Siemens to pull out of Areva nuclear venture

By Peggy Hollinger in Paris and Daniel Schäfer in Frankfurt
Published: January 23 2009 11:02

Siemens, Europe’s largest engineering group, 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 state-owned Areva earlier this week 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, people close to the situation said.
Siemens’ management decided to back out after it became clear that the French would not allow it to lift the stake to 50 per cent.
Siemens felt the current shareholding gave it insufficient say in the company’s strategic development, in a market it deemed to be of growing importance for its sprawling energy sector.
Areva would not comment, and Siemens would only say that the subject would be discussed at a special supervisory board meeting on Monday.
The exact terms of the sale would still have to be negotiated. The stake is valued at €2.1bn ($2.7bn), according to French newspaper Les Echos.
Although Areva has three years to buy the stake from Siemens, this could happen as early as this year.
People close to the subject said this made it almost certain that the government would open up Areva’s capital in the coming months.
A sale would enable Siemens to follow other options to become a full-range supplier in the fast-growing market.
Siemens’ departure from the joint venture is likely to be viewed with relief inside the presidential Elysée Palace, as it lifts a significant obstacle to its hopes for a new French energy champion.
At one stage the government had considered a merger with turbine maker Alstom, but this was considered unworkable as long as rival Siemens was Areva’s joint venture partner.
Angela Merkel, German chancellor, had told Nicolas Sarkozy, French president, in 2007 she objected to any attempt to force Siemens out.
Since Mr Sarkozy’s election in May 2007, the government was also 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.
However, the question of how Areva will finance its investment needs – €14bn in the next four years – remains pressing.
One government official told the Financial Times that although no decision on Areva’s future was imminent, the moment was “approaching”.
Anne Lauvergeon, chief executive, has always favoured a partial privatisation, and been fiercely opposed to any merger with Alstom.
Copyright The Financial Times Limited 2009