EU Gives Seal of Approval for EDF AREVA Nuclear Takeover

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Commission (EC) has approved the proposed 2.7 billion-euro ($2.96 billion) takeover of AREVA's (EPA:AREVA) (Paris, France) struggling nuclear business by leading French energy company Électricité de France SA (EPA:EDF) (Paris, France).

The deal, which was first announced in the summer of 2015, was designed to help save the struggling French engineering giant. It was fully supported by the French government, which controls 87% of AREVA and 84% of EDF. Both companies are critical to France's energy security, as nuclear power supplies around 75% of the country's total electricity. For additional information, see August 4, 2015, article - EDF to Take AREVA's Nuclear Business in $2.96 Billion Deal.

The Commission stated that the deal would not raise competition concerns. EDF, the largest operator of nuclear power plants in the European Union (EU), plans to take a stake of between 51% and 75% in AREVA's nuclear business, known as New NP, which designs and supplies nuclear reactors and equipment, fuel assemblies, control systems and services.

"Considering the vertical relationships between the two companies, the Commission has concluded that the proposed takeover is unlikely to cause competition issues," it said. "As regards the market for the design and construction of new reactors, the Commission has concluded that EDF and New NP would not be in a position to push out their competitors because of the different market characteristics and the number of suppliers and also the number of nuclear plants not operated by EDF."

It also concluded that in the case of the markets for services to existing plants and for instrumentation and control systems, New NP "has every interest in proposing high-quality products and services to as many potential customers as possible." That was illustrated by Industrial Info last year when AREVA landed contracts worth 5 billion euro ($5.6 billion) at the Hinkley Point C nuclear power plant project in the U.K. For additional information, see October 11, 2016, article - AREVA Lands Contracts Worth $5.6 Billion for U.K. Nuclear Project.

Last month, EDF's Board of Directors approved the creation of EDVANCE, the company that will comprise the nuclear businesses of EDF and AREVA. It called the merger "a significant milestone in the reconstruction of the French nuclear industry." EDVANCE will be in charge of the basic design and implementation (studies, procurement support, assembly and commissioning) for projects involving nuclear islands and control systems for new reactors being built in France and around the world.

"With the creation of EDVANCE, we are taking a major step forward in the reconstruction of the French nuclear industry," commented Jean-Bernard Lévy, EDF Group's Chairman and Chief Executive Officer. "This company brings together the expertise of EDF and Areva NP under one roof, so they can design and build nuclear islands for power plants. This combining of forces will help our industry work better and more efficiently when it comes to building new nuclear plants, thus making sure it is more competitive domestically and on international markets."

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