Government pushes button on nuclear sale

Marion Dakers
THE GOVERNMENT has formally put its stake in uranium enrichment firm Urenco on the market, taking a big step forward in its privatisation plans.

The UK’s stake in Urenco, which it owns alongside the Netherlands and Germany, is set to be sold in either a trade sale or an initial public offering.

Business minister Michael Fallon, whose department took over responsibility for Urenco from the Department of Energy in January, said the form of the sale will be decided in the coming weeks.

“It’s always been our policy that we shouldn’t hang onto a shareholding that doesn’t give value to the taxpayer,” he told City A.M.

Fallon said he was confident that the government can handle the sale of Urenco alongside that of Royal Mail, one of the biggest disposals in the coalition’s privatisation drive.

“Royal Mail has turnover of £9bn this year, Urenco revenues were €1.6bn, so they are both substantial companies, but they are both profitable and successful and there’s really no need for the government to keep hold of these.

“If we were to consider an IPO in either case, this would depend on markets remaining sufficiently open.”

When asked about the level of bidding interest in Urenco so far, Fallon said “we don’t know yet who will come forward – they will obviously need deep pockets”.

In the months leading up to the formal sales process starting, a number of firms with a large presence in nuclear energy including Areva, Toshiba and Cameco were named as potential bidders. All declined to comment or were unavailable yesterday.

Urenco was set up in 1971 under the Treaty of Almelo between Germany, Britain and the Netherlands, which regulates the use of uranium enrichment for civil purposes.

RWE and E.ON, the holders of Germany’s stake, earlier this year expressed an interest in selling their shareholding, a move that prompted the UK government to push on with its own sale. The Dutch government has said it is keen to keep its interest in the firm.



Morgan Stanley’s London team was hired in September to provide the government with advice on its options for Urenco.

The bank will now help steer officials at the Department for Business, Innovation and Skills through the sale process, giving advice on whether the taxpayer will get a better return on its stake through a trade sale or an IPO.

The Wall Street bank has a track record on complex work for governments, having helped to restructure mortgage giants Fannie Mae and Freddie Mac in the wake of the credit crunch.

Morgan Stanley was also an underwriter on the US government’s $20bn sale of shares in General Motors in 2010.

On this side of the pond, Morgan Stanley worked on Glencore’s blockbuster float in London in 2011, as well as its soon-to-be-completed merger with Xstrata.

Morgan Stanley declined to comment on its role in the Urenco sale process yesterday.

The Dutch government is being advised by Credit Suisse, and the two German utilities are being advised by Bank of America Merrill Lynch.