EDF to Expand in U.S. Even If Constellation Bid Fails

By Tara Patel

Dec. 9 (Bloomberg) -- Electricite de France SA, Europe’s biggest power producer, plans to expand nuclear operations in the U.S. even if an offer to buy half the atomic business of Constellation Energy Group Inc. is rejected.

“Even if it fails we are determined to play a role in nuclear renewal in the U.S.,” Chief Executive Officer Pierre Gadonneix said today in an interview with BFM radio. “The U.S. doesn’t have a choice; they will have to renew the nuclear industry” to ensure security of energy supply and reduce carbon emissions, he said.

EDF offered to buy a 50 percent interest in Constellation’s nuclear plants for $4.5 billion on Dec. 3. Warren Buffett’s MidAmerican Energy Holdings Inc. has agreed to pay $4.7 billion for the whole company. Constellation will begin talks with EDF, the Baltimore-based utility said yesterday, adding that the board hasn’t changed its recommendation that shareholders vote for the MidAmerican deal in a special meeting on Dec. 23.

“We were expecting this news,” Gadonneix said. “It’s part of the normal process. I don’t know what the opinion of Constellation’s board or investors will be. We think our offer is good for Constellation, and for EDF it is coherent with our strategy.”

EDF rose as much as 2.9 percent in Paris trading and was at 38.88 euros, up 1.5 percent, as of 2:34 p.m. local time, trimming its decline this year to 52 percent. Constellation climbed 57 cents to $28.15 in New York yesterday.

‘Consolidate Partnership’

EDF’s development of so-called Evolutionary Power Reactors in the U.S. “will go through our venture with Constellation,” Gadonneix said. “We want to consolidate this partnership so it can play a major role in the restart of nuclear in the U.S. with EPRs.”

The French company already owns 9.5 percent of Constellation. The two utilities created a 50-50 joint venture last year, called Unistar Nuclear Energy LLC, to develop reactors in North America using Areva SA’s EPR design. Areva, the world’s biggest reactor builder, and Constellation have started the licensing process for four EPRs in the U.S.

“We aren’t excluding any solution,” Gadonneix said when asked whether plans for EPR development would change should Buffett acquire Constellation. “Our priority is to develop EPRs,” he added.

EDF, the Paris-based owner of 58 reactors in France, is developing its first EPR in Flamanville, Normandy, and intends to operate 10 around the world by 2020 including two in China and four in the U.K., where the utility is taking over British Energy Group Plc.

EDF’s Constellation offer is for a 50-50 joint venture, which would own the U.S. company’s five American reactors. Constellation has 3,869 megawatts of nuclear assets and 6,595 megawatts of non-atomic facilities.

The EDF offer is “low risk” because it’s for power- producing assets, Gadonneix said.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net