10 GIS stations
CanadaRiel substation
Areva TAlstom
Main projects
Shared competenciesExpertise in managing and controlling large integrated projects
27Press Conference - Alstom / Schneider Electric – 2 December 2009 27
Areva TAlstom
Tianjin, Wuhan – ChinaEnvironmental protection
systems,Hydropower turbines
Baroda, Chennai - IndiaTransformers, GIS
Circuit breakers
Elblag - Poland Foundry
Chattanooga – USASteam turbines,
Boilers
Gebze - TurkeyTransformers
Shanghai, Wuhan - ChinaTransformers, GIS
Main production centres
Areva TAlstom
Main investments
Shared competenciesA global and flexible industrial base close to key markets
28Press Conference - Alstom / Schneider Electric – 2 December 2009 28
Alstom Areva TInternational PowerConstellationHydro QuebecGeneral ElectricChevronCFEAlcan/Rio Tinto
Americas
Alstom Areva TEDFEndesaIberdrolaGDF SuezArevaE.ONVattenfallRWEBOTNational Grid
Europe
Alstom Areva TNTPCRelianceEVNMarubeniPower GridBabcock & BrownSGCCPLNCTGPCCGNPC
Asia / Pacific
Alstom Areva TEskomSECSonelgazGecolDEWAADWEA
Africa/Middle East
Main Alstom and Areva Transmission customers
√ √ √ √
√ √ √ √ √ √ √
√ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √
√
√ √
√ √
√ √
√
√
√
√ √ √ √ √ √ √ √
√ √
√ √
√ √
Shared customersA strengthened commercial base
29Press Conference - Alstom / Schneider Electric – 2 December 2009 29
Introduction04
33 Conclusion
13 Schneider Electric & Areva D
20 Alstom & Areva T
29 Social commitments
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Alstom & Schneider Electric, committed to corporate social responsibility
● A history of strong and shared company culture
● A continuous social dialogue supporting each company’s transformation
● Respect, diversity & development of people at the heart of human resources policies
Signatory of
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A transparent integration project for all Areva T&D employees
Willingness for dialogue and sharing with all employees
A transparent communication at each step
A rapid transition associatingT&D teams
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Solid social commitments for Areva T&D employees
● Integration of all T&D people● All Areva T&D people, either in Alstom or Schneider Electric● In Europe, if necessary, propose to the employees an equivalent
position in the same geographical area while maintaining their grade, seniority and remuneration
● In Europe, people and sites maintenance● No site closures, up until the beginning of 2013● No mass redundancy plan other than voluntary one, unless in
case of a significant downturn in the general economic conditions
●Continuity● Maintenance and development of social policies and practices
from Areva T&D
33Press Conference - Alstom / Schneider Electric – 2 December 2009 33
Introduction04
33 Conclusion
13 Schneider Electric & Areva D
20 Alstom & Areva T
29 Social commitments
34Press Conference - Alstom / Schneider Electric – 2 December 2009 34
The transaction timeline
Exclusivity period
Consultation of works’ councils Regulatory approvals
Acquisition of Areva T&Dthrough a common vehicle
Allocation of T to Alstomand D to Schneider
Announcement Signing Closing
Approval by Commission des Participations et des Transferts (CPT)
Areva T&D,Alstom & Schneider Electric
Creating two global leaders to tackle the new smart grid challenges