By Inti Landauro
PARIS--French state-controlled power utility Eléctricité de France SA (EDF.FR) Wednesday signed an agreement to buy the nuclear reactor unit of Areva as part of a rescue package for the beleaguered engineering group agreed earlier this year.
EDF will buy as much as 75% in Areva NP, as the unit is known, in a deal that values it at 2.5 billion euros ($2.68 billion). EDF plans to sell a 24% stake to other investors in the future.
The deal excludes a series of potential liabilities related to the nuclear reactor manufacturing unit, such as potential losses related to the constructionof a reactor in Finland and possible losses related to deficient components made at the Le Creusot plant. Those potential liabiliies will remain in Areva.
The takeover is part of a EUR8 billion plan to rescue Areva after five years of consecutive losses.
In recent years, Areva has lost ground to competitors from Russia, South Korea and the U.S., while demand for new nuclear reactors has plummeted following the Fukushima nuclear disaster in Japan in 2011
The government, which owns around 85% in Areva, will inject EUR5 billion in different parts of the company. Areva will seek to raise EUR2.9 billion from the sale of units that make nuclear-submarine engines, wind turbines and nuclear reactors for research, after the sale of a majority stake of Areva NP to EDF.
The sale to EDF of Areva NP is expected to be effective in the second half of 2017 and hinges on the results of investigations carried out by the French regulator on the construction of a new reactor in Flamanville and on Areva's steel mills.
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(END) Dow Jones Newswires
November 16, 2016 04:59 ET (09:59 GMT)
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