Toshiba Corp, Japan's largest maker of nuclear reactors has agreed to buy engineering and construction company Shaw Group's 20-per cent stake in nuclear power-plant company Westinghouse Electric Co, for about $1.6 billion.
The purchase will increase Toshiba's stake in Westinghouse from 67 per cent to 87 per cent.
Tokyo-based Toshiba, Shaw Group and Japan's Ishikawajima-Harima Heavy Industries had acquired a majority stake in Westinghouse in 2006 from British Nuclear Fuels Plc for $5.4 billion. (See: Toshiba buys Westinghouse for $5.4 billion).
Toshiba paid $4.16 billion for a 77 per cent stake, while Shaw Group paid $1.08 billion for 20 per cent stake and Ishikawajima paid $16 million for the remaining 3 per cent. Toshiba sold 10 per cent of its stake to Kazatomprom, Kazakhstan's state nuclear company in 2007.
As part of the acquisition, Shaw had the option to sell all or part of its 20-per cent stake to Toshiba before the six-and-a-half-year maturity of the bonds.
Shaw Group said that it decided to exercise its option of selling its stake due to the recent significant appreciation of the Japanese yen against the US dollar, which made the group incur foreign exchange loss on the bonds. Under the circumstances, Shaw Group said that it has decided to exercise the put option.
The proceeds from the sale will enable Shaw Group to eliminate $1.7 billion of debt.
''We firmly believe that exercising the put options is in the best interest of our shareholders and our future business opportunities,'' said J.M. Bernhard Jr., Shaw's chairman and CEO in a statement.
''Toshiba, Westinghouse and Shaw have worked together successfully both in the US and China, and we look forward to continuing to work together. We remain committed to our role as a premier constructor of nuclear power plants,'' he added.
Pittsburgh, Pennsylvania-based Westinghouse Electric provides fuel, services, technology, plant design, and equipment to the commercial nuclear electric power industry.
Nearly 50 per cent of the nuclear power plants in operation worldwide, and nearly 60 per cent in the US, are based on Westinghouse technology.
Westinghouse has won orders for 10 units of AP1000, the next-generation pressurized water reactor, in the US and China.
In coming years, Westinghouse' the AP1000, the next-generation pressurized water reactor is expected to grow despite the recent earthquake in Japan. Many countries including the US, China, the UK, India, Brazil and countries of Eastern Europe, have given their support for nuclear power in order to achieve energy security and mitigate climate change.
Shaw Group has partnered with Toshiba and Westinghouse for the plant construction and engineering of the AP1000 in projects in the US and China. Toshiba and Westinghouse said that they intend to maintain collaborative relations with Shaw Group.