Cameco partners with Brookfield in acquisition of Westinghouse Electric

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By Imelda Cotton - 

Canadian uranium giant Cameco Corporation (TSX: CCJ) and clean energy investor Brookfield Renewable Partners (TSX: BEPC) have announced they will join forces on the acquisition of global nuclear services business Westinghouse Electric Company.

The acquisition gives Westinghouse a total enterprise value of almost US$8 billion.

Under the arrangement, Cameco’s expertise in the nuclear industry is combined with Brookfield’s skills in clean energy to create what has been labelled as a “powerful platform” for strategic growth across the nuclear sector.

Brookfield expects to invest approximately US$750 million to acquire a 17% interest in Westinghouse, funded through initiatives including asset level up financings and asset recycling.

Cameco said it would pursue a permanent financing mix of capital sources (including cash, debt and equity) to fund its part of the transaction, designed to preserve the company’s balance sheet and ratings strength while maintaining its liquidity.

At the close of the acquisition, Brookfield and its institutional partners will own a 51% interest in Westinghouse, while Cameco will assume the remaining 49%.

The existing debt structure owned by Westinghouse will remain in place, leaving an estimated US$4.5 billion equity cost which will be shared proportionately between Brookfield and its institutional partners (approximately US$2.3 billion) and Cameco (US$2.2 billion).

Net zero emissions

Westinghouse services half the world’s nuclear power generation sector and is the original equipment manufacturer for more than half of its nuclear reactor fleet.

Cameco chief executive officer Tim Gitzel said buying the company would give more direct access to customers chasing nuclear power and net zero emissions.

“We like to think of ourselves as more than just mining and this is an extension of that,” he said.

“We know what [Westinghouse] does, and its business is very complementary to what we do.”

The acquisition is expected to align Cameco’s uranium production and fuel services expertise with Westinghouse’s downstream capabilities to offer a highly-competitive nuclear fuel solution for existing and new customers.

This could include offering more efficient access to fuel supplies sourced in North America and Europe.

Mr Gitzel said the purchase would create a “platform for growth” across the nuclear value chain.

Westinghouse bankruptcy

Westinghouse fell into bankruptcy in 2017 due to billions in cost overruns on four nuclear reactor development projects across the US.

The runaway costs threatened the viability of Japanese parent company Toshiba Corp and in 2018, Toshiba divested the company to Brookfield Business Partners (BNP) for US$4.6 billion.

BNP is the industrials and services unit of Brookfield Asset Management, which owns 60% of Brookfield Renewable Partners.

BNP overhauled the Westinghouse management team and repositioned the business by strengthening its organisational structure, refocusing product and service offerings, optimising the global supply chain and investing in new technology.

Westinghouse’s profitability is believed to have nearly doubled under BNP’s ownership.

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