Dealmaking among European nuclear providers is likely to receive a significant boost from energy-intensive data centers, M&A practitioners said.

The rise of artificial intelligence (AI) is supported by a growing network of data centres, which consume significant amounts of energy. Energy providers to the sector have been actively considering M&A.

To decarbonise their activities and reach CO2 emissions targets, energy-intensive industries are increasingly interested in relying on nuclear energy, Ximena Vasquez-Maignan, counsel at White & Case, said.  She is the former Head of Legal Counsel of the Organisation for Economic Co-operation and Development (OECD) Nuclear Energy Agency.

Nuclear dealmaking in Europe is beginning to boom as a result. In 2024, the total deal value in the European nuclear space almost grew 6x with EUR 886m across 15 deals, compared to EUR 160m over 20 transactions in 2023, according to Mergermarket data.

The trend looks set to continue. Earlier this year, private equity firm IRDI Capital Investissement and state-owned investment group Bpifrance acquired an undisclosed minority stake in Groupe D&S.

The French company specialises in nuclear risk management, including clean-up services, dismantling, operational radiation protection, and quality assistance. It also offers asbestos removal and other services in the industrial sector.

French leadership

It is no coincidence that a French company led the most significant deal of the year so far. The country derives around 70% of its electricity from nuclear power, which makes it the world’s largest net exporter of electricity.

There is a clear contrast with neighbouring Germany, which phased out nuclear power in 2023, despite sanctions on Russia from 2022 hurting its industrial base. The country had previously imported large quantities of Russian gas. The incoming government is rethinking its position on nuclear power, as widely reported.

Last month at an AI summit in Paris, the European Commission (EC), the French government, private equity firms including Brookfield, and AI and telecoms companies including Evroc and Iliad pledged to invest hundreds of billions of euros to boost data centres. The idea is to build a sovereign European AI industry.

In this context, there is significant interest in deploying small modular reactors (SMRs), which can be built offsite and then be installed next to a data centre. SMRs can be powered by nuclear waste.

So far, only China and Russia have deployed SMRs operationally. However, the European Union (EU) has backed the development of SMR projects throughout the bloc, as has the UK government. This, in turn, has led to huge interest from investors.

An SMR unicorn, Newcleo, is leading the way. It moved its headquarters to Paris in September 2024 and is preparing a potential initial public offer (IPO). It has already raised EUR 537m in private funding since 2021 and signed a large property deal in March.

Major strategic players are also positioning themselves, including Rolls-Royce‘s [LON:RR] SMR unit, which announced a partnership with Siemens Energy [ETR:ENR] in February to produce factory-built SMRs.

Yes, please?

Germany is not the only European country to rethink its stance on nuclear power. Italy plans to reintroduce nuclear power by 2020 and could seek investment for a state-backed company. Meanwhile, Sweden has announced ambitious plans for nuclear power, and Switzerland is moving to end a ban on new reactors.

As excitement builds in the industry, names to watch include Electricite de France [EPA:EDF] (EDF), which is looking for investors for the Hinkley Point C nuclear project in the UK; and Core Power of the UK, which builds nuclear tech solutions for ocean transport and heavy industry, and is closing a round to raise USD 500m.

Finally, plans by European members of the North Atlantic Treaty Organization (NATO) to massively increase defence spending could also help the sector attract investment, particularly for providers of nuclear-based military equipment.