Brookfield Business Partners, an arm of Canadian property company Brookfield Asset Management, has agreed to buy Westinghouse Electric, Toshiba’s bankrupt nuclear subsidiary, for $4.6bn.
The deal was announced in a statement released by Brookfield yesterday (4 January). The company, which specialises in buying other companies, said it would fund the purchase with $1bn in shares and $3bn of long-term debt.
Cyrus Madon, the chief executive of Brookfield Business Partners, said: "We look forward to bringing our significant expertise and reputation as a long-term owner and operator of critical infrastructure to enhance the company’s position as a leading global infrastructure services provider to the power generation industry."
José Emeterio Gutiérrez, the chief executive of Westinghouse, said the deal reaffirms his company’s position as "the leader of the global nuclear industry".
The deal is expected to close in the third quarter of this year, but will require approval from regulators and the US Bankruptcy Court. Reuters reports that Westinghouse hopes to exit bankruptcy as soon as March, to allow Toshiba to claim tax benefits in the current fiscal year.
Toshiba bought Westinghouse from British Nuclear Fuels for $5.4bn in 2008. The initial expectation was that Westinghouse would fetch about $1.8bn, however the Japanese engineer was willing to pay a premium to beat rivals such as GE because it expected Westinghouse’s AP1000 pressurised water reactors to be used in new-build nuclear projects in South Carolina and Georgia.
In the subsequent eight years, the US’ attempts to restart its civil nuclear industry have ended in failure in South Carolina, where the VC Summer project was abandoned last year. Meanwhile, a project to add two AP1000 units to the Vogtle plant in Georgia is still under way, but may need federal government support if it is to avoid VC Summer’s fate.
Westinghouse filed for bankruptcy following cost overruns at the two projects, and subsequently said it would no longer be involved in new nuclear construction.
Image: Work under way on the Vogtle project in Georgia (CIC)