EDF Moves to Rescue AREVA, Will Buy Majority of Nuclear Reactor Business
France’s state-owned utility EDF will snap up between 51% and 75% of troubled nuclear giant AREVA’s reactor business in a possible $2.96 billion deal.
While the French government owns about 87% of AREVA and 85% of EDF, the utility that operates the nation’s aging 58-reactor fleet, it has pledged to look at all options to overhaul AREVA. In a statement that followed signing of a memorandum of understanding (MoU) between the two companies on July 30, EDF said that the acquisition would improve critical activities for its existing fleet. EDF’s experience would meanwhile “improve the efficiency of [AREVA’s] engineering services, project management, and some manufacturing activities.”
“In accordance with the guidelines set by the French government, this new collaboration between EDF and AREVA forebodes an improved efficiency of our cooperation and increases the chances of success of our major international nuclear projects,” said EDF Chair and CEO Jean-Bernard Lévy. The companies will also focus on improving research and development, international sales of new reactors, and the storage of spent fuel, and dismantling, he said.
AREVA has been struggling financially for several years. Plagued by delays and cost overruns at the Olkiluoto 3 EPR project in Finland and at a research reactor construction project, and financially hemorrhaging from renewable energy contracts, it reported a $5.6 billion loss for 2014. On July 30, meanwhile, EDF reported its highest level of nuclear power generation in France for a first half of the year since 2011.
EDF said on July 30 the agreement provides for majority control (at least 51%) of AREVA, but it will consider potential participation of other minority partners. It will submit a binding offer in the fourth quarter of 2015 and possibly close the deal in early 2016.
The MoU will also see the companies set up a joint venture dedicated to “optimizing the design and management” of new reactor projects that will be held 80% by EDF and 20% by AREVA.
The purpose of this company is to “improve the preparation and management of projects as well as the export offering of the French industry,” said EDF. It will do this by improving the coordination of strategic marketing to draw up offers in the upstream project phase, by developing offers that are more competitive and adapted to client needs, and by harmonizing and expanding the range of reactors. “This company will form part of an integrated generator/supplier model, which has been tried and tested in several countries,” it said.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)