B&W to acquire Nuclear Fuel Services

12 August 2008

Babcock & Wilcox (B&W) has entered into a definitive agreement to acquire Nuclear Fuel Services (NFS), a provider of specialty nuclear fuels and related services, for an undisclosed sum.

NFS is involved in the conversion of US government stockpiles of weapons-grade highly enriched uranium (HEU) into commercial nuclear reactor fuel. The company also operates a fuel production facility to support the USA's fleet of nuclear-powered submarines and aircraft carriers. NFS owns and operates a nuclear fuel fabrication facility licensed by the US Nuclear Regulatory Commission (NRC) in Erwin Tennessee.

B&W - a subsidiary of engineering and construction company McDermott International Inc - said that the acquisition supports its strategic goal of being a leading provider of nuclear manufacturing and service businesses for government and commercial markets. The company intends to continue existing activities at NFS' facility in Erwin.

B&W works in advanced energy technology innovation and service, primarily in nuclear and fossil power. It has competed against NFS for Navy contracts. B&W's nuclear plant products include: heat exchangers; pressure vessels; pressurisers; reactor vessels and closure heads; steam generators; and used fuel dry storage containers. It is also involved in the military sector.

The purchase is contingent upon obtaining regulatory approvals and satisfying other closing conditions. The deal is expected to be completed by the end of 2008.

John Fees, CEO of B&W, commented, "NFS is a great addition to the B&W portfolio of businesses, complementing the products and services we currently provide." He added, "B&W and NFS have been major contributors in both the government and commercial nuclear industries for the past five decades. This acquisition better aligns both companies in delivering the future applications of nuclear energy."

Fees said: "The combined expertise resulting from this acquisition will enhance our opportunities for business growth and elevate our service to our customers. Moving forward, B&W's continuous improvement culture and proven safe conduct of operations will support and enhance NFS' regulatory performance initiatives."

In May 2007, the NRC disclosed that a serious spill of high-enriched uranium solution had occurred in March 2006 at NFS' facility at Erwin used to make nuclear fuel for naval reactors. No workers were injured in the incident, which was revealed in an NRC report to Vice President Dick Cheney, detailing events from FY2006 which commissioners considered to be significant from the standpoint of public health and safety.

In November 2007, B&W announced that it had reorganized its operations into four groups, including the newly-formed nuclear power subsidiary Babcock & Wilcox Nuclear Power Generation Group Inc (B&W NPG). The new subsidiary offers design engineering, manufacturing, field service and construction services worldwide. B&W also renamed its other major operating units: Babcock & Wilcox Power Generation Group Inc (B&W PGG); Babcock & Wilcox Technical Services Group Inc (B&W TSG); and Babcock & Wilcox Nuclear Operations Group Inc (B&W NOG).