Press Releases-2 17 October, 2006 | News

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Toshiba Completes Westinghouse Acquisition

17 October, 2006

Heralds the Dawn of a New Era for Nuclear Energy

TOKYO--Toshiba Corporation today announced its acquisition of BNFL USA Group Inc. and Westinghouse UK Limited (collectively Westinghouse), following completion of the final arrangements with British Nuclear Fuels Limited on October 16, US Eastern Standard Time. Westinghouse Electric Company is now a Toshiba Corporation consolidated group company.

The integration of Westinghouse into Toshiba, along with its extensive expertise in nuclear power generation and nuclear fuel and worldwide market presence, is of great significance in terms of taking Toshiba Group's energy systems business to the global level. The powerful combination of Toshiba and Westinghouse's respective strengths, complementary technologies and businesses, will position Toshiba as the world’s leading nuclear power group, with an unrivaled business range extending to both BWR*1 and PWR*2 systems.

Toshiba established two holding companies in the U.S. and the U.K., Toshiba Nuclear Energy Holdings (US) Inc. and Toshiba Nuclear Energy Holdings (UK) Limited, to carry out the acquisition. Through these holding companies, Toshiba has invested US4,158 million dollars in acquiring a 77 percent share of Westinghouse, giving Toshiba management control of the company. The remaining 23% is held by two strategic partner companies: the Shaw Group Inc. of the USA invested US1,080 million dollars in a 20% stake, while Japan’s Ishikawajima-Harima Heavy Industries Co., Ltd. (IHI) invested US162 million dollars in a 3% stake. Toshiba discussed capital participation with potential partners in terms of mutual understanding of long-term business strategy, a shared market vision, and complementary relations and maximized synergies in conducting business. Toshiba continues discussions with several potential partners.

Following the acquisition, Westinghouse will retain its operating autonomy and remain headquartered in Pennsylvania. By strengthening Westinghouse’s operational structure to maximize synergy with Toshiba and its partners, Toshiba will seek to promote the expansion of Westinghouse’s business.

*1	BWR: Boiling Water Reactor, a reactor developed and commercialized by General Electric of the U.S.
*2	PWR: Pressurized Water Reactor, a reactor developed and commercialized by Westinghouse of the U.S.

Significance of the Acquisition

There is renewed global interest in nuclear energy, driven by concerns to secure stable electric power supplies, promote conservation, and develop environmentally friendly energy technologies. Public awareness of the need for additional nuclear energy capacity is emerging in the United States and Europe, and in the fast-growing Asian economies. China and other growing economies have already planned new investments in plant construction. There are currently 439 nuclear power plants in operation worldwide, and demand for nuclear energy is expected to grow, as it complements the resource-saving and recycling-oriented society of the 21st century. From 2002 to 2020, the global nuclear energy market is expected to grow 130-gigawatt, equivalent to 130 1-gigawatt plants, the typical plant size anticipated in future.

Toshiba is a leader in BWR technology, with a major presence in the Japanese market. Westinghouse enjoys a leading position in the world market with its PWR nuclear systems. The combination of Toshiba and Westinghouse will leverage capabilities in manufacturing, sales and marketing, and in engineering and R&D. The complementary partnership will go beyond the simple addition of the two businesses, and reinforce the ability to enter new business areas where the companies have found it difficult to operate individually in the past.

By integrating Westinghouse’s operations and promoting operational and technological synergies, Toshiba expects sales in its nuclear power business to expand to 700 billion yen by 2015 and 900 billion yen by 2020, compared with 200 billion yen today.

Operational Structure after Acquisition

Toshiba’s policies on Westinghouse’s operation are: 1. Toshiba has majority ownership; 2. maximize complementary synergy with partners; and 3. maintain and strengthen Westinghouse’s ongoing operations. The operational structure will be as described below.

1.	By holding voting rights in proportion to its investment ratio through the holding companies in the U.S. and U.K., Toshiba has majority ownership of Westinghouse. Mr. Masao Niwano, a representative executive officer and corporate senior executive vice president and director of Toshiba Corporation has been appointed president of the board of both holding companies.
2.	The holding companies will have an “owner board” comprised of representative of the three partners. This organization will serve as an advisory body to the holding companies, with the role of coordinating views among the partners and making recommendations to the board of the holding company. Mr. Niwano will chair the owner board.
3.	Westinghouse Electric Company, the core of Westinghouse, will continue to operate from its headquarters in Pennsylvania. Mr. Steve Tritch will remain CEO of Westinghouse.
4.	The board of directors of Westinghouse Electric Company will have seven members, three from Westinghouse Electric Company, and four from Toshiba (two of whom will be part-time directors).
5.	In order to promote complementary relations and enhance synergetic collaboration, Toshiba will establish a coordination office in Westinghouse Electric Company. Personnel will be assigned from Toshiba and its partner companies, and the chief coordination officer (CCO) will be appointed by Toshiba.
6.	In Toshiba’s Power Systems Company, the Nuclear Energy Systems & Services Division will continue to be responsible for promoting the BWR business. A WEC Coordination Division will be established to collaborate with the coordination office at Westinghouse Electric Company.

Outline of Westinghouse Electric Company

Established:	1886
President and CEO:	Steve Tritch
Sales:	Approximately US$2 billion^*1
Employees:	About 9,000^*1
Head Office:	Monroeville, Pennsylvania, U.S.A.

*1	Sales and employees at Westinghouse, including Westinghouse Electric Company

Information in the press releases, including product prices and specifications, content of services and contact information, is current on the date of the press announcement,but is subject to change without prior notice.