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Investing in Energy: Power Company Breaking to New Highs
Alstom (ALO:Paris) just received a $190 million order for four 1,000-MW generator sets for the Hongyanhe nuclear station in the Liaoning province. These are four of six steam turbine generator sets the station needs in order to become operational by 2012, and the full project will cost around $6.5 billion.
Alstom is one of the world’s top nuclear steam-turbine-generator suppliers, and the Chinese nuclear market is the largest in the world: China has aspirations of building 40 new nuclear reactors by 2020. Total investments in this industry expected to reach $53.7 billion and a total installed capacity of 36,000-40,000 MW.
Of course, this French company also competes with another well-known French nuclear company, Areva (CEI:Paris).
Investing in Nuclear Energy: Power Company Breaking to New Highs
And in past years, Alstom expressed interest in merging with Areva. Though the talks were unsuccessful, a merger between the two would benefit several large shareholders, like Bouygues (EN:Paris), Electricite de France, and Siemens (SI:NYSE) (SIE:XETRA).
But just last week, interest in the two was renewed by new merger talks. Neither company has commented specifically on any possible deal, but the French government (which holds an 80% stake in Areva) hired HSBC to explore a possible union between the two companies.
The combination of Areva and Alstom would create a $55 billion global power giant. The French government would retain an 18% stake in the new company. The rest would be offered to the public.
A merger would benefit Alstom the most, though, so keep an ear out for any news about further merger talks, and watch for another pop in Alstom’s share price.
S.R. Nunnally
Editor, Commodities & Resources Report
Taipan Financial News
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