WESTINGHOUSE ACQUISITION $8 BLN

WNN - 12 October 2022 - A strategic partnership of Cameco Corporation and Brookfield Renewable Partners is to acquire Westinghouse Electric Company for a total enterprise value of approximately USD8 billion.

Brookfield Renewable, together with its institutional partners, will own a 51% interest in Westinghouse and Cameco will own 49%. Closing of the transaction is expected in the second half of 2023, subject to certain conditions, including approval from Brookfield Business Partners unit holders and regulatory approvals.

Westinghouse was acquired out of bankruptcy by Brookfield Business Partners in 2018. Since then it has refocused on core nuclear services, reduced its operating cost base and strengthened its in-house expertise. It has nearly doubled its profitability and is now "ideally positioned to benefit from strong industry tailwinds driven by increased recognition of nuclear power as a reliable source of clean energy to achieve global decarbonisation goals", Brookfield said. Brookfield Business Partners expects to generate about USD1.8 billion in proceeds from the sale of its 44% stake in the company.

Brookfield Renewable claims to operate one of the world's largest publicly traded, pure-play renewable power platforms with a portfolio of hydroelectric, wind, solar and storage facilities in North America, South America, Europe and Asia. Brookfield Renewable CEO Connor Teskey said Westinghouse aligns well with Brookfield Renewable's existing portfolio. Cameco's deep nuclear sector expertise and Brookfield's knowledge of energy markets and global customer base will together form a formidable champion for nuclear power, he said. "We see significant potential to grow the business and deliver on broader growth in the nuclear power sector through our strategic partnership with Cameco."

Westinghouse is one of the world's largest nuclear services businesses, but the company can trace its energy industry roots back more than 100 years. Today, the company has four key business lines which include providing services for outages and maintenance, engineering solutions, and replacement components and parts; long-term contracting for the manufacture and installation of fuel assemblies and ancillary equipment for light-water reactors; designing, engineering and supporting the development of new nuclear reactors; and providing environmental services which support nuclear sustainability, environmental stewardship and remediation. It is the original equipment manufacturer for around half the world's nuclear power plants.

Cameco President and CEO Tim Gitzel said the transaction was expected to create a platform for growth across the nuclear value chain.

"We're witnessing some of the best market fundamentals we've ever seen in the nuclear energy sector. As one of the few forms of electricity generation capable of safely, reliably and affordably producing emissions-free, baseload power, nuclear energy is becoming increasingly important in a world that prioritises electrification, decarbonisation and energy security," he said.

"Coupled with our more than 30-year proven track record of providing secure and reliable fuel supplies to a global customer base, this transaction fits perfectly within Cameco's strategy and is expected to increase our ability to meet the growing needs of existing and new customers at a time when origin and security of supply is of significant concern. At the same time, we expect the recurring demand for Westinghouse's operating plant services and nuclear fuel will generate a strong revenue stream and add stable cash flow to complement Cameco's existing uranium and fuel services business."

Owning almost half of Westinghouse will enhance Cameco's financial profile and also enable it to diversify its business mix within the industry, Gitzel said in a press call about the transaction. In the near term, opportunities exist to partner with Westinghouse to serve existing customers better and compete for new demand, he said, particularly in an Eastern European market that is "seriously looking to find other options for the fuel supplies required to power their critical nuclear power plants in a way that doesn't depend on Russia".

Such new business opportunities could align Cameco's uranium conversion services with Westinghouse fuel fabrication to offer customers with alternative solutions for contacting their fuel supplies, he said.

"In the longer term, new reactor builds are a critical part of nuclear's growth and with the AP1000 reactor, SMR and the eVinci microreactor technology we believe Westinghouse is well positioned to capture significant new reactor business. New reactor builds often come with a fuel supply and that fuel supply connects right back through to uranium," Gitzel said.

"I believe we're witnessing a fundamental change that will alter the way countries approach their energy needs going forward, and I think anyone who looks seriously at the global issues we're facing will say that there's no solution without nuclear. So we see a lot of opportunity ahead of us, with demands for safe, reliable, affordable and carbon-free baseload electricity coming from across the globe. We believe this transaction positions us extraordinarily well to continue to participate in the momentum that is building for nuclear power that is clearly aligned with our vision of energising a clean air world."

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