Japan's Toshiba Corporation said Tuesday that it has been selected as the preferred bidder for the sale of U.S. nuclear plant builder Westinghouse Electric Co., the company said in a statement. Westinghouse is the U.S.-based unit of the British government's British Nuclear Fuels PLC, or BNFL. "Toshiba is pleased to confirm that it has been selected as the preferred bidder in BNFL's sale of Westinghouse," the statement said. Toshiba officials stressed that this does not mean that the company has won the final confirmation. Toshiba, which was the highest bidder, will be recommended for approval by the BNFL Group Board later this week, according to the BNFL statement issued Tuesday. The statement said it "expects the sales contract to be signed in the near future."
Kyodo News agency reported that the purchase cost is estimated at more than US$5 billion (4.1 billion euros), but officials would not comment on the price.
Toshiba was competing against General Electric Co. and Mitsubishi Heavy Industries Ltd. GE formed a partnership with Hitachi Ltd., and Mitsubishi Heavy was working with Washington Group International Inc. in efforts to clinch the deal.
Toshiba spokesman Keisuke Omori could not confirm the report, saying that the company does not disclose any figure because the company has not reached an agreement.
Standard & Poor's said Tuesday it might downgrade Toshiba credit ratings on the report, warning that the costly bid could strain Toshiba's balance sheet.
The acquisition may generate larger funding demands than stated in Toshiba's medium-term management plan, and could cause deterioration in the company's balance sheet, which recorded cash and equivalents of 257 billion yen (US$2.24 billion; 1.83 billion euros) as of Sept. 30, 2005, S&P said in a news release.
S&P placed its 'BBB' long-term and 'A-2' short-term issuer credit and issue ratings on Toshiba on CreditWatch with negative implications, following the announcement of the bid.
Still, analysts say Westinghouse is attractive for Japanese heavy machinery makers, particularly due to its strength in China, which plans to build more nuclear power plants to meet growing energy demand.
The high-profile battle for control of Westinghouse underscores a view among global firms that energy is an industry that could grow in importance as the world confronts limited resources of oil and other fossil fuels.
China's demand for energy is particularly expected to drive up costs for such traditional energy sources, sparking calls for alternatives, including nuclear power, reports the AP.
Russian Foreign Minister Sergei Lavrov announced the termination of diplomatic relations with NATO at a time when US Secretary of Defense Lloyd Austin ended a meeting in Georgia with his counterpart