Enlarge imageBy Tom Bergin
LONDON (Reuters) - U.S. engineering and construction firm
Fluor Corp.
Fluor sent a letter to British Nuclear Fuels Ltd. (BNFL), the holding company that controls BNG, earlier this week, offering 250 million to 400 million pounds for BNG, BNFL said on Thursday.
Fluor confirmed the offer in a statement but not the price, which BNFL said varied depending on conditions attached to business contracts BNG holds.
Shares in Fluor, which has its headquarters in Irving, Texas, opened higher following the statement and were up 2.7 percent at $86.81 at 6:30 p.m., compared with a flat Dow Jones industrials index <.DJI>.
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Analysts described the move as widely anticipated and said Fluor stood to gain from a push into the British market.
"It sounds like a very good move (for Fluor). This is definitely positive. The question is how positive," said Philip Dodge, an analyst with Stanford Group.
BNG’s core business is the clean-up of sites formerly occupied by nuclear power stations and waste recycling facilities.
BNG is also involved in waste reprocessing and reactor decommissioning. The Nuclear Decommissioning Authority, a government agency, is BNG’s principal customer.
The government wants to privatise BNG, and BNFL has hired investment bank Rothschild to organise a sale, BNFL spokesman Philip Dewhurst said.
The sale is planned for completion by the middle of next year. BNG could be sold in one lot or broken up and sold in parts.
One industry source said the government may prefer a breakup as it could see this as a way to encourage competition in the British decommissioning industry, currently dominated by BNG.
However, Fluor hopes to buy all of BNG.
"Fluor’s offer recognises that BNG as a whole is worth far more than its individual parts," Fluor said in its statement.
Dewhurst said BNFL had not yet had the opportunity to discuss Fluor’s letter with its shareholder, the government, and so declined to comment on whether the offer was sufficient.
A spokeswoman at the Department of Trade and Industry said the government would discuss the offer with BNFL and noted a March statement from the trade and industry minister in which he said he wanted to sell BNG "through a competitive sale process."
Britain’s ageing network of nuclear power stations is set to provide a bonanza to the clean-up industry. Twenty sites are due for decommissioning in the coming five years, creating $2 billion (1.1 billion pounds) a year of business, Dewhurst said.
The government-commissioned Energy Review in early July should also guarantee the industry’s long-term future.
The Review gave the green light for a new generation of nuclear reactors, arguing that nuclear power had an important role to play in reducing carbon dioxide emissions and ensuring energy supply.
The Times earlier reported that Fluor’s offer was partly aimed at heading off a possible bid from a U.S. rival, privately owned Bechtel.
The Times said Bechtel had advised the Department of Trade and Industry on strategy for introducing competition into nuclear decommissioning and so was precluded from bidding for major decommissioning contracts for at least three years.
(Additonal reporting by Mark McSherry in New York and Matt Daily in Houston)
