Cameco and Brookfield Renewable to acquire Westinghouse

13 October 2022

Cameco Corporation and Brookfield Renewable Partners, together with its institutional partners (the consortium), are forming a strategic partnership to acquire Westinghouse Electric Company. Brookfield Renewable, with its institutional partners, will own a 51% interest in Westinghouse and Cameco will own 49%.

Bringing together Cameco’s expertise in the nuclear industry with Brookfield Renewable’s expertise in clean energy positions nuclear power at the heart of the energy transition and creates a powerful platform for strategic growth across the nuclear sector, a statement said.

The total enterprise value for Westinghouse is $7.875 billion. Westinghouse’s existing debt structure will remain in place, leaving an estimated $4.5 billion equity cost to the consortium, subject to closing adjustments. This equity cost will be shared proportionately between Brookfield and its institutional partners (approximately $2.3 billion) and Cameco (approximately $2.2 billion).

Brookfield Renewable is pursuing this opportunity through the Brookfield Global Transition Fund I (BGTF I), which is the largest fund in the world focused on the energy transition. Brookfield Renewable, which has significant available liquidity, expects to invest approximately $750 million to acquire an approximate 17% interest in Westinghouse, which will be funded through normal course funding initiatives, including asset level up-financings and asset recycling. Brookfield Renewable is among the world’s largest investors in clean energy and transition assets, with approximately 125,000MWe of operating and development capacity worldwide.

Cameco currently has available liquidity and committed financing facilities for the purposes of supporting the transaction to acquire a 49% share in Westinghouse. However, Cameco will be pursuing a permanent financing mix of capital sources (cash, debt and equity), designed to preserve the company’s balance sheet and ratings strength while maintaining its liquidity, prior to closing.

Cameco is also one of the largest global suppliers of uranium fuel for nuclear energy, with extensive uranium mining and milling operations, as well as refining and conversion facilities and Candu fuel fabrication for heavy water reactors.

Westinghouse services about half the nuclear power generation sector and is the original equipment manufacturer to more than half the global nuclear reactor fleet. The company has a specialised workforce of roughly 9,000 employees. Cameco said approximately 85% of Westinghouse’s revenue has come from long-term contracted or highly recurring customer service provision with a nearly 100% customer retention rate given its comprehensive services offerings and position as an original equipment manufacturer, providing stability in all macroeconomic environments.

“With strong growth projected in the nuclear energy market, Westinghouse is well positioned to increase business in its core fuel and services segments, execute on the growing pipeline for extending and uprating nuclear power plants, and service the rising demand for new utility-scale and modular baseload nuclear power generation,”

Cameco and Brookfield Renewable say they are well placed to build a global player in the clean-energy transition. The acquisition is expected to align Cameco’s uranium production and fuel services capabilities with Westinghouse’s downstream capabilities to potentially offer utilities a highly competitive nuclear fuel solution to deliver value for existing and new customers. “This could include offering customers more efficient access to fuel supplies sourced in North America and Europe.”

Tim Gitzel, President and CEO of Cameco, said: “We’re witnessing some of the best market fundamentals we’ve ever seen in the nuclear energy sector. As one of the few forms of electricity generation capable of safely, reliably and affordably producing emissions-free, baseload power, nuclear energy is becoming increasingly important in a world that prioritises electrification, decarbonisation and energy security. The opportunity to partner with Brookfield Renewable, a leader in the clean-energy space, to acquire Westinghouse is expected to create a platform for growth across the nuclear value chain.” He added: “We expect the recurring demand for Westinghouse’s operating plant services and nuclear fuel will generate a strong revenue stream and add stable cash flow to complement Cameco’s existing uranium and fuel services business.”

The consortium partners see several major external trends that are expected to benefit the acquisition of Westinghouse, including:

  • Critical transition technology: Nuclear power is the one of the only zero-emission, baseload sources of electricity currently available at scale. An estimated 400 GW of additional nuclear capacity will be needed by 2050.
  • Accelerating growth plans: Nuclear power is experiencing a resurgence around the world with more than 20 countries across the Americas, Europe, the Middle East and Asia pursuing new projects or plant extensions. More than 50 GW of plant extensions have been announced to date and more than 60 GW of new-build reactors are expected between 2020-2040.
  • Energy security: Energy supply chains are coming under stress as a result of geopolitical uncertainty. In the short-term, the transaction provides the opportunity to win new business supporting dozens of nuclear facilities across Eastern European countries traditionally served by Russia.
  • Technology advancements: There are multi-decade growth opportunities in the rollout of next-generation advanced nuclear technology and long-term nuclear energy storage solutions. Modular baseload generation, such as Westinghouse’s eVinci micro-reactor technology, can play a growing role in an increasingly decentralised and decarbonised energy system.

Westinghouse has several key business lines: operating plant services; nuclear fuel; long-term contracting for the manufacturing and installation of fuel assemblies and other ancillary equipment across multiple light water reactor technologies; energy systems: designing, engineering and supporting the development of new nuclear reactors; environmental services to government and commercial customers.

The transaction follows the turnaround of Westinghouse by Brookfield Business Partners (BBU) – the industrials and services business of Brookfield Asset Management – which acquired the business in 2018. Brookfield invested $1bn in equity to acquire Westinghouse after it went into bankruptcy in 2017 amid large cost overruns at projects in Georgia, pictured, and South Carolina. Under BBU’s ownership Westinghouse refocused on core nuclear services, reduced its operating cost base and pursued several complementary M&A transactions to strengthen its in-house expertise.

This transaction was unanimously approved by the independent directors of Brookfield Renewable based, in part, on the recommendation of a committee of independent directors, which received an opinion as to the financial fairness of the consideration from Greenhill & Co Canada Ltd, as independent financial advisor, as well as advice from independent legal counsel. Goldman Sachs & Co and CIBC Capital Markets are acting as financial advisors to Cameco.

The deal is expected to close in the second half of 2023.

Westinghouse has a long, and somewhat chequered history. The Westinghouse Electric Corporation was an American manufacturing company founded in 1886 by George Westinghouse Early on, Westinghouse was a rival to Thomas Edison's electric company. In 1892, Edison was merged with Westinghouse's chief AC rival, the Thomson-Houston Electric Company, making an even bigger competitor, General Electric. It was originally named "Westinghouse Electric & Manufacturing Company”, and was renamed "Westinghouse Electric Corporation" in 1945. 

In 1990, Westinghouse experienced a financial catastrophe losing more than $1 billion due to bad high-risk, high-fee, high-interest loans made by its Westinghouse Credit Corporation lending arm.

Westinghouse purchased CBS Inc in 1995 and Westinghouse Electric Corporation changed its name to and became the original "CBS Corporation" in 1997. That same year, the Power Generation Business Unit, headquartered in Florida, was sold to Siemens of Germany. A year later, CBS sold all of its commercial nuclear power businesses to British Nuclear Fuels Limited (BNFL) and certain rights to use the Westinghouse trademarks were granted to the newly formed BNFL subsidiary, Westinghouse Electric Company. That company was sold to Japan's Toshiba in 2006.

Westinghouse filed for Chapter 11 bankruptcy protection with US courts in March 2017 in the face of extensive financial difficulties. The filing affected only its US operations, which included projects to build four AP1000 reactors – two each at Vogtle in Georgia, and the VC Summer site in South Carolina. In 2018, Brookfield Business Partners (together with institutional partners collectively known as Brookfield) announced that it had agreed to acquire 100% of Westinghouse from Toshiba for about $4.6 billion. Brookfield completed the purchase in August 2018, marking Westinghouse's exit from Chapter 11 bankruptcy protection as a restructured company.

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