| Toshiba Completes Westinghouse Acquisition
17 October, 2006
Heralds the Dawn of a New Era for Nuclear Energy
TOKYO--Toshiba Corporation today announced its acquisition of BNFL USA Group Inc. and Westinghouse UK Limited (collectively Westinghouse), following completion of the final arrangements with British Nuclear Fuels Limited on October 16, US Eastern Standard Time. Westinghouse Electric Company is now a Toshiba Corporation consolidated group company.
The integration of Westinghouse into Toshiba, along with its extensive expertise in nuclear power generation and nuclear fuel and worldwide market presence, is of great significance in terms of taking Toshiba Group's energy systems business to the global level. The powerful combination of Toshiba and Westinghouse's respective strengths, complementary technologies and businesses, will position Toshiba as the world’s leading nuclear power group, with an unrivaled business range extending to both BWR*1 and PWR*2 systems.
Toshiba established two holding companies in the U.S. and the U.K., Toshiba Nuclear Energy Holdings (US) Inc. and Toshiba Nuclear Energy Holdings (UK) Limited, to carry out the acquisition. Through these holding companies, Toshiba has invested US4,158 million dollars in acquiring a 77 percent share of Westinghouse, giving Toshiba management control of the company. The remaining 23% is held by two strategic partner companies: the Shaw Group Inc. of the USA invested US1,080 million dollars in a 20% stake, while Japan’s Ishikawajima-Harima Heavy Industries Co., Ltd. (IHI) invested US162 million dollars in a 3% stake. Toshiba discussed capital participation with potential partners in terms of mutual understanding of long-term business strategy, a shared market vision, and complementary relations and maximized synergies in conducting business. Toshiba continues discussions with several potential partners.
Following the acquisition, Westinghouse will retain its operating autonomy and remain headquartered in Pennsylvania. By strengthening Westinghouse’s operational structure to maximize synergy with Toshiba and its partners, Toshiba will seek to promote the expansion of Westinghouse’s business.
Significance of the Acquisition
There is renewed global interest in nuclear energy, driven by concerns to secure stable electric power supplies, promote conservation, and develop environmentally friendly energy technologies. Public awareness of the need for additional nuclear energy capacity is emerging in the United States and Europe, and in the fast-growing Asian economies. China and other growing economies have already planned new investments in plant construction. There are currently 439 nuclear power plants in operation worldwide, and demand for nuclear energy is expected to grow, as it complements the resource-saving and recycling-oriented society of the 21st century. From 2002 to 2020, the global nuclear energy market is expected to grow 130-gigawatt, equivalent to 130 1-gigawatt plants, the typical plant size anticipated in future.
Toshiba is a leader in BWR technology, with a major presence in the Japanese market. Westinghouse enjoys a leading position in the world market with its PWR nuclear systems. The combination of Toshiba and Westinghouse will leverage capabilities in manufacturing, sales and marketing, and in engineering and R&D. The complementary partnership will go beyond the simple addition of the two businesses, and reinforce the ability to enter new business areas where the companies have found it difficult to operate individually in the past.
By integrating Westinghouse’s operations and promoting operational and technological synergies, Toshiba expects sales in its nuclear power business to expand to 700 billion yen by 2015 and 900 billion yen by 2020, compared with 200 billion yen today.
Operational Structure after Acquisition
Toshiba’s policies on Westinghouse’s operation are: 1. Toshiba has majority ownership; 2. maximize complementary synergy with partners; and 3. maintain and strengthen Westinghouse’s ongoing operations. The operational structure will be as described below.
Outline of Westinghouse Electric Company
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