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Toshiba (TYO: 6502) to Sell Westinghouse Stake

Sale to Bring in Cash

Written by Brian Hicks
Posted January 2, 2013

Partly in response to lowered cash flow, Japan’s Toshiba Corp. (TYO: 6502) is trying to sell a 36 percent stake in the U.S. nuclear reactor manufacturer Westinghouse. Although Toshiba isn’t likely to divest completely, it is clearly trying to reduce its stake in Westinghouse in order to bring in some much-needed cash.

From Reuters:

"We are in talks with six separate groups for the (Westinghouse) stake," Toshiba CEO Norio Sasaki told Reuters on Friday, without giving details of how much Toshiba might make from the sales.

Back in 2006, when nuclear power was a highly active industry sector, Toshiba paired up with IHI Corp. (TYO: 7013) to purchase Westinghouse in a deal worth $5.4 billion. Toshiba had to pay another $1 billion to raise its stake above the desired 51 percent following a deal-endangering pull-out by Marubeni Corp. (TYO: 8002).

But nuclear power has fallen from favor in the years since, and Japan’s recent Fukushima incident has made nuclear power something investors have strayed away from.

According to Sasaki, Shaw Group Inc. (NYSE: SHAW) of Louisiana is set to sell back 20 percent of Westinghouse to Toshiba for $1.6 billion next January, and in an ideal case, another American company should pick that up. Toshiba won’t be doing any equity financing for the deal.

Currently, Toshiba is in talks with three unnamed parties regarding a possible sale of Shaw’s stake, plus another three parties for an additional 16 percent stake in Westinghouse.

The markets have been difficult for Toshiba. The company reduced its year’s operating profit projections by 13 percent, down to $3 billion back in October, and earlier in July it slashed production at its main Yokkaichi plant by 30 percent.

Shares were up 4.98% on Wednesday to 337 yen.

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