FRAMATOME and SIEMENS To Merge Their Nuclear Businesses

Framatome and Siemens have announced they intend to fully merge their nuclear operations in a joint venture in which Framatome will have a 66% holding and Siemens a 34% stake. An agreement in principle outlining the activities involved and the main guidelines of the new entity was signed December 6, 1999.

"The synergies resulting from this merger and our improved ability to better serve our customers are important as we meet the challenges resulting from industry deregulation," said John Bohart, President and CEO of Framatome Technologies Group, Framatome's U.S. affiliate in Lynchburg, VA. "The merger will enhance our ability to provide services and technology for both PWR and BWR reactors."

Negotiations on the terms of the merger are to be finalized within the next few months. The joint-venture company should start operations in the third quarter of 2000, subject to anti-trust review. The new venture will be the world leader in nuclear energy with revenues of $3 billion–approximately $2 billion for Framatome and $1 billion
for Siemens.

The new entity combines the nuclear activities of both companies, whose major operational headquarters are located in France, Germany and the U.S. The new company will serve its domestic and international customers with a broader array of products. For example, Framatome is the world leader in pressurized water reactors, while Siemens has expertise in both PWRs and boiling water reactors. In the U.S. this will allow Framatome Technologies to widen its scope concerning BWR services, a market it is already active in.

In addition, the alliance will be beneficial regarding nuclear fuel, since combining Framatome's and Siemens' U.S. subsidiary companies, Framatome Cogema Fuels and Siemens Power Corporation, will allow the combined companies to provide a broad array of nuclear fuel and fuel related services.

In addition, the merger will support the long-term development of technology to better meet customer needs, including an expected renaissance of new nuclear plant construction.

The two companies have been cooperating since 1989 in an increasing number of fields, in particular on development of the European Pressurized Reactor (EPR) as part of their joint venture, Nuclear Power International (NPI). The companies have also been working together on occasional orders for replacement of major components in nuclear power plants built by other vendors, and on safety upgrades for Russian-designed reactors.

The agreement reinforces the desire of Framatome and Siemens to increase their presence internationally, with a particular focus on North America and Asia.