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Areva-EDF Merger Is Possibility, Energy Minister Royal Says

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A merger between state-owned nuclear companies Areva SA and Electricite de France SA is a possibility, French Energy Minister Segolene Royal said.

“Merger, maybe, all hypotheses are on the table,” Royal said in an interview on RMC radio when asked about possible solutions to address record losses at Areva. “Closer ties, convergence, of course.”

EDF fell as much as 4.4 percent to the lowest since Jan. 20. The stock was down 2.8 percent at 22.65 euros by 4:48 p.m. in Paris.

“All hypotheses are being looked at to see what is in the interest of our country,” she said. “What is in the interest of our country is to structure champions in the energy sector.”

EDF has declined every day since Areva reported a record loss of 4.83 billion euros ($5.2 billion) March 4. The loss raised speculation that EDF may be pressured into rescuing the reactor builder and has wiped about 4.5 billion euros off the market value of the world’s largest operator of atomic plants.

Roland Vetter of CF Partners in London has said investors are worried EDF will be “dragged into somehow helping Areva.”

Areva has been hit by delays at projects in Finland and France, unprofitable investments in uranium mines in Niger, and a slowdown in global nuclear expansion after the Fukushima disaster in Japan in 2011.

State Holdings

“They have undoubtedly made errors in the past,” Royal said today, reiterating that the government has asked Areva not to shed jobs.

The state owns more than 80 percent of the shares in both companies. As she has done in the past, the minister Monday also raised the possibility that the state-owned nuclear research organization Commissariat a l’Energie Atomique et aux Energies Alternatives, or CEA, may be part of the solution for Areva’s problems. It holds a 54 percent stake in Areva and is working to develop a so-called fourth generation of nuclear reactors.

President Francois Hollande and his ministers have called for greater cooperation between EDF and Areva as the country adopts a new atomic energy policy. Economy Minister Emmanuel Macron argued in Le Figaro on March 4 for a “new convergence” of the two companies’ strategies, with options ranging from a capital transaction to large-scale industrial cooperation.

Talks with EDF “are about operations,” Areva Chief Executive Officer Philippe Knoche said March 4. “Potential capitalistic talks will come if necessary, in a second stage, based on operational and industrial needs.”

Spokesmen for Areva and EDF declined to comment.

(Updates shares in third paragraph.)
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