Westinghouse Electric Co. will acquire Rolls-Royce’s Civil Nuclear Systems and Services businesses in North America for an undisclosed amount under a “definitive agreement” announced on Sept. 26. 

The transaction, which is subject to customary closing conditions and regulatory approvals, will see Westinghouse absorb Rolls-Royce’s civil nuclear service businesses in the U.S. and Canada, along with sites at Mondragon, France, and Gateshead, UK, which are currently part of Rolls-Royce’s Power Systems business unit. 

The sale does not include the instrumentation and controls business based in Grenoble, France, but Rolls-Royce said in a statement that “remains under review.” It also does not include the company’s UK new build operations or small modular reactor activities. 

The merger will conjoin two of the most traditionally significant nuclear businesses in the U.S. and the UK and give the two industry giants more clout in the global nuclear power operating plant services sector. It could also substantially boost growth for Westinghouse, which emerged from bankruptcy in August 2018 as a Brookfield company. 

Rolls-Royce has been part of the UK’s nuclear industry for more than 60 years, starting from its involvement in the development and support of the nuclear steam raising plant for the UK Royal Navy’s nuclear submarine program, but it established its civil nuclear business only a decade ago—in July 2008—seeing opportunity in the global market for civil nuclear power. However, the company’s core businesses are today entrenched in civil aerospace; defense; design and research of aeronautical engines and gas turbines; and power systems—which includes the development and sales of reciprocating engines, power systems and nuclear systems for civil power generation. It says it serves 400 airlines, 160 armed forces, 70 navies, and 5,000 power and nuclear customers.

Today, the civil nuclear business, which brings in about 5% of the Power Systems division’s revenues, operates 11 sites in Canada, France, the UK, and the U.S., and has grown into a formidable provider of instrumentation and control systems; inspections, testing, and site services; plant automation and monitoring systems; and digital services. But according to the company’s Aug. 6–issued 2019 half-year results, revenues from its civil nuclear business fell 8% compared to the year before. 

While Rolls-Royce is generally profitable, in January 2018, it embarked on a restructuring program to identify changes and sustain its momentum. The sale of its North American civil nuclear services businesses—a division that reported revenues of $70 million and has more than 500 employees—follows a “review of options for the businesses and continues our drive to simplify the Group and focus on meeting the vital power needs of our customers,” the company said. 

“Our North America services business offers great opportunities for Westinghouse as a leading player in the nuclear energy industry,” said Rolls-Royce CEO Warren East. “We believe this transaction represents the best outcome for this part of our civil nuclear operations and its people.”

Westinghouse, which supplied the first pressurized water reactor at Shippingport, Pennsylvania, in 1957, filed for Chapter 11 bankruptcy protection with U.S. courts in March 2017 to enable it to undergo strategic restructuring as a result of financial and construction challenges in its U.S. AP1000 power plant projects. It was acquired by Brookfield from Toshiba in January 2018, and has since sought ways to reestablish its presence in the nuclear sector.

The acquisition of Rolls-Royce would create customer value and support customer operations, said Patrick Fragman, Westinghouse president and CEO on Thursday. “Acquiring Rolls-Royce will strengthen our ability to serve the nuclear operating fleet through an expanded presence in our core business while adding new digital offerings,” he said. “This acquisition is an important step in our growth strategy.”

In a statement, Westinghouse noted that combining Westinghouse’s and Rolls-Royce’s global customer base would enhance customer offerings and experience in field services and plant automation. It would also “enhance the company’s digital innovation efforts to optimize customer planning and maintenance, and provide engineering solutions to maximize cost effectiveness and obsolescence risk.”

Sonal Patel is a POWER senior associate editor (@sonalcpatel, @POWERmagazine)

Updated (Sept. 27): Adds details and clarification from Rolls-Royce.