Westinghouse goes to BNFL/Morrison Knudsen

30 June 1998

A joint venture of Morrison Knudsen Corp of Boise, Idaho and British Nuclear Fuels Ltd has reached an agreement with CBS Corp to buy for $1.2 billion Westinghouse Electric Co’s nuclear businesses, consisting of Energy Systems (which designs, supplies and services PWRs) and Government Services (which provides environmental clean-up, naval nuclear technology and spent fuel management and engineering to the US government). If regulators approve, the deal, announced in late June, would be finalised by year’s end. It will elevate both MK, a major US engineering and construction company, and BNFL, the UK government-owned nuclear fuel and services company, into significant players in the global nuclear power market. MK will take a 60% share, while BNFL will own the remainder through a US-based holding company. Charles Pryor will continue as president and CEO of the Monroeville, Pennsylvania-based company.

MK and BNFL are already working in the US nuclear business, for example on decommissioning of the Rocky Flats nuclear weapons site. MK is also working jointly with Duke Power to replace steam generators at US nuclear plants.

The deal calls for MK and BNFL to pay CBS $238 million in cash and assume $950 million in Westinghouse debt, liabilities and commitments. Westinghouse’s liabilities were a major sticking point to the agreement, given Westinghouse’s history of litigation with utilities over steam generator reliability. But BNFL’s projections showed it could pay off the liabilities within five years.

The deal may be good news for Westinghouse, which has seen a long, slow attrition of its staff. Morrison Knudsen chairman Dennis Washington told the press he expects employment levels to remain at the current level “for some time” and “hopefully increase at some point.” Westinghouse’s advanced nuclear plant, the AP 600, was recently approved by the NRC staff and is scheduled to be certified this autumn.

For Westinghouse, which bought CBS in 1995, the deal completes a move to divest all of its industrial assets so it can concentrate on radio and television broadcasting. The Process Control Division (PCD) was recently sold to Emerson Electric for $265 million in cash, with the assumption of pension and other liabilities. Under the terms of this transaction Emerson entered into an exclusive supply agreement ensuring that the Westinghouse nuclear business could continue to provide nuclear I&C services, with exclusive rights to PCD-developed technology.

The US Justice Department has recently cleared the $1.5 billion sale of the non-nuclear power generation part of Westinghouse to Siemens of Germany.

Talks on merging Siemens’ nuclear activities with BNFL, which started last year, have come to a halt as a result of the MK/BNFL agreement to buy the Westinghouse nuclear businesses .



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