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UK adds security conditions to EDF purchase of GE unit

Tuesday, 8 August 2023

The UK government has imposed measures to mitigate national security concerns arising from the purchase by EDF of GE Steam Power Limited and GE Oil & Gas Marine and Industrial UK Limited.

UK adds security conditions to EDF purchase of GE unit — An Arabelle turbine (Image: GE)

EDF's wholly-owned subsidiary GEAST UK Ltd is to gain control of the two GE businesses - which include the supply of turbines and related servicing for British nuclear submarines - in an acquisition that was first announced in February last year.

Although the acquisition was cleared by UK competition authorities in May, the UK government's Cabinet Office has now issued a statement saying: "The Secretary of State considers that a risk to national security will arise because of the critical national security and defence capabilities relating to naval propulsion systems which are delivered through the GE Oil & Gas Marine & Industrial UK Limited and GE Steam Power Limited UK facility."

For the acquisition to go ahead, the Secretary of State has ordered that the companies must: meet physical and information security requirements; implement governance arrangements to protect sensitive information; place a UK government-appointed observer to the board of GEAST UK Ltd with access to the board meetings of both GE Oil & Gas Marine & Industrial UK Ltd and GE Steam Power Ltd; establish a steering committee of the GEAST UK Ltd board to provide oversight of compliance with security requirements and protection of sensitive information and to maintain capacity and capability in respect of critical Ministry of Defence programmes in the UK.

The 'Final Order' also includes a provision that the Secretary of State will have the power to "step in and take operational control of and/or takeover the relevant business or part of the business necessary for the fulfilment of those Ministry of Defence programmes".

The statement adds that the Secretary of State believes that the 'Final Order' "is necessary and proportionate to mitigate the risk to national security".

The binding agreement for EDF to purchase GE Steam Power's nuclear business was signed in November last year. Its nuclear business includes steam turbines, which are installed in about half of the world's nuclear power plants, including in all of EDF's plants in France. The merger has been cleared by competition authorities in France, South Africa, Morocco and Ukraine as well as the UK.