US companies consider Westinghouse buy-out

3 October 2017

Private equity companies Blackstone Group and Apollo Global Management have formed a consortium to buy out US-based Westinghouse Electric Co from a Japanese Toshiba corporation, Reuters reported on 27 September, citing “people familiar with the matter”.

US investment company Apollo Global Management, founded in 1990 by banker Leon Black, specialises in financed redemption. Reuters noted that it was Apollo, which issued a loan to Westinghouse, necessary to continue operations during the period of bankruptcy. Blackstone Group is a US investment group of companies founded in 1985 by former managers of Lehman Brothers Bank, Peter Peterson and Steven Schwarzman.

Westinghouse, which filed for bankruptcy in March as a result of cost overruns at four nuclear reactors under construction in the US, is working with investment bank PJT Partners Inc on a sale process, which is still in its early stages, Reuters said. A deal could value Westinghouse at close to $4bn, the sources added and would limit the financial damage to Japan’s Toshiba Corp, which owns Westinghouse.

Buyout firm Cerberus Capital Management is also reportedly in talks with US nuclear power plant component provider BWX Technologies about submitting a joint bid for Westinghouse.

Other bidders may also emerge, but the US Committee on Foreign Investment, which scrutinises deals for potential national security risks, could make any acquisition of Westinghouse by a foreign buyer harder, according to the sources.

Reuters cited a Westinghouse spokeswoman as saying the company had started the process to exit bankruptcy through a sale or by securing an investment. Westinghouse has previously said it is hoping to exit bankruptcy early next year.

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