Brookfield-led group to buy Westinghouse Electric for US$4.6 billion


A group led by Brookfield Business Partners LP announced yesterday that it has entered into an agreement to purchase nuclear engineering firm Westinghouse Electric Co. for $4.6 billion.

Cyrus Madon, CEO of Brookfield Business Partners said today: "Westinghouse is a high-quality business that has established itself as a leader in its field, with a long-term customer base and a reputation for innovation".

The buyers are also assuming Westinghouse's underfunded pension plan. It's expected to close in the third quarter. The deal, which still needs court and regulatory approval, was reached Wednesday night, said the source, speaking on condition of anonymity because some details are not yet public.

Representatives for Blackstone and Apollo weren't immediately available for comment.

BAM, which has $265 billion in assets under management, is an active investor in real estate, energy and infrastructure.

"Acquiring Westinghouse definitely fits the risk approach they have", said Mycle Schneider, an energy and nuclear policy consultant in Paris. CIBC Asset Management Inc now owns 2,135,736 shares of the business services provider's stock worth $63,164,000 after buying an additional 1,417,874 shares during the last quarter.

Last year, Brookfield Asset Management acquired control of two owners of renewable energy projects, TerraForm Global and TerraForm Power, from SunEdison, which had filed for Chapter 11. Brookfield Business Partners said it will fund roughly half of the equity on closing using existing funds and may syndicate some of the investment to other institutional investors at a later date.

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Brookfield won an auction to propose the best possible offer for the company, and has a plan to reorganize its bankrupt USA assets as well, a person familiar with the offer told Bloomberg.

The deal marks a positive turn in a long saga of financial woes stemming from USA reactor projects that dragged Westinghouse into bankruptcy, ensnared its parent, Toshiba Corp., and also battered US utilities that had taken on their construction.

Westinghouse runs the Springfields factory at Salwick which produces fuel for reactors at power stations.

Despite problems with two USA nuclear projects, Brookfield says the company is a leader in providing nuclear infrastructure and operates within a complex regulatory and licensing environment requiring depth of expertise and capability.

Only a day before, India's Minister of Atomic Energy and Space, Dr Jitendra Singh had informed the Parliament about the government's decision to go ahead with the proposed deal despite the uncertainty surrounding the ownership of Westinghouse that filed for bankruptcy past year following the Japanese Toshiba Corporation's decision to pull out of the nuclear power plant sector.

One of Westinghouse's unfinished US projects, known as Vogtle in Georgia, will continue with Southern Co replacing the company as the project manager.

South Carolina Electric & Gas Co. abandoned construction reactors at the V.C. Summer Nuclear Station.