Toshiba in talks to sell Westinghouse stake

Two Japanese and one American company are in negotiations to buy as much as 49 per cent of Westinghouse, the US nuclear group, from Toshiba, Japan’s second-biggest electronics maker.

Marubeni, the trading company, and Mitsui, the conglomerate, are the most likely Japanese winners of the deal whose total value could surpass $2.5bn. Meanwhile Shaw, the US engineering group, is expected to end up with a smaller stake in Westinghouse.

Shaw, whose original bid for Westinghouse was rejected by BNFL’s board in early January, is being brought back into the fold because of the perceived need for Toshiba to include a US partner to clear Washington’s political and regulatory hurdles, people close to the negotiations said.

Atsutoshi Nishida, Toshiba’s president and chief executive, said on Monday, that Toshiba was looking to sell 46 to 49 per cent of Westinghouse, which it is in the process of acquiring from BNFL, the UK government’s nuclear group, for $5.4bn. He was speaking at a press conference following the signing of the agreement between Toshiba and BNFL.

Toshiba’s acquisition of Westinghouse still requires regulatory approval, which it expects will take no more than six months.

Gordon Campbell, chairman of BNFL, on Monday told the FT that all the legal and political advice gathered so far indicated the Japanese company should have little trouble clearing any US political and regulatory hurdles.

However, to improve its chances, Toshiba has hired Howard Baker, the retired Republican senator of Tennessee who served as US ambassador to Japan from 2001 until last year, people close to the company said.

Mr Baker has also served as majority leader of the US House of Representatives (1981-85) and was President Ronald Reagan’s chief of staff from 1987-88.

The Toshiba/Westinghouse deal will come under review by the Committee of Foreign Investments in the US. The interagency panel chaired by the Treasury Department has come under increasing pressure to look closely review at foreign deals. But analysts said that Toshiba, being a company from an ally, taking over Westinghouse, which is already in foreign hands, should have far less trouble than CNOOC, the Chinese oil company that was forced to abandon its bid to takeover Unocal, of the US, before it even got to the committee.

Toshiba expects nuclear power to triple by 2015 and said it should recoup its investment in Westinghouse in 15-20 years. It intends to finance the deal through its Y100bn-a-year ($840m) cash flow, but may look to borrow funds, Mr Atsutoshi said on Monday.

China was particularly important in Toshiba’s decision to buy Westinghouse, Masao Niwano, chief executive of Toshiba’s nuclear arm told the FT in an interview last month.

The Chinese government plans to increase its nuclear power capacity to 36,000 megawatts by 2020, requiring This would require about 27 new reactors at a cost of costing about $2bn each.

Beijing has indicated it wants those reactors to use pressurised water technology, which Westinghouse uses.

Toshiba’s reactors use boiling water technology, Mr Niwano explained.