BNFL to buy US nuclear reprocessor in $1bn deal
Wednesday 24 June 1998
The move, which will be announced in London this morning, is being seen as a possible precursor to privatisation under a New Labour government which has overcome initial shyness about the sale of state assets.
BNFL has beaten off strong competition to win control of the nuclear side of the US company CBS Westinghouse for a price believed to be around $260m. But the British company will also take on a part of the Westinghouse liabilities, making the deal worth $1bn in total.
It will make BNFL one of the largest British employers in America. It has built up a significant subsidiary in the US with sales contracts worth $2bn.
A spokeswoman for BNFL in London refused to comment on the Westinghouse deal, saying: "We never comment on speculation." As to whether such a move would lead towards privatisation, the spokeswoman added: "BNFL is owned by government so it would be up to them to comment on such issues."
The nuclear and government services divisions of Westinghouse are the last parts of the company to be spun off by by CBS, which will now focus its efforts on media.
BNFL was bidding with Morrison Knudsen, an Idaho-based US engineering company, against other consortia including Bechtel, the US group, and Framatome, the French nuclear giant.
Though there are no regulatory implications in the US beyond the normal requirements of antitrust law, it will imply renewing agreements with the US Department of Defense and the Department of Energy, Westinghouse's largest customers, as well as other commercial nuclear operators.
BNFL will, by taking on Westinghouse, become a key supplier to the US government. Westinghouse manages facilities for tritium production for the US weapons programmes, and handles spent nuclear fuel and dismantled nuclear weapons from the US navy.
BNFL has built up a significant business in the US since it established its own operating subsidiary, BNFL Inc, in 1990. The Washington-based company now holds contracts worth $2bn, mainly to clean up and manage old nuclear weapons sites, like the one at Savannah River in South Carolina.
BNFL's US success, built on expertise established in the UK, has helped swell the group's turnover in 1997 to pounds 116m on sales of pounds 1.2bn.
Globalising BNFL and making it a key player in the US market, the transaction raises big questions about its continued ownership by the British government, corporate sources in America say. It may lead to changes in the structure of ownership, if not all-out privatisation.
Westinghouse Electric Company has 24,000 employees around the world, a substantial increase in BNFL's already important overseas activities. It supplies new plant design, services, fuel and instrumentation and control technologies for 400 plants around the world.
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