Toshiba's Westinghouse to be sold in $4.6bn deal

Image source, AFP/Getty

Toshiba's troubled nuclear division, Westinghouse Electric, is set to be acquired by a Canadian company in a deal valued at $4.6bn (£3.4bn).

The deal, which was announced by Westinghouse, would resolve the fate of a business that has weighed on the future of the Japanese conglomerate.

Westinghouse filed for bankruptcy protection in the US last March.

Shortly after, Toshiba warned that losses in the unit jeopardised its ability to continue as a going concern.

Toshiba has struck deals to sell key assets, including its prized memory chip unit, in an effort to recover. It has been working to sell Westinghouse for months.

The planned buyer of Westinghouse, Brookfield Business Partners, is the private equity division of Toronto-based Brookfield Asset Management.

It counts $15.9bn in assets, with investments in energy, construction and industrial operations.

Brookfield said in a statement that Westinghouse had a strong market position "as the largest service provider to nuclear power plants worldwide".

It also noted that most of the firm's profits came from regular services provided under long term contracts.

Letter of intent

Brookfield said it has signed a letter of intent to purchase Westinghouse's global businesses, to be paid for with $1bn in equity and $3bn in debt financing.

It is also taking on certain Westinghouse obligations, such as pension and environmental commitments.

The firm said it expects the deal to close in the third quarter of 2018, assuming the takeover is approved. The deal includes Westinghouse's global operations.

Toshiba acquired Westinghouse in 2006 for more than $5bn, but the prospects for nuclear power have dimmed, as oil and renewable energy costs decline and the Fukushima accident hurt the industry's reputation.

Cost overruns and other losses at two projects in the US led to the bankruptcy filing in 2017.

Last month Toshiba provisionally agreed to sell NuGen, which is working on plans for a nuclear power station in the UK.

In December, NuGen named South Korean utility Kepco as the preferred buyer for NuGen, and said it would continue working toward the proposed Moorside plant in Cumbria.

Westinghouse had previously been in line to provide technology for the project.