EDF agrees to majority stake in Areva's reactor business

30 July 2015

EDF has agreed to take a stake of at least 51% in Areva's reactor business, according to a memorandum of understanding (MOU) signed by the two companies yesterday that sets out the principal terms and conditions of the plan.

The MOU provides for EDF to take a majority stake (at least 51%) in Areva NP, the company responsible for equipment and fuel manufacturing, as well as services for reactors. Areva will hold a stake of no more than 25%, allowing the potential participation of other minority partners.

EDF said, "This project enables to better secure the most critical activities of the Grand Carénage [life extension program] for the existing fleet in France, and to improve the efficiency of engineering services, project management, and some manufacturing activities through EDF's experience feedback."

New head for Areva NP

Areva announced today that Bernard Fontana has been appointed as president and CEO of Areva NP as of 1 September.

Since February 2012, Fontana has been CEO of Swiss cement company Holcim Limited, which completed a merger with France's Lafarge earlier this month. He previously worked for steel firm ArcelorMittal and French explosives company Groupe SNPE.

Referring to his appointment with Areva NP, he said, "My objective is to work, with the support of employees, to write a new chapter in the company's history."

The memorandum also seeks to establish a dedicated company - 80% owned by EDF and 20% owned by Areva - for the design, project management and marketing of new reactors. The aim of this company is to improve the preparation and management of projects, as well as the export offering of the French nuclear industry, EDF said. The new company will develop offers that are "more competitive and adapted to client needs, and by harmonizing and expanding the range of reactors". EDF said the new company would form part of an "integrated generator/supplier model, which has been tried and tested in several countries".

In addition, the MOU calls for Areva and EDF to "improve and develop the efficiency of their cooperation" in areas such as research and development, international sales of new reactors, used fuel storage and decommissioning.

The memorandum also provides that EDF, Areva NP and their subsidiaries "will be completely immunised" against any risks related to the construction of the Olkiluoto 3 (OL3) EPR in Finland.

Areva - which is 87% owned by the French state - and EDF have agreed on an indicative price of €2.7 billion ($3.0 billion) at the closing date.

EDF said a due diligence phase will begin in August so that it can submit a binding offer during the fourth quarter of 2015. The company said it would continue discussions with other potential partners before submitting a binding offer. Subject to regulatory approvals, the transaction is planned to be closed during the second half of 2016.

According to Areva, finalization of the transaction is, at EDF's request, subject to "the favourable outcome of verifications in progress concerning the compliance of the Flamanville 3 reactor vessel and the definition of procedures to protect EDF from any risk related to the OL3 project".

In March, Areva announced a two-part strategy to refocus on its core business of nuclear power and return to competitiveness, aiming to make savings of about €1 billion ($1.1 billion) over the next few years after a record loss in 2014 of €4.83 billion ($5.38 billion).

Researched and written
by World Nuclear News