samedi 23 mai 2015

EDF bid on Areva reactor division

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EDF offers €2 billion for Areva nuclear division



JUST NEW - Friday, EDF CEO, Jean Bernard Levy sent his bid to Areva directors, namely Philippe Varin and Philippe Knoche, about the buy-out of Areva nuclear division (namely Areva NP, former Framatome), as expected. According to our information, this offer amounts to some €2 billion, after deduction of liabilities. More precisely, this amount is calculated on the EBITDA multiplied by a 7,5 ratio, of the activity, based on the perimeter and on the restructuring which will be set up. « That’s an indicative offer, which shall be followed by a set of diligences, before being modified to become a definitive bid, to be linked to suspensive conditions possibly », said a source close to the negotiation. « At that point, EDF offer covers around a third of Areva financing needs, which amount to some €7 billion », the source adds.

During his statements made this week, Jean Bernard Levy hammered it clearly. Even if EDF bid answers to a State’s request, EDF main shareholder, this offer shall be industrially based and shall focus on activities, in which EDF owns a real know-how. As such, the activity in view counts three divisions : services to the installed base, fuel assembling and equipment manufacturing, all three divisions amounting to 15,000 jobs. EDF intends to avoid the risks linked to Areva past operations. For instance, the Finland EPR (known as OL3) agreement would be kept out of this possible perimeter, as heavy losses are recorded and as an arbitration proceedings is pending between Areva-Siemens and TVO, their customer. Friday afternoon, when attending a meeting with the trade-unions, Emmanuel Macron (Minister of Economy) raised some ideas about a possible warranty awarded by the State on OL3. Moreover, EDF hopes too that the uncertainties linked to the Flamanville EPR tank damage, detected by the authority of nuclear safety several weeks ago, would be lifted before the possible negotiation closing.

The activities so targeted would be organized within an autonomous structure, with skilled managers, and would be detained by EDF as the main shareholder, with some external partners for the remaining stake. « EDF has already been approached by French companies, interested in taking a stake in the structure », a source says. When the company thus incorporated would be enough mature, it would be listed on Paris Stock Exchange.

 EDF offer includes reactor engineering and conception. The corresponding working force, namely 1,200 engineers, would be integrated in EDF teams.

According to our information, the power operator intends to finance its share in this investment by a transfer programme. Indeed the company sticks to its target, namely generating a free positive cash flow after dividend deduction in 2018.

Whereas Areva management did not show any enthusiasm for this offer, Emmanuel Macron, the Minister of Economy, did not give any precise agenda to the trade unions this afternoon. The State shall take a decision « up to summer », he indicated. A meeting focusing on Areva future shall be convened at Elysées Palace on June, 3rd, but it won’t be decisive.

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