EDF to Buy Majority Stake in Areva’s Nuclear Reactor Unit
PARIS—French state-controlled power utility Électricité de France SA on Thursday agreed to buy a majority stake in the nuclear reactor-making unit of Areva SA as part of a broader plan to rescue the beleaguered nuclear supplier.
EDF will buy at least 51% of Areva NP, as the unit is called, in a transaction that values the whole unit at €2.7 billion ($3.0 billion), while Areva will keep a maximum of 25%, and both companies will seek potential partners to invest in the rest of the unit, EDF Chief Executive Jean-Bernard Lévy said.
“If we don’t find other partners we could end up with 75%, but we think that after preliminary contacts we had and after potential partners have shown interest and Areva NP is a wonderful company…we think we will reach a tripartite situation,” Mr. Lévy said. He declined to identify any potential partners.
Areva’s chairman, Philippe Varin, recently said Chinese investors were an option.
The creation of a joint venture between EDF and Areva is part of a broader plan by the government, which controls more than 85% of both firms, to save an industry that was once the pride of France. In recent years, Areva has lost ground to competitors from Russia, South Korea and the U.S. while demand for new nuclear reactors has plummeted.
The company has lost money for the past four years, dogged by a tough market for nuclear reactors since the Fukushima disaster in Japan in 2011, poor investment decisions over the past decade and cost overruns on two projects in France and Finland. Areva sank deeper into the red last year with a loss of €4.8 billion on sales of €8.3 billion.
As part of the deal, EDF will make sure it won’t be exposed to any of the future liabilities that may be associated to the project in Finland.
The government will inject cash into Areva at a later stage, the nuclear firm said in a separate statement. Areva said it needs as much as €7 billion to get back on its feet.
The state-controlled nuclear reactor firm said it would raise €400 million from the sale of other assets and €1.2 billion in new financing.
Areva’s financial needs may rise further after the company posted Thursday a net loss for the first half of this year of €206 million on revenue of €1.93 billion.
EDF, meanwhile, said its net income dropped slightly to €2.51 billion, while overall revenue rose 6.3% to €38.40 billion.
Source: The Wall Street Journal
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