Framatome and Siemens to merge

23 December 1999

In a further consolidation of the nuclear industry, Framatome and Siemens have announced a merger. A joint venture company integrating the nuclear businesses of both companies, with locations in France, Germany and the US, will be formed, probably by next autumn.

Framatome will hold a 66% stake, with Siemens holding the other 34%. This reflects the value of the assets each company currently holds. In 1999 Framatome will achieve sales of 2 billion euros in the nuclear technology field. In the last fiscal year, Siemens posted sales worth 1.1 billion euros. Framatome employs 9000 people in the nuclear business, Siemens 4100. The new company will be the largest in the nuclear field in the world, with a market share of 20.9%. The next largest company, BNFL - Westinghouse, has a market share of 17.5%.

The two companies are yet to discuss possible job losses. But Siemens’ spokesman Wolfgang Breyer said that although some synergies are likely, they may be counterbalanced by increasing market penetration, particularly in North America.

“Our presence in the North American services market is relatively small,” he said. “US plants are going for extensions to their operating lives and we have nuclear technologies to offer that we believe are on the leading edge. We think we can get a much larger slice of this business. Siemens has also had some success recently in the decontamination field.

“Any expansion in foreign markets increases activity at the central headquarters.” The merger follows last year’s purchase of Westinghouse by BNFL and American company Morrison Knudsen. Framatome’s close ties with Cogema means that the new company will, like BNFL – Westinghouse, be able to offer a full service portfolio, including reprocessing of spent fuel and MOX fuel fabrication.

“The European market is currently stagnating or regressing in terms of volume,” said a joint statement. “It is also characterised by increased pressure on prices from nuclear power plant operators as a result of deregulation of the power markets. Over the next decade Framatome and Siemens are, however, anticipating a resurgence in new construction business in Europe and the Americas, and want through intensified cooperation to secure their expertise in new plant construction and push ahead with further technical development.” The two companies have been cooperating since 1989 on the development of the European Pressurised Water Reactor (EPR) and following the merger efforts to bring the technology to market are likely to intensify.

There are also political benefits in a transnational company.

“By virtue of its international character, the joint venture will be less dependent on the political developments in individual countries,” said Siemens executive Norbert Konig.

The merger follows a major restructuring of Framatome in which Cogema took a 34% stake, the French government reduced its holding to 20%, CEA Industrie reduced its share to 20% while the Alcatel holding dropped to 10%, with an agreement that Alcatel would likely phase out its ownership entirely within the next two years.

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