Major engineering conglomerate Toshiba has been selected as the preferred bidder in British Nuclear Fuels’ (BNFL) sale of US-based reactor manufacturer Westinghouse.
The BNFL board has formally approved the sale of its Pittsburgh based subsidiary, although it is subject to government review and the buyer’s own due diligence process. The parties hope to sign the final contract during February. Toshiba, which already manufactures reactors in Japan, secured the deal with a $5 billion (£2.8 billion) offer, beating off bids from US group General Electric and what had been seen as the front-runner Japanese rival Mitsubishi Heavy Industries. The expected price was around $1.8 billion, but intense competition between buyers primarily owing to the expected upturn in nuclear business generally has increased that sum out of all expectation.
To fend off possible US concerns over foreign influence in a strategic asset base, Toshiba is expected to invite a US partner to take a minority stake in Westinghouse, possibly engineering group Shaw which had earlier made a bid for the reactor group. However, while political influence in the US may yet see the final sale process delayed, the transfer to Toshiba is considered to be favourable for Westinghouse’s long-term prospects. Toshiba is seen as fostering better growth potential than GE, which may also face anti-trust concerns in the US, as GE is seen as having a more aggressive corporate culture. This, it is thought, may negatively influence the company’s chances of securing reactor contracts in China.
The deal, says a statement from Toshiba, “will enable the company to take advantage of a number of strategic opportunities in a sector which we believe has tremendous growth potential.” BNFL ceo Mike parker predicted ‘a smooth expeditious sale’ and described the deal as ‘a straightforward decision due to the strength of Toshiba’s bid and the care BNFL has taken to ensure every potential concern is addressed responsibly’.
The sale comes as interest in nuclear technology grows in response to concerns over global warming and security of supply and yields a considerable return for the UK government, owners of BNFL, which bought Westinghouse in 1999 for $1.1 billion. The sale will also include the nuclear business formerly owned by ABB, which BNFL purchased in 2000 for $485 million, and BNFL’s 22.5% holding in the Eskom-led pebble bed modular reactor (PBMR) project which is expected to result in the first generation-IV reactor’s coming to market. State-owned Eskom is planning to construct a demonstration PBMR unit at its Koeberg site in South Africa.
Westinghouse’s value has been enhanced in recent months with US Nuclear Regulatory Commission design certification approval for its AP1000, a 1100 MW pressurised water reactor (PWR) system, last month. And a number of US nuclear generation companies are including Westinghouse designs in combined construction and operation licence (COL) applications, a preliminary to full regulatory approval for new reactor construction.
China is also expected to order one of Westinghouse’s AP1000 units for Yangjiang, in Guangdong province near Hong Kong, with the very real prospect of more AP1000 orders in China to follow.
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