By Inti Landauro And Nadya Masidlover
PARIS--French state-controlled power utility Eléctricité de
France SA is planning to make an offer for the reactor unit of
nuclear engineering firm Areva SA, as the government seeks to
reorganize France's nuclear sector.
Following requests from Economy Minister Emmanuel Macron, EDF
Chief Executive Jean-Bernard Lévy on Tuesday said the company,
which operates 58 French reactors, plans to make an offer in the
coming days.
Mr. Lévy said an offer would be made at "a fair price, a market
price," but he didn't elaborate further.
Areva's management will evaluate the offer, but the government
will have the ultimate say, said Philippe Varin, the company's
chairman and EDF board member.
"It is the state, as the controlling shareholder of both
companies, that must decide on the matter, and it has said it would
do so before the summer," Mr. Varin told reporters on the sidelines
of EDF's annual shareholders meeting on Tuesday.
The government owns more than 85% of both EDF and Areva.
As Areva plunged deep into the red last year, dogged by an
adverse market for nuclear reactors since the Fukushima disaster,
poor investment decisions and cost overruns on two projects in
France and Finland, Mr. Macron decided to push for a tie-up with
EDF.
The French utility operates the world's largest fleet of nuclear
reactors and is one of Areva's largest customers.
After posting a EUR4.8 billion loss in 2014, Areva has embarked
in an aggressive cost-cutting effort that includes between 5,000
and 6,000 job cuts.
The initiative from the government is just the latest in a
long-standing effort to reorganize France's nuclear sector, which
has lost ground against competitors from Russia, South Korea or the
U.S.
The government has asked top executives at both companies to
make proposals, and will make a decision based on the outlook for
the nuclear industry in the long term, said an aide to Mr.
Macron.
The valuation of the Areva unit, which represents about 40% of
the company's revenue, still has to be determined both Mr. Varin
and Mr. Lévy said Tuesday.
Even though Areva owns and operates factories with one of the
most advanced technology in the world, its nuclear reactor
business, called Areva NP, has posted losses over the past four
years.
Analyst Pierre Boucheny at brokerage Kepler Cheuvreux estimates
the unit made a negative EBITDA on its reactor construction and
servicing business of about EUR1 billion ($1.11 billion) over the
past five years. The nuclear fuel manufacturing has been slightly
profitable over the period, he said.
Mr. Boucheny estimates the unit might be worth between EUR3.5
billion and EUR4 billion given its outlook and the fact that EDF
wouldn't take the liabilities related to the nuclear reactor being
built in Finland.
French utility Engie, formerly known as GDF Suez, also has said
that parts of Areva looked attractive and could take part in the
process. The utility is also an Areva customer.
Mr. Varin said Areva is talking with other potential
partners.
He said the solution must make industrial sense and allow Areva
to remain a "robust actor" in the industry.
Areva is holding on Thursday its annual shareholders meeting,
and on June 3 President François Hollande is expected to meet with
Mr. Macron and other officials to discuss the Areva situation.
Write to Inti Landauro at inti.landauro@wsj.com and Nadya
Masidlover at nadya.masidlover@wsj.com
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