TORONTO (Reuters) - The Canadian government is set to announce the sale of Atomic Energy of Canada Ltd to SNC-Lavalin Group Inc, the Globe and Mail newspaper said on Tuesday.
SNC-Lavalin, Canada’s biggest engineering and construction firm, was the sole bidder for AECL’s commercial nuclear power division and had said it was still interested in the deal despite losing its bidding partner in May.
The sale of the AECL division could come as early as this week, although negotiators are still working out the final details, the paper said, citing sources close to the talks.
A spokeswoman for Montreal-based SNC-Lavalin said the company “was not in a position to respond to any of the information that is circulating”.
AECL’s commercial division designs and builds Candu reactors for nuclear power stations. The government put the unit up for sale in 2009 after years of subsidies and a poor performance. It plans to retain ownership of the research business and place it under private management.
Little is known about SNC’s bid, including the price, although analysts expect the company’s offer to be modest especially in the wake of negative sentiment globally toward nuclear energy after the Fukushima disaster.
SNC’s bid is likely to give no value to AECL’s reactor-building business and only price in its refurbishment operations, Northland NCP analyst Maxim Sytchev said.
“While the timing of AECL’s acquisition is not ideal in the context of anti-nuclear sentiment, we believe that the asset will be priced to reflect the current reality,” Sytchev said in an email to clients.
AECL’s reactor division posted a loss of C$104 million ($106 million) last year on revenue of C$428 million.
In April, Ontario’s municipal employee pension fund pulled out of talks with SNC-Lavalin to buy AECL.
Negotiations were slow while the Conservative government held only a minority in Parliament. The Conservatives won a majority in the May 2 election, which was expected to speed up the sale.
The Globe said the sale completes Ottawa’s plans to get out of the nuclear energy business. AECL has had billions of dollars of government support and faced major cost overruns at key projects in recent years, while failing to find an international partner in sale talks.
The Candu reactor sales and service division will be split from the Chalk River laboratory and its research reactor, which produces isotopes for medical imaging and diagnostic procedures. The federal government will continue to own that unit, but it will be managed via an outside contract.
SNC-Lavalin has assured Ottawa that it is buying AECL with the expectation that it will boost reactor sales and servicing, the Globe and Mail said.
Reporting by Andrea Hopkins and Nicole Mordant; editing by Rob Wilson
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