Toshiba on Tuesday confirmed it had been selected as the preferred bidder in BNFL's sale of Westinghouse.
The group said the deal, which would double Toshiba’s nuclear power business, would allow it to “take advantage of a number of strategic opportunities in a sector which we believe has tremendous growth potential”.
There is growing concern that the high price will strain Toshiba’s finances, although the group is expected to bring in other companies to share the burden. Marubeni, the trading company, confirmed yesterday that it was talking to Toshiba about participating in the acquisition but said nothing had yet been decided. Toshiba, with about Y300bn ($2.6bn) in cash, was likely to have to raise funds to finance the purchase, said Yoshiharu Izumi, analyst at JPMorgan in Tokyo.
Toshiba said it could not comment on the price since details of the acquisition had yet to be finalised.
But the acquisition would allow the group to enter a new and promising business and expand its nuclear power business, a representative said.
Toshiba builds boiling water reactors while Westinghouse makes pressure water reactors.
“We believe that our business opportunities will expand. There is no overlap but (the acquisition) augments our existing business,” he said.
The Japanese group, which has not made a foreign acquisition of this scale, said it would “retain Westinghouse's US identity with Pittsburgh at the centre of Westinghouse's US and European activities”.
Standard & Poor’s on Tuesday placed Toshiba’s credit on watch with negative implications. Toshiba’s shares fell 1 per cent to Y723.