* Deal could be announced later this week, paper says
* No details yet but analyst sees modest purchase price
* SNC-Lavalin's stock rises 2.4 pct
(Adds federal government, Ontario energy minister's response,
SNC stock price)
TORONTO, June 28 The Canadian government is set
to announce the sale of Atomic Energy of Canada Ltd to
SNC-Lavalin Group Inc (SNC.TO), 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".
A spokeswoman for Natural Resources Minister Joe Oliver
said the federal government is "is continuing its process
towards the divestiture of the Candu reactor division".
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 poor
financial 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.
SNC-Lavalin's shares were up C$1.36, or 2.4 percent, at
C$57.13 on the Toronto Stock Exchange.
AECL's reactor division posted a loss of C$104 million
($106 million) last year on revenue of C$428 million.
The province of Ontario, which put plans to buy two
reactors from AECL on hold two years ago because of spiraling costs and uncertainty about the nuclear firm's future,
welcomed reports that the sale process was drawing to a close.
Ontario Energy Minister Brad Duguid told Reuters he expects
the federal government will invest in the province's nuclear
sector even if it no longer holds a stake in AECL's reactor
The province, Canada's biggest electricity consumer, plans
to keep 50 percent of its power coming from nuclear generating
stations over the next 20 years.
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 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, Nicole Mordant in Vancouver and
Randall Palmer in Ottawa; editing by Rob Wilson)