A Canadian company are expected to acquire Toshiba’s nuclear division, Westinghouse Electric, in a deal valued at $4.6bn (£3.4bn).
The purchase of Westinghouse aims to help save the company from its financial woes and potentially restore some cash flow in the company after going bankrupt last year.
Selling the nuclear division comes after Toshiba’s nuclear division fell down a financial downward spiral, leaving them filing for bankruptcy after a project went over budget by billions of dollars. Declaring bankruptcy then led to the sale of Toshiba’s famous memory chip unit to the Bain Capital-Led consortium for $18bn in October last year.
Now at a quarter of the price, Toshiba’s troublesome nuclear division is expected to be sold to Brookfield Business Partners, a Canadian company, after being on the agenda for the last few months.
Already counting $15.9bn in assets across energy, construction and industrial operations the nuclear division seems somewhat a perfect fit for the company that plans to acquire Westinghouse by the end of the third quarter this year.
According to the BBC, Brookfield Business Partners is said to have signed a letter of intent for the purchase of Toshiba’s Westinghouse’s global businesses, splitting the purchase into $1bn equity and $3bn in debt financing.
In addition to acquiring the company, Brookfield must also honour Westinghouse obligations including pension and environmental commitments.
Brookfield aims to enhance the nuclear division’s position providing services to the power generation industry Cyrus Madon, Brookfield Business Partners’ chief executive has said according to Reuters.
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The deal will not directly benefit Toshiba financially, but the proceeds will be divided between creditors of Westinghouse which includes Toshiba.
Toshiba first acquired Westinghouse in 2006 for over $5bn and now awaits the sale to be approved so that the deal can close by the third quarter of 2018. Despite hoping the sale will close by the third quarter if history repeats itself it could take substantially longer after Toshiba’s memory chip unit sale was under negotiation for a total of eight months.
The company also provisionally agreed to sell NuGen, which is working on plans for a nuclear power station in the UK, last month.