A consortium comprised of Brookfield Renewable Partners, together with its institutional partners, and Cameco Corp. announced on Oct. 11 an agreement to acquire Westinghouse Electric Co. from Brookfield Business Partners (BBU). The deal has a total enterprise value of about $8 billion, including proceeds from the disposition of a non-core asset expected to be received prior to closing the transaction. The deal is expected to be finalized in the second half of 2023, subject to customary closing conditions and approvals.
Westinghouse has a long and storied history in the energy industry dating back more than a century. The company was a pioneer in the nuclear power industry, and it continues to be a major player in the sector today.
Westinghouse has four key business lines. Operating Plant Services provides recurring services for outages and maintenance, engineering solutions, and replacement components and parts. Nuclear Fuel offers long-term contracting for the manufacturing and installation of fuel assemblies and other ancillary equipment across multiple light water reactor technologies, including as the original equipment manufacturer (OEM) for approximately half the nuclear plants worldwide. Energy Systems designs, engineers, and supports the development of new nuclear reactors. Environmental Services provides services to government and commercial customers that support nuclear sustainability, environmental stewardship, and remediation.
“This is the start of an exciting new chapter for the Westinghouse team and for nuclear power,” Patrick Fragman, president and CEO of Westinghouse, said in a statement. “We are grateful to BBU for its stewardship and investments that have strengthened Westinghouse’s position in the nuclear power industry, and more broadly in the clean power world, for the long-term. Now we are proud to join Brookfield Renewable and Cameco, reaffirming the important role played by Westinghouse and nuclear power in enabling the world’s clean energy transition and energy security goals.”
Brookfield Renewable operates one of the world’s largest publicly traded, pure-play renewable power platforms. Its portfolio consists of hydroelectric, wind, solar, and storage facilities in North America, South America, Europe, and Asia, and totals approximately 24 GW of installed capacity with approximately 100 GW more in its development pipeline. Cameco, meanwhile, is one of the largest global providers of uranium fuel. It claims to have a competitive advantage based on its “controlling ownership of the world’s largest high-grade reserves and low-cost operations.” Its headquarters are in Saskatoon, Saskatchewan, Canada.
After giving effect to the transaction, Brookfield Renewable and other affiliates of Brookfield Asset Management Inc. will own a 51% interest in Westinghouse and Cameco will own 49%. Brookfield Renewable said it is “pursuing this opportunity through the Brookfield Global Transition Fund I, which is the largest fund in the world focused on the clean energy transition.”?
Westinghouse was acquired by BBU out of bankruptcy in 2018. In early July this year, Westinghouse announced organizational and structural changes designed “to further drive the company’s growth strategy and enhance customer engagement.” Notably, the company created a dedicated Global Markets organization and realigned its portfolio of installed fleet services into two global business units with responsibility for Operating Plant Services and Nuclear Fuel. Several personnel changes were also made in leadership positions at the time.
“These are the right steps at the right time for Westinghouse,” Fragman said in a statement released on July 5. “We are bolstering our global approach to meet the extraordinary market opportunities and enhance our responsiveness to our customers.”
BBU claims Westinghouse’s profitability nearly doubled under its ownership. “Today the business is ideally positioned to benefit from strong industry tailwinds driven by increased recognition of nuclear power as a reliable source of clean energy to achieve global decarbonization goals,” it said.
“We have significantly enhanced the business’ operations over the past four years, increasing its margins and strengthening its global leadership position. Westinghouse is an exceptionally well-run business today and has a great future,” Cyrus Madon, CEO of BBU, said in a statement. When combined with distributions received to date, BBU said it expects proceeds to be approximately six times its invested capital—roughly a $4.5 billion total profit.
The consortium, however, believes Westinghouse’s business is poised for further growth. “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,” the group said.
Westinghouse provides services to about half of the nuclear power generation sector. The company has significant intellectual property and a specialized workforce of about 9,000 employees capable of operating in markets around the world. Approximately 85% of Westinghouse’s revenue has come from long-term contracted or highly recurring customer service provisions, with a nearly 100% customer retention rate, according to the consortium. The group said given Westinghouse’s comprehensive services offerings and position as an OEM, it has “stability in all macroeconomic environments.”
In a statement, 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 prioritizes electrification, decarbonization 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. Coupled with our more than 30-year proven track record of providing secure and reliable fuel supplies to a global customer base, this transaction fits perfectly within Cameco’s strategy and is expected to increase our ability to meet the growing needs of existing and new customers at a time when origin and security of supply is of significant concern. At the same time, 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.”
Said Connor Teskey, CEO of Brookfield Renewable, “Westinghouse has successfully refocused on providing core services to the nuclear industry and is ready for the next phase of growth. The business aligns well with our existing portfolio, delivering highly contracted and dependable revenue by serving customers who operate critical clean energy assets. Partnering with Cameco brings deep nuclear sector expertise, alongside our knowledge of energy markets and global customer base, to form a formidable champion for nuclear power. We see significant potential to grow the business and deliver on broader growth in the nuclear power sector through our strategic partnership with Cameco.”
