Toshiba Corporation is reportedly planning to sell up to 36% stake in Nuclear power unit Westinghouse. ChicagoBridge& Iron (CBI - Analyst Report) has emerged as the prospective buyer. The decision to sell its stake by Toshiba (which currently owns a 67% stake in the Westinghouse Electric atomic-power unit) is in the wake of the slowdown in the nuclear industry since the Fukushima shutdown last year. Toshiba intends to reduce its exposure to the nuclear industry as many of the power plants in Japan have been closed.
Currently, Toshiba has received six offers for the announced divestiture, three of which are for a 16% stake and the other three are for 20% in the said company. However, Toshiba intends to retain a majority stake in the nuclear unit, for which now Toshiba intends to acquire another 20% stake from the Shaw group for approximately ¥125 billion ($1.5 billion). Following the buyout, Toshiba’s stake in the power unit increases to 87%.
The Shaw Group primarily serves sectors like energy, chemicals, power, environmental, infrastructure and emergency response industries.
The prospective bidder for Toshiba’s nuclear unit, Chicago Bridge & Iron, is also set to acquire The Shaw Group for $3 billion, primarily to expand its nuclear business. Therefore, if the company succeeds in acquiring the 20% stake of the nuclear unit, it will further enhance the company’s portfolio in the nuclear business. The Shaw group and Chicago Bridge & Iron were one of the first companies in the group that had built nuclear reactors in the U.S.
Chicago Bridge & Iron Company N.V. provides conceptual design, technology, engineering, procurement, fabrication, construction, and commissioning services to energy and natural resource industries worldwide. The company currently has a Zacks #2 Rank, implying a short-term (1-3 months) Buy rating on the stock.
Toshiba is a leading manufacturer of consumer electronics and home appliances globally. The company is also the principal manufacturer of NAND flash memory following South Korea based Samsung Electronics.