China key to Toshiba’s nuclear strategy

Toshiba, the Japanese technology group, would keep Westinghouse, the US power plant company, as a separate business for the next few years, making only minimal changes among employees and senior executives.

Toshiba was this week confirmed as the preferential bidder in the sale of Westinghouse by British Nuclear Fuels.

In an exclusive interview with the FT, Masao Niwano, chief executive of Toshiba’s nuclear arm, said he expected Toshiba and Westinghouse to work “in parallel” for several years.

“We respect their technology and their strategy,” he said. “If they succeed in China, we will assist their strategy. But if they are not able to get business outside the US, we will have to rethink the strategy.”

Westinghouse’s headquarters would remain in Pittsburg, he said.

Getting Westinghouse into China – which aims to build 30 nuclear reactors by 2020 – is one of Toshiba’s main goals and was a key factor in its decision to buy
Westinghouse. Toshiba’s reactors use boiling water technology, while Westinghouse specialises in the pressurised water technique preferred by China.

“China’s market is very important for us and Westinghouse has been trying to construct two power stations in China,” Mr Niwano said.

“It is one of the reasons we were aiming to buy Westinghouse.”

Toshiba is understood to have offered close to $5.4bn, far in excess of the expected price though not substantially more than its closest competitors, which included General Electric of the US and Mitsubishi of Japan. The high price tag has prompted UK government officials to double the amount they expect to be fetched by the impending initial public offering of Urenco, the enrichment group jointly owned by Germany, the Netherlands and the UK. Private estimates stand at $10bn-$12bn.

Mr Niwano said that he expected Toshiba to clear any regulatory or political hurdles and complete the purchase of Westinghouse within the next six months.

Toshiba’s aim was to control half the world’s nuclear reactors and gain a voice equal to GE and France’s Areva, the world’s largest nuclear group, in the debate over the future of nuclear energy and its safety.

“We want to be a real competitor to Areva,” he said.

Mr Niwano said he hoped the deal would “tighten the relationship between the UK, US and Japan, not only in nuclear but in other business areas as well”.

Toshiba experienced no real US government opposition to the purchase and did not expect any in the coming months, he said.

The UK government is expected to help Toshiba get through any US political hurdles, an adviser to the UK government said.