EUR 850.00 For Business Accounts Only

Morningstar | Alstom Company Report

In 2015, Alstom sold its energy business to General Electric, which also has stakes in three joint ventures. As result of the deal, Alstom’s financial flexibility increased tremendously, opening the door for targeted investments in the railway equipment, signaling, and solution business. Formidable positions in the rail space, especially in the high-speed rolling stock market, make Alstom a primary beneficiary of global infrastructure stimulus plans. Economic and demographic growth in emerging countries creates a growing demand for infrastructure, trains, and signaling in these countries. But Alstom’s product offering is also well suited to participate in projects aimed at updating and modernising existing infrastructure in mature markets.Alstom’s solid safety record with limited accidents is an excellent selling point, and the firm’s products and services are well integrated into the daily operations of railway owners. However, these two barriers--knowledge and reputation--will not prevent Asian players from winning big contracts and gaining market share. The Alstom-Siemens mobility merger to create the second-largest manufacturer of rolling stock to cope with increasing competition out of China, announced end September 2017, was the trigger to exercise the joint-venture put options and collect the control premium for the JV energy assets. The shareholder-friendly options terms, especially in the context of contracting energy businesses, stemmed from the historical battle between GE and Siemens for Alstom's power business and the significant interest that France has in the firm, resulting in taxing negotiations that ultimately worked to shareholders' advantage. Alstom had to carve out strategic French assets in 2015 (by putting assets in a separate JV, which now--approximately three years later--will be 100% controlled by GE), indicating that the firm’s merger and acquisitions flexibility is limited due to some unpredictable French governmental influence.