Toshiba to buy Shaw’s stake in Westinghouse
10 October 2012
Toshiba’s stake in Westinghouse will increase to 87% in January 2013 when it completes the purchase of the Shaw Group’s 20% stake in the company. Shaw announced over a year ago that it planned to sell its stake back to Toshiba.
Shaw’s option to trigger the sale was part of a deal struck with Toshiba during its $5.4 billion purchase of Westinghouse from the UK’s former national nuclear company, BNFL, in October 2006.
Toshiba immediately sold on 20% of Westinghouse to Shaw, which financed that by issuing yen-denominated bonds. The arrangement between the firms included a ‘put option’ under which Shaw could call on Toshiba to buy back the stake at any time before October 2012, at which time it would be exercised automatically.
Shaw announced in September 2011 that it was exercising the option in order to reduce its exposure to the sliding dollar-yen exchange rate. The dollar value of the debt had grown by “over $600 million to a total of almost $1.7 billion,” it said. At the time the deal was agreed, $1 would buy about ¥116, but the figure is only ¥78 today.
The put option was exercised automatically on 6 October 2012 under the terms of the put option agreement, for cash settlement 90 days thereafter, in January 2013. Toshiba said that it will purchase Shaw’s stake for some ¥125 billion ($1.6 billion) by immediately available cash and/or loans.
Assuming appropriate consents for the transaction are obtained, some 87% of Westinghouse will be held by Toshiba. Ten percent is held by Kazakh uranium and rare-earth metals producer KazAtomProm and 3% by Japanese component-maker IHI.
Toshiba said that it has received interest from potential partners regarding the purchase of a stake in Westinghouse and “is open to talks on the condition that Toshiba retains a majority stake, can expect to share long term business prospects and strategies with partners, and secure positive synergies.”
Westinghouse is currently constructing four AP1000 reactors in the USA and a further four in China. Shaw is working with Westinghouse on these projects and has already agreed to see all currently outstanding orders through to completion. Toshiba said that future plant engineering partners would be selected on a project-by-project basis.
In July 2012, it was announced that global engineering, procurement and construction company Chicago Bridge & Iron Company (CB&I) is to acquire the Shaw Group in a transaction worth an estimated $3 billion. CB&I Shaw will become one of the world’s largest energy industry engineering and construction companies. The acquisition is expected to be completed in early 2013.