Siemens AG will pay France’s Areva SA 648 million euros ($927 million) after an arbitration tribunal found the German company failed to meet contractual obligations in a nuclear joint venture that it exited earlier this year.
The payment, plus interest, will be booked in Siemens’s fiscal third quarter ending June, the Munich-based company said in a statement late yesterday. Siemens had sold its stake in the joint venture to Areva in March for a pretax gain of 1.52 billion euros. The tribunal also cut in half the term of the non-compete clause of the former joint venture to four years.
The French joint venture, previously called Framatome, was the world’s biggest maker of nuclear reactors and was created a decade ago when Areva and Siemens merged their nuclear reactor businesses in France, Germany and the U.S.
Siemens said in March that its 34 percent share in the partnership may be worth 1.62 billion euros, according to an independent expert appointed by the two companies. That assumption was lower than the 2 billion euro-value that Siemens had assigned in September 2009.
In the second quarter, the sale of the stake helped profit at Siemens’s fossil power division rise more than sixfold to 2.05 billion euros. Siemens has sought to expand in renewable energy including wind and solar and focus more on infrastructure, health-care systems and factory automation.
Germany is reconsidering its nuclear-energy future following the reactor accident in Japan’s Fukushima power plant. Europe’s largest economy had previously extended the lifespan of its nuclear facilities, and the government has now suspended that extension as it weighs the risk of keeping the facilities hooked up to the grid for longer.
Siemens shares rose 2.08 euros, or 2.3 percent, to 93.84 euros in Frankfurt trading yesterday.