Private equity firms eye BNFL's US unit

Westinghouse, the US nuclear arm of BNFL, has been put up for sale by the British government, attracting interest from a variety of bidders including a private equity firm chaired by Dan Quayle, a former American vice president.

Westinghouse, the US nuclear arm of BNFL, has been put up for sale by the British government, attracting interest from a variety of bidders including a private equity firm chaired by Dan Quayle, a former American vice president.

Rothschild, bankers to the publicly owned BNFL, are handling the sale and are looking for in excess of $1bn for Westinghouse. The Pittsburgh-based company is one of the largest providers of nuclear technology in the world, and is one of three contenders to win a multibillion-dollar contract to build 30 reactors in China by 2020.

Cerberus Global Investments, which Mr Quayle joined in 2000, has informed the Government that it is interested in buying Westinghouse, and has assembled a team of well-known names from the nuclear sector to lead the bid, according to New York financial circles.

They include Norman Askew, a former chief executive of BNFL and currently the chairman of Manchester-based IMI, an engineering company. Also involved are Charles Pryor, a former head of Westinghouse and currently president of Urenco, the state-owned uranium enrichment company. They declined to comment.

Blackstone, the New York-based buyout group, is also thought to be eyeing Westinghouse closely, along with Oaktree Capital, a Los Angeles-based buyout firm. The business could also attract attention from industry buyers, such as the Louisiana-based Shaw Group or France's Areva.

Barry Gardiner, the minister in charge of overseeing government-owned businesses, and BNFL's board are expected to approve the Westinghouse prospectus within the next few weeks.

Government officials have already had conversations with interested buyers and are likely to meet bidders after the prospectus has been circulated.

The Government's decision to sell Westinghouse comes at a time of unprecedented interest in the US and UK in nuclear energy as a way of meeting targets to cut carbon emissions from fossil fuels.

That is likely to make Westinghouse particularly desirable at the moment. The Government may also build a stipulation into the deal which would require the acquirer to pay more if Westinghouse wins the reactor contract in China, which will not be decided until late this year.

At the same time, divesting Westinghouse will remove Downing Street's obligation to use the British-owned group in any future programme of building new reactors in the UK. Sources said Whitehall officials prefer the cutting-edge technology developed by competitors in France and South Africa.

BNFL would not comment on the sale of Westinghouse. A spokesperson for the Department of Trade and Industry said no formal decision had been taken on the deal.

Nuclear industry circles have been speculating on Westinghouse's future since its chief executive, Steve Tritch, told an industry meeting in Pittsburgh last month that "there are people in the British government considering whether Westinghouse ought to continue to be part of BNFL or whether Westinghouse ought to have a new home".

The company was bought by BNFL in 1999. Cerberus, which has about $15bn under management, would not comment on the deal. It is understood that Messrs Askew and Pryor would form a new board at Westinghouse if the bid succeeds. But their close ties to other parts of the nuclear industry could raise difficulties for the Government. Mr Pryor at Urenco is running a business with financial connections to BNFL.