PARIS—French state-controlled power utility
Eléctricité de France SA, or EDF, made a
preliminary offer for the reactor unit of nuclear-engineering firm
Areva SA of €2 billion ($2.2 billion) as part of the
latest attempt by the government to restructure the country's
nuclear industry.
EDF Chief Executive Jean-Bernard Levy said earlier this past
week that an offer would be forthcoming. The company made its
nonbinding bid to buy the nuclear-reactor unit of Areva on Friday,
a person close to the matter said. The amount will be negotiated
and increase, the person said.
The French utility has stepped in to take over some of Areva's
assets following requests from Economy Minister Emmanuel Macron.
Officials at both Areva and EDF have said the government will have
the ultimate say. More than 80% of the two companies' shares are
held by the government. French President François
Hollande will meet June 3 with Mr. Macron and other top officials
to discuss the issue.
The minister advocated a tie-up between the two companies after
Areva sank deeper into losses last year, dogged by a tough market
for nuclear reactors since the Fukushima disaster in Japan, poor
investment decisions over the past decade and cost overruns on two
projects in France and Finland. The initiative from the government
is the latest in a long effort to reorganize France's nuclear
sector, which has lost ground to competitors from Russia, South
Korea and the U.S.
Areva has booked four consecutive annual net losses, culminating
with a €4.8 billion loss last year.
The person close to the matter said EDF wants to avoid
liabilities with two Areva projects in Finland and in France, which
ran into cost overruns so wide they threatened the company's
survival. The French utility operates the world's largest fleet of
nuclear reactors and is one of Areva's largest customers.
The preliminary offer is lower than what some analysts had
expected.
Analyst Pierre Boucheny at brokerage Kepler Cheuvreux estimates
earnings before interest, taxes, depreciation and amortization on
Areva's reactor construction and servicing business amounted to a
loss of about €1 billion over the past five years. The
nuclear-fuel manufacturing business has been slightly profitable
over the period, he said.
Mr. Boucheny estimates the reactor unit might be worth between
€3.5 billion and €4 billion given the unit's
outlook and the fact EDF wouldn't take on liabilities related to
the nuclear reactor being built in Finland.
The other large French power utility, Engie, formerly known as
GDF Suez, is also interested in some of Areva's assets. Its chief
executive, Gerard Mestrallet, said his company might be interested
in taking a stake in Areva's nuclear-reactor servicing unit.
Write to Inti Landauro at inti.landauro@wsj.com
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