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Friday, January 23, 2009

Siemens to exit Areva NP


Siemens plans to pull out of Areva venture

FT.com / Companies / Utilities - Siemens plans to pull out of Areva venture

By Peggy Hollinger in Paris and Daniel Schäfer in Frankfurt

Published: January 23 2009 11:02 | Last updated: January 23 2009 11:02

Siemens plans to pull out of its nuclear joint venture with France’s Areva, in yet another blow to the often strained Franco-German attempts to build industrial partnerships.

The German conglomerate notified the state-owned Areva and French government officials two days ago of its intention to exercise its option to sell its 34 per cent stake in Areva NP, the nuclear engineering arm of the French group.

Siemens’ departure is likely to be viewed with a degree of relief inside the presidential Elysée Palace, as it lifts one significant obstacle to its hopes for a new French energy champion. At one stage, the government had considered merging Areva with French turbine maker Alstom, a direct competitor to Siemens, but this was considered unworkable under the status quo.

German Chancellor Angela Merkel had made clear to French President Nicolas Sarkozy back in 2007 her objections to any attempt to force Siemens out of Areva in order to enable a French solution.

Areva would not comment on Friday and Siemens would only say that the subject would be discussed at a supervisory board meeting on Monday.

But people close to the subject said the German group had become frustrated by the French government’s failure to decide on Areva’s future. Under a review that has been under way, on and off, since Mr Sarkozy’s election in May 2007, the government has also been looking at a capital increase with both French and foreign partners as well as a partial privatisation. Market conditions have ruled out the latter option and Paris has delayed any decision on a capital increase.

Siemens had wanted to swap its stake in the nuclear engineering subsidiary for a significant holding in the parent group, which has operations stretching from uranium mines to fuel reprocessing and waste management. Paris, however, has delayed any decision, and the global economic crisis may have encouraged the German group to pull out of this minority position.

According to the French financial daily Les Echos, the stake could be worth about €2bn.

The question of how Areva will finance its investments remains pressing. One government official told the Financial Times that though no decision on Areva’s future was imminent, the moment was “approaching”.

Areva has said it will need €14bn to meet its investment needs in the four years to 2012. Anne Lauvergeon, chief executive, has always favoured a partial privatisation, and has been fiercely opposed to any merger with Alstom. Siemens’ departure, however, weakens its defence against Alstom. Les Echos also reported that the group had approached oil services group Technip about a possible merger, but this was rejected by the government.

It is possible that Total, the oil group, already a 1 per cent shareholder, could form part of a French solution to Areva’s financing needs by increasing its holding. The oil major is keen to increase its knowledge of the nuclear industry and has a partnership with GdF-Suez, the French power group, to bid for nuclear contracts in Abu Dhabi.

On Thursday, Total said it would be prepared to take a minority stake alongside GdF-Suez in the next nuclear project in France – the country’s second EPR heavy duty reactor, designed by Areva – should its partner win the contract.

The government is expected to announce the winner in the coming weeks, and may even launch plans for a third project. EDF is lobbying hard to win the contract for building the first of the two new reactors, and reports suggest that the second will go to GdF-Suez.

Copyright The Financial Times Limited 2009

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