AEA Tech to be privatised

The Government is expected to confirm before the end of the month that the privatisation of AEA Technology is to go ahead later this year, and the company is believed to be on the point of winning its battle for a stock exchange flotation.

Ministers are not thought to have made a final decision yet, but if the company is floated in the autumn it is likely to be valued at about pounds 200m. AEA Technology is the commercial arm of the UK Atomic Energy Authority, and the indirect nuclear link may give ministers food for thought because of the embarrassment of the British Energy flotation, where small investors have lost money this week.

AEA Technology was incorporated as a separate company earlier this year but had already moved away from its nuclear roots to become a science and engineering research and development business. It is based at Harwell in Oxfordshire, where the workforce has been slimmed by a quarter over the last two years in preparation for privatisation.

Last month, the Government appointed Cazenove as brokers to work with merchant bank advisers Schroders in an indication that a flotation was probable. The specialist financial public relations firm Citigate has also been hired.

The chairman of AEA Technology, Sir Anthony Cleaver, has made no secret of his desire for stock market ownership, and has been pushing for an early decision because of the possibility that an election may undermine the privatisation.

The other option has been a trade sale of the business, to an international contract research or consultancy company, which would have the attraction for the Government of raising the money without the pricing risks involved in a flotation.

A stock market sale would represent the last privatisation of its kind before the election, and it would also be one of the smallest - as little as a seventh of the size of British Energy on current estimates of AEA Technology's value.

Though the company would be a challenge to value, there have been a number of successful flotations of small science-based businesses in recent years.