Cameco and Brookfield Finalize Westinghouse Acquisition: A New Era for Global Nuclear Solutions

The strategic acquisition of Westinghouse Electric Company by Cameco and Brookfield Asset Management has officially closed, reshaping the landscape of the global nuclear services industry. The ownership structure reflects a balanced partnership: Cameco holds a 49% stake while Brookfield maintains controlling interest at 51%. This question of who owns Westinghouse now has a clear answer—a powerful joint venture positioning itself at the forefront of the clean energy transition.

The Partnership Model and Strategic Rationale

This $8.2 billion US enterprise value acquisition represents far more than a financial transaction. Tim Gitzel, President and CEO of Cameco, emphasized the significance, noting that market conditions for nuclear energy have substantially improved over the past year as countries worldwide intensify efforts to meet net-zero commitments through reliable, emissions-free baseload power.

The partnership merges complementary strengths: Cameco brings 35 years of expertise in uranium mining and nuclear fuel production, while Brookfield contributes its extensive background in clean energy infrastructure. Together, they’ve created an entity uniquely positioned to deliver comprehensive solutions across the entire nuclear fuel cycle—from reactor technology and plant services to fuel supply and decommissioning services.

The board structure reflects this collaborative approach, with three directors appointed by each partner. While day-to-day decisions align with ownership percentages, critical matters such as annual budget approval require consent from both parties when ownership thresholds are maintained.

Financing the Deal: A Conservative Approach

To fund Cameco’s 49% share of approximately $2.1 billion US, the company deployed a diversified financing strategy:

• $1.5 billion US from existing cash reserves
• $300 million US from the first tranche of a committed term loan (two-year maturity)
• $300 million US from the second tranche of a committed term loan (three-year maturity)

Notably, a $280 million US bridge financing commitment was arranged but ultimately not deployed, underscoring the strength of Cameco’s balance sheet. This disciplined approach preserved financial flexibility while maintaining investment-grade ratings—critical for funding future growth opportunities in an industry requiring substantial capital deployment.

Westinghouse’s Financial Performance and Revenue Outlook

Examining Westinghouse’s nine-month performance through September 2023 reveals a company operating with considerable stability and growth trajectory. Revenue reached $3.051 billion US against an adjusted EBITDA of $483 million US, translating to a margin of approximately 16%.

For the full year 2023, management projects:

• Revenue of $4.2-4.4 billion US
• Adjusted EBITDA of $690-750 million US
• Levered adjusted free cash flow of $475-525 million US

The revenue expansion reflects contributions from emerging markets in Central and Eastern Europe, alongside gains from strategic acquisitions completed in 2022. Particularly noteworthy: over 95% of projected adjusted EBITDA derives from the stable, recurring core business characterized by long-term customer contracts.

The Core Business: Predictable Revenue Streams

Westinghouse’s foundation rests on three revenue pillars, each generating predictable cash flows:

Plant Support and Services represents the largest segment, encompassing critical engineering for operational reactors, outage support, components manufacturing, and specialized instrumentation. These services build on decades-long customer relationships, creating a moat of recurring revenue streams.

Nuclear Fuel Products and Services serves utilities globally, designing and manufacturing fuel assemblies for multiple light-water reactor technologies. This business benefits particularly from Westinghouse’s positioning as a trusted, non-Russian supplier—an increasingly valuable attribute as Eastern European nations diversify their fuel supply chains away from geopolitical risks.

Sustainability and Remediation Services addresses the back-end of the nuclear lifecycle, including decommissioning support for retired plants and environmental stewardship for government customers.

The combination of long-term contracts (3-10+ year durations depending on service type) and mission-critical service requirements creates a defensive business model resilient to macroeconomic cycles.

New Reactor Development: Unlocking Future Growth

Beyond the stable core, Westinghouse operates in the higher-margin new build segment through its proven AP1000 reactor design. Recent contract wins demonstrate market momentum:

• Poland recently signed engineering services contracts for three AP1000 reactors
• Ukraine selected AP1000 for nine units and has committed to engineering services for the first
• Bulgaria chose AP1000 for two units at Kozloduy

The economics of new reactor projects follow a predictable framework. Based on MIT cost studies, constructing a new AP1000 in the US ranges from $6-8 billion US, though costs vary significantly by geography and labor productivity. Westinghouse’s role—engineering and procurement—typically represents 25-40% of total project costs (except China, where scope is usually under 10%), with EBITDA margins for new build activity aligning with the 15-21% range of the core business.

Once construction concludes and commercial operations commence, these projects transition to recurring fuel supply and maintenance service revenue, effectively feeding growth into the stable core business.

Next-Generation Technologies: SMR and Microreactor Development

Strategic investments in emerging technologies are shaping Westinghouse’s long-term competitive position. The AP300 small modular reactor (SMR) builds on the licensed AP1000 design, while the eVinci microreactor recently received US Department of Energy funding for a test FEED (front-end engineering design) at Idaho National Lab.

These technologies address applications beyond centralized electricity generation, including industrial heat, desalination, hydrogen production, remote mining, off-grid communities, and defense facilities. While still in development phases, management acknowledges these platforms hold potential for meaningful long-term financial contributions.

Capital Allocation and Shareholder Returns

The partners’ capital allocation framework balances growth investment with cash returns. Annually, they approve budgets outlining financial projections and capital priorities. Cash distribution determinations occur quarterly, based on approved expenditures, growth opportunities, and available cash balances—with distributions typically concentrated in Q4 when Westinghouse’s cash generation peaks.

Given the transaction’s late-year close, no distributions are expected in 2023. However, Westinghouse’s demonstrated ability to self-fund operations from de-risked cash flows positions it well to sustain operations and eventually resume regular distributions.

Industry Backdrop: The Nuclear Renaissance

The broader context amplifying this acquisition’s significance involves accelerating nuclear energy recognition as essential to global climate and energy security objectives. Policy makers globally are removing regulatory barriers and strengthening fuel supply chains to enable nuclear deployment at scale.

This momentum directly benefits Westinghouse’s competitive positioning. Its proven technology, strong reputation, non-Russian alternative status for VVER fuel, and geopolitically favorable asset locations position it to participate in the expected 3.6% annual industry growth rate (World Nuclear Association Reference Case).

Looking Forward: The Virtual Investor Day

Cameco plans to host a virtual investor day on December 19, 2023, beginning at 9:30 a.m. Eastern to detail Westinghouse’s prospects and expected impact on Cameco’s consolidated financial performance. This gathering will provide detailed strategic and operational insights beyond today’s announcement.

Conclusion: A Transformative Platform

The finalized acquisition represents a strategic inflection point. By uniting Cameco’s uranium and fuel expertise with Brookfield’s clean energy platform through ownership of Westinghouse, the partners have created an integrated nuclear solutions provider spanning mining, fuel production, reactor design, plant services, and environmental remediation.

The question of who owns Westinghouse now has a definitive answer: two preeminent energy companies committed to capitalizing on the global nuclear industry’s anticipated expansion. With a stable cash-generating core, proven new reactor designs gaining adoption, emerging SMR and microreactor technologies in development, and long-term contracted revenue streams, this partnership positions Westinghouse as a cornerstone asset in the world’s evolving energy infrastructure.