Alstom closer to sale of its NZ rail arm

Australian engineering and construction company United Group is in exclusive talks to buy the Australia and New Zealand transport arm of French heavy engineering group Alstom, having pushed aside Transfield Services and Downer EDI.

Alstom services and maintains Toll New Zealand's trains. Analysts estimate that the business could fetch up to A$400 million ($432 million).

United Group, which is listed on the Australian Stock Exchange, said it was about to enter final due diligence with Alstom to possibly buy its transport operations in Australia and New Zealand.

"No definitive agreement has been reached and United Group will advise the market of any material developments," the company said yesterday.

Toll New Zealand effectively has sign-off rights to the sale of the New Zealand assets and can revoke its contract if it does not like the new owner.

"Toll has the ability to say, 'Sorry, we don't like who is buying you,"' Alstom's New Zealand chief, Mike Yeoman, said last year.

A Toll spokeswoman yesterday said the company had nothing to say on the United Group development.

Alstom put the transport business, which includes rail maintenance, train manufacturing and maintenance and road infrastructure, up for sale last year to meet conditions imposed in a French Government-backed plan to rescue the company.

Alstom's spokeswoman declined to comment immediately on the final bidder, but said last week that Alstom was considering three bids.

The bulk of the business is in Australia, where Alstom's activities include making and maintaining trains.

The company's New Zealand website says it maintains, services and overhauls Toll's fleet of mainline diesel-electric, electric and shunt locomotives and diesel multiple units.

It also inspects and maintains about 4200 flat-container, box and specialist freight wagons for Toll and provides an asset management service.

Downer EDI confirmed yesterday that it had dropped out of the race.

Transfield Service said last year that it was interested in looking at the Alstom arm, but has not commented on whether it was the third bidder.

United Group last traded unchanged at A$6.18. Transfield rose 0.3 per cent to A$6.95, while Downer EDI rose 0.6 per cent to A$4.95 in line with the broader market.