Canadian uranium company Cameco Corporation (TSX: CCJ) and clean energy investor Brookfield Renewable Partners (TSX: BEPC) have announced a collaboration in the acquisition of global nuclear services company Westinghouse Electric Company. The acquisition will give Westinghouse a total enterprise value of nearly US$8 billion.
This strategic partnership combines Cameco’s expertise in the nuclear industry with Brookfield’s proficiency in clean energy, creating a robust platform for strategic growth in the nuclear sector. Brookfield plans to invest approximately US$750 million to acquire a 17% interest in Westinghouse, utilizing funding methods such as asset level up financings and asset recycling.
Cameco intends to pursue a permanent financing mix of capital sources, including cash, debt, and equity, to fund its portion of the transaction while maintaining its balance sheet and liquidity. After the acquisition, Brookfield and its institutional partners will hold a 51% stake in Westinghouse, with Cameco owning the remaining 49%.
The existing debt structure of Westinghouse will remain unchanged, resulting in an estimated US$4.5 billion equity cost to be shared between Brookfield and its partners and Cameco proportionately. This acquisition is seen as a means to align Cameco’s uranium production and fuel services expertise with Westinghouse’s downstream capabilities to offer a competitive nuclear fuel solution to a wider customer base.
The acquisition aims to leverage Westinghouse’s position as a key player in servicing the global nuclear power generation sector and as the original equipment manufacturer for a significant portion of the nuclear reactor fleet. Cameco’s CEO, Tim Gitzel, views the acquisition as a strategic move to enhance direct access to customers pursuing nuclear power and net zero emissions.
Westinghouse faced financial challenges in 2017, leading to bankruptcy due to cost overruns on several nuclear reactor projects. Subsequently, Toshiba Corp divested Westinghouse to Brookfield Business Partners, resulting in a revitalization of the company under new management. BNP’s ownership saw significant improvements in Westinghouse’s profitability through strategic restructuring and investment in new technologies.
Overall, the acquisition of Westinghouse by Cameco and Brookfield aligns with the goal of creating a strong platform for growth in the nuclear value chain, offering enhanced nuclear fuel solutions and expanding access to fuel supplies in North America and Europe.
