Areva sell-off poser for BNFL

FRENCH Finance Minister Nicolas Sarkozy plans to sell-off up to 40% of State nuclear engineering group Areva in a float that could value the business at e10bn (£6.97bn).

The decision comes as Sarkozy received enthusiastic applause from British business leaders after addressing the CBI conference in Birmingham, and only 19 days before he quits office to prepare a challenge for the French Presidency in 2007.

The French government will sell down its stake in the first half of next year, market conditions permitting, to raise e4bn and reduce its budget deficit.

The part-privatisation is scheduled to be followed later in the year by the sale of a 30% stake in the French State electricity company, Electricite de France, which generates 80% of its power from nuclear plants.

The French sell-off strategy contrasts starkly with that of Britain. Most of Britain's nuclear power plants were privatised in the 1990s with the flotation of Nuclear Electric, which renamed itself British Energy, then plunged into losses and insolvency. Shareholders are still wrangling with the Government about its planned financial restructuring.

Britain's nuclear engineering industry, historically concentrated in British Nuclear Fuels Limited - loss-making owner of the Sellafield reprocessing plant - is being reorganised. In May the Government announced it was splitting-out BNFL's nuclear clean-up business, Magnox, and US-based subsidiary Westinghouse into a new business, branded British Nuclear Group. There are no plans to privatise it.

Areva, the world's largest nuclear engineering group, will be BNFL's biggest competitor.

Born from the 2000 consolidation of French nuclear-related businesses Cogema, Framatome and CEA-Industrie, 96% State-owned Areva is a profitable business.

In the six months to 30 June, Areva, headed by the doughty Anne Lauvergeon, quintupled net profits to e243m on revenues ahead 29% at e5.34bn.

One reason for the profit and sales surge was the inclusion of the transmission and distribution business of troubled French engineering group Alstom, bought in January for e1bn.

But Lauvergeon, who has lobbied hard for the flotation, also succeeded in getting its once-lossmaking connectors business back into the black.

Areva, which employs 48,000 people, benefits from having these profitable businesses making components for power transmission grids. But it still derived e3.14bn of first-half sales from nuclear engineering.