"Since becoming an independent company in 2010, the B&W Board and management team have pursued and successfully capitalized on a number of opportunities to improve performance and increase value for our shareholders. We believe that separating the Power Generation and Government & Nuclear Operations businesses is the next logical step to unlock even greater value for B&W shareholders," said Mr. E. James Ferland, President and Chief Executive Officer of B&W.
"After an extensive and thorough evaluation of a possible separation, the B&W Board concluded that the standalone businesses will benefit from independent management teams, each equipped with the resources, strategic autonomy and financial flexibility to create significant long-term value for their respective shareholders."
The spin-off of the Power Generation business is expected to create two independent, publicly traded companies with strong balance sheets:
Babcock & Wilcox, which will comprise the Power Generation business, is a leading technology-based provider of advanced fossil and renewable power generation equipment that includes a broad suite of environmental controls, products, and services for power and industrial uses. This business is project-driven with a solid base of recurring aftermarket services revenues.
As a standalone company, the Power Generation business, which will continue to operate under the "Babcock & Wilcox" name, will offer an attractive investment opportunity with significant growth potential, particularly in international markets.
BWX Technologies will comprise the Government & Nuclear Operations business and will consist of the Nuclear Operations, Technical Services, Nuclear Energy and mPower businesses. This business is a leading supplier of nuclear components and fuel to the U.S. government, provides technical, management and site services to aid governments in the operation of complex facilities and environmental remediation activities, and supplies precision manufactured components and services for the commercial nuclear power industry.
BWX Technologies will also offer an attractive investment opportunity with a stable backlog and consistent performance in earnings and cash flow, with growth opportunities in existing and adjacent markets.
Benefits
The Company believes that the spin-off will result in material benefits to the standalone companies:
Flexibility to deploy and execute a focused capital structure consistent with the strategic priorities of each business
Increased opportunities to pursue external growth strategies as independent companies
Ability to attract an investor base suited to the particular operational and financial characteristics of each company
Greater management focus on the distinct businesses of power generation and government and nuclear operations
Leadership
Upon completion of the spin-off, Mr. E. James Ferland, currently President and Chief Executive Officer of B&W, will become Chairman and Chief Executive Officer of the new Babcock & Wilcox. Mr. John A. Fees, currently Chairman of B&W, will become Executive Chairman of BWX Technologies. Mr. Peyton S. (Sandy) Baker, currently President of the Company’s Government & Nuclear Operations Group, will become President and Chief Executive Officer of BWX Technologies.
Transaction Details
The spin-off of the Power Generation business and the pro rata distribution of shares of the new Babcock & Wilcox to B&W shareholders are expected to be completed by mid-summer 2015.
The contemplated spin-off does not require a shareholder vote, but is subject to various conditions, including the effectiveness of the SEC filings, regulatory review by the Nuclear Regulatory Commission, and final approval by the B&W Board of Directors.
