Fluor Backs Upcoming SPAC IPO for NuScale Power, Looks to the Future

By

Dec. 15 2021, Published 10:45 a.m. ET

Texas-based engineering company Fluor Corp. (NYSE:FLR) is already a name in the U.S. stock market. FLR stock has been on the market for more than two decades, although one of its projects is preparing to make its market debut for the first time. Fluor-backed NuScale Power is going public via a special purpose acquisition company (SPAC).

Article continues below advertisement

Here's what we know about the IPO of Oregon-based nuclear technology company NuScale Power, including how much of a stake Fluor has and when the blank-check firm plans to trade its ticker out for something shiny and new.

What does the NuScale Power SPAC involve?

NuScale Power is going public via a blank-check firm, or SPAC, called Spring Valley Acquisition Corp. (NASDAQ:SV). Spring Valley has been on the market for a year and has homed in on a target company to acquire ahead of the two-year deadline.

Article continues below advertisement

The combined entity is expected to be worth $1.9 billion. NuScale could see an injection of liquidity to the tune of $413 million.

What does NuScale do?

NuScale creates nuclear small modular reactor technology. According to the company's website, its "ambition is to help the world transition to clean energy with a small environmental footprint, in a socially-responsible manner, and with strong corporate governance and safety culture."

Article continues below advertisement

One way NuScale does this is via the NuScale VOYGR. Small modular reactor (SMR) power plants deliver carbon-free energy and cost less than similarly sized nuclear facilities.

Fluor's connection to NuScale runs deep.

Fluor will own a 60 percent ownership stake of the combined company after the merger is finalized. Fluor first invested in NuScale in 2011 and has been its majority stakeholder since. NuScale mainly operates independently, but Fluor fills in the gaps, namely with its expertise in the EPFC (engineering, procurement, fabrication, and construction) industry and its "financial strength."

Article continues below advertisement

Should you invest in the NuScale SPAC?

NuScale, which will trade under the ticker "SMR" after the merger is finalized, has a leg up against other nuclear pure plays. For one, it's the only company with standard design approval from the U.S. Nuclear Regulatory Commission. The approval is for its NuScale Power Module, while its SMR technology might follow.

Spring Valley CEO Christopher Sorrells wrote, "By receiving Standard Design Approval from the NRC, NuScale has helped establish a new standard in nuclear safety, and in doing so, developed a new carbon-free power solution that provides unique capabilities and performance that can realistically factor into the clean energy transition in the near term."

Article continues below advertisement

Still, SPACs tend to experience higher rates of volatility than even traditional IPOs, at least in the early days. Whatever you choose, make sure your entrance—and egress—for the position is strategic. The SPAC's lockup period is 180 days and institutional or internal shareholders might liquidate some of their positions at that time.

Despite the definitive agreement, either company could terminate the merger at any time before the merger finalization date, according to the terms of the business combination.

Because of Fluor's involvement in NuScale and other nuclear technology operations, investors could choose FLR stock instead of NuScale's upcoming SMR stock. However, FLR has its own volatility issues, too.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.