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Released May 28, 2015 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - An offer of 2 billion euro ($2.2 billion) has reportedly been made for the nuclear business of struggling French power engineering giant AREVA S.A. (EPA:CEI) (Paris, France) by French state-owned utility Electricite de France (EPA:EDF) (EDF) (Paris).
Although the exact value of the non-binding offer has not been officially confirmed, both companies are examining the possibility. A spokesman for AREVA told media: "We have received an indicative offer from EDF which is being examined", but refused to confirm the value.
The news comes just weeks after AREVA revealed that 6,000 jobs would have to go as a result of years of financial losses. It said that the company has to make immediate cost-saving measures to the tune of 1 billion euro ($1.1 billion) by 2017. For additional information, see May 18, 2015, article - Nuclear Engineering Giant AREVA to Shed 6,000 Jobs.
The French government owns the majority stake in both companies -- 87% of Areva and 84% of EDF -- so it will eventually decide the fate of any deal. For its 2014 financial year, AREVA turned in record losses of 4.8 billion euros ($5.4 billion) after absorbing costs and penalties related to chronic delays to its European Pressurized Reactor (EPR) nuclear projects in Finland and France.
EDF's Chief Executive Officer, Jean-Bernard Levy, is in favour of taking over Areva's reactor and maintenance division - Areva NP -- which currently employs approximately 15,000 people. Speaking to Le Figaro recently, he commented: "The more ambitious proposal from EDF will preserve the technical expertise of Areva's reactor business and create the possibility of partnerships with outside groups from France or elsewhere".
He added: "It is up to the state, which is the majority shareholder of EDF and Areva, to decide".
Levy said that any deal will have to include guarantees that EDF would not be liable for losses associated with costly overruns at the Olkiluoto 3 nuclear project in Finland, which will be nine years late when it is finally commissioned in 2018. The overruns have cost Areva billions of euro. For additional information, see September 5, 2014, article - Finland's New Nuclear Project Delayed.
The showcase EDF/Areva EPR project at Flamanville in France is running five years later than planned and is now expected to be commissioned in December 2017. Costs have rocketed to almost three times the original quote of 3.3 billion euro ($3.7 billion). For additional information, see December 1, 2014, article - No Start for Flamanville Nuclear Plant Until 2017.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
Although the exact value of the non-binding offer has not been officially confirmed, both companies are examining the possibility. A spokesman for AREVA told media: "We have received an indicative offer from EDF which is being examined", but refused to confirm the value.
The news comes just weeks after AREVA revealed that 6,000 jobs would have to go as a result of years of financial losses. It said that the company has to make immediate cost-saving measures to the tune of 1 billion euro ($1.1 billion) by 2017. For additional information, see May 18, 2015, article - Nuclear Engineering Giant AREVA to Shed 6,000 Jobs.
The French government owns the majority stake in both companies -- 87% of Areva and 84% of EDF -- so it will eventually decide the fate of any deal. For its 2014 financial year, AREVA turned in record losses of 4.8 billion euros ($5.4 billion) after absorbing costs and penalties related to chronic delays to its European Pressurized Reactor (EPR) nuclear projects in Finland and France.
EDF's Chief Executive Officer, Jean-Bernard Levy, is in favour of taking over Areva's reactor and maintenance division - Areva NP -- which currently employs approximately 15,000 people. Speaking to Le Figaro recently, he commented: "The more ambitious proposal from EDF will preserve the technical expertise of Areva's reactor business and create the possibility of partnerships with outside groups from France or elsewhere".
He added: "It is up to the state, which is the majority shareholder of EDF and Areva, to decide".
Levy said that any deal will have to include guarantees that EDF would not be liable for losses associated with costly overruns at the Olkiluoto 3 nuclear project in Finland, which will be nine years late when it is finally commissioned in 2018. The overruns have cost Areva billions of euro. For additional information, see September 5, 2014, article - Finland's New Nuclear Project Delayed.
The showcase EDF/Areva EPR project at Flamanville in France is running five years later than planned and is now expected to be commissioned in December 2017. Costs have rocketed to almost three times the original quote of 3.3 billion euro ($3.7 billion). For additional information, see December 1, 2014, article - No Start for Flamanville Nuclear Plant Until 2017.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
