REFILE-FACTBOX-Possible buyers for Areva T&D division

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July 8 (Reuters) - French state-owned nuclear technology group Areva SA (CEPFi.PA) has decided to sell its power transport and distribution division (T&D) as part of a financing package for its ambitious growth plans. [ID:nLU456060]

A number of potential bidders have emerged for T&D, all French up to now. The unit is valued at an average of 3.7 billion euros ($5.2 billion) by five analysts polled by Reuters, although some have put the price as high as 5 billion.

Following is a summary of possible bidders:

ALSTOM SA (ALSO.PA)

Buying Areva's T&D activities would allow the French engineering group to boost its scale and diversify its business across cycles, but the market would keep a close eye on the terms of any deal, as well as any other acquisition projects.

Analysts expect Alstom to strengthen its presence in rail signalling, possibly looking at assets of France's Thales (TCFP.PA) or Italy's Ansaldo (STS.MI) of Finmeccanica (SIFI.MI).

"An acquisition like this (T&D) would allow Alstom to pad out its commercial offering and by extension its critical mass," said analyst Delphine Brault at brokerage Oddo.

She added it would balance out its exposure to different cycles and allow it benefit from expected strong growth in the sector in the medium- to long-term.

Brault said a buy of T&D would boost Alstom's revenue by 27 percent. Alstom sold the same unit to Areva in 2004 as part of conditions set by the European Commission for its approval of a 920 million euro ($1.3 billion) state-orchestrated rescue plan.

Alstom had cash reserves of almost 2 billion euros at the end of March and would need a capital increase of up to 1.5 billion euros to buy T&D. But some analysts think it should not pay more than 4 billion euros for T&D and reassure investors it can cope with an expected drop in order intake.

A buy could also represent a second prize for Alstom CEO Patrick Kron, who wanted a full merger with Areva, a scenario that is unlikely to come about in the short term.

SCHNEIDER ELECTRIC SA (SCHN.PA)

Buying T&D would be a growth opportunity for Schneider Electric but the French engineering group may need to launch a capital increase to finance an acquisition.

"For Schneider (as well as Alstom) it would be a way to change scale and dimension, diversify cycles and to respond to an increasingly systems-based approach to energy efficiency," said Oddo's Brault.

Buying Areva's T&D would allow Schneider, the world number one in low voltage, to take the top spot in the medium-voltage market, overtaking Switzerland's ABB AG (ABBN.VX), with a market share of around 20 percent.

Schneider had debts of some 4.5 billion euros at the end of 2008, giving a gearing ratio of 41 percent, which limits its room for manoeuvre. The company doubled in size between 2005 and 2008 through acquisitions but concentrated on energy management systems and sold its high-tension activities to its joint venture partner VA Tech of Austria, now part of Siemens AG (SIEGn.DE).

"The question is whether Schneider will want to sell on the high-tension activities," said a sector analyst, adding the high-tension business was a completely different business than the current core activities of Schneider.

INVESTMENT FUNDS

An acquisition by an investment fund looks less likely, according to several sources in the sector, but funds are studying the situation even though their access to bank finance may be constrained.

"We are interested in the operation and we are still studying ways to advance," Dominique Gaillard, a management board member of Axa Private Equity, told Reuters.

A fund would need to pay a large part of the deal in cash instead of debt, but with some expecting debt markets to re-open after 2010, a corporate lawyer said some funds might risk such a bet.

However, a sector specialist doubted a fund could offer a better price: "I do not see how a fund, in the current circumstances, can pay more than an industrial bidder who could realise cost advantages."

(Reporting by Benjamin Mallet, Gilles Guillaume, Julien Ponthus and Marie Maitre in Paris; Writing by Helen Massy-Beresford and Marcel Michelson; Editing by David Holmes)