Starboard Pushes Fluor to Unlock $4.3 Billion Nuclear Stake Value

Activist Pressure Builds at Engineering Giant

Starboard Value, the prominent activist investor known for pushing operational improvements at industrial companies, has set its sights on Fluor Corporation in what analysts suggest could be another lucrative campaign. Reports indicate Starboard has accumulated a nearly 5% stake in the engineering and construction firm and is specifically targeting what they see as buried value in Fluor’s nuclear technology investments.

At the heart of the matter is Fluor’s 39% stake in NuScale Power, the small modular nuclear reactor company that represents a surprising portion of Fluor’s overall valuation. According to the analysis circulating among investors, this nuclear technology holding accounts for more than 60% of Fluor’s market capitalization yet appears to be trading at a substantial discount within the larger corporate structure.

What makes this situation particularly compelling is the dramatic turnaround Fluor has already undergone. When David Constable took over as CEO in 2021, the company was emerging from a brutal period for the engineering, procurement and construction management (EPCM) sector. The industry had been plagued by aggressive risk-taking on fixed-price contracts that led to massive cost overruns and bankruptcies throughout the sector.

The Hidden Nuclear Fortune

Fluor’s early bet on nuclear innovation is now paying off in spectacular fashion. The company invested approximately $30 million in NuScale more than a decade ago, backing what would become the first U.S.-listed small modular reactor company with Nuclear Regulatory Commission design approval. That stake is now valued at around $4.3 billion according to recent analysis.

Meanwhile, the market context for nuclear power has shifted dramatically. With global power demand surging—particularly from the data center boom—and growing emphasis on carbon-free energy, small modular reactors are increasingly seen as a crucial piece of the energy transition puzzle. NuScale Power stands uniquely positioned as the only company of its kind with full U.S. regulatory design approval.

The math here is what’s catching Wall Street’s attention. If you back out the NuScale stake from Fluor’s current $6.7 billion enterprise value, the core engineering business appears to be trading at just 4.6 times EBITDA. That compares to a range of 6 to 13 times for peers, suggesting the market isn’t properly valuing Fluor’s main operations.

Multiple Paths to Value Creation

Starboard reportedly sees several options for unlocking this embedded value. The activist investor has suggested everything from straightforward open market sales of the NuScale position to more sophisticated financial engineering like exchange offers or mandatory exchangeable bonds. The proceeds could then fund substantial share buybacks that would be highly accretive given Fluor’s current valuation.

Alternatively, sources indicate Starboard has proposed a tax-free spinoff of the NuScale stake. This approach would allow Fluor shareholders to maintain exposure to the nuclear technology’s long-term potential while potentially triggering a rerating of the core Fluor Corporation business. Analysis suggests this separation could yield over 200% upside if Fluor’s core operations achieve a more appropriate multiple.

The relationship dynamics here are particularly interesting. Starboard and Fluor’s executive leadership aren’t strangers—they previously crossed paths during Starboard’s highly successful campaign at AECOM, which returned 147% versus the Russell 2000’s 26% during the same period. That’s when they first encountered David Constable, who now serves as Fluor’s executive chairman after recently stepping down as CEO.

Industry Transformation Creates Opportunity

Fluor’s core business has undergone a remarkable transformation under Constable’s leadership. The company dramatically shifted from high-risk lump-sum contracts to safer reimbursable projects, growing that portion of its backlog from 45% to 80%. Simultaneously, exposure to loss-making legacy projects plummeted from $1.8 billion to just $558 million.

This derisking hasn’t come at the expense of growth, however. Fluor has maintained a steady backlog while achieving a 14% compound annual EBITDA growth rate from fiscal 2021 to 2024. Analysts project continued growth around 9% annually through 2028.

The broader industry consolidation has left Fluor in an enviable position. With many competitors having exited the market, Fluor now operates in what amounts to a global duopoly with Bechtel in the end-to-end EPCM space. Meanwhile, the overall construction market has ballooned to over $918 billion, creating substantial opportunity for the remaining players.

For activist investors like Starboard, this combination of operational improvement, industry consolidation, and buried asset value represents the ideal campaign setup. The firm’s track record in the industrial space is formidable—their average return across 18 prior industrial company campaigns stands at 50.55% versus 11.73% for the Russell 2000 during comparable periods.

What happens next will depend heavily on how Fluor’s leadership responds to the pressure. With construction markets booming and nuclear technology gaining renewed interest, the timing for unlocking value appears favorable. The coming months will reveal whether Fluor pursues a separation of its nuclear assets or finds another path to ensure the market properly values both sides of this unique business combination.