Westinghouse Selling Power Unit To Siemens

Westinghouse Electric Corp. said Friday it had agreed to sell its power generation business to Siemens AG of Germany for $1.525 billion cash as part of its plan to divest its industrial businesses.

Westinghouse said its divestiture time table had been pushed back about six months but was expected to be completed by mid-1998, after which it will be a pure-play media company led by its CBS television network.

Effective December 1, the company said it will change its name to CBS Inc.

Germanys Siemens AG wanted to buy the conventional power generation unit of Westinghouse Electric Corp and operate it as a separate business within its own power generation business, a union representative told Reuters on Friday.

 

Management talked to the works council two days ago and said (the Westinghouse unit) would be another constellation within Siemens KWU power generation business, works council speaker Helmut Huehlriegel said.

A Siemens spokesman declined to say if the company planned a news announcement on Friday. I dont want to go that far, said Thomas Weber in Munich.

Sources close to Westinghouse on Thursday told Reuters that the sale could be announced shortly.

The unit was expected to fetch a price of about $1.5 billion and the assumption of some liabilities.

Huehlriegel said KWU executives told the units employees at a regular works council meeting that the German electrical engineering giant was interested in Westinghouses conventional power generation business and was bidding against other international companies.

French nuclear power group Framatome SA has also expressed interest in the Westinghouse unit. GEC-Alsthom SA and British Nuclear Fuels Ltd were also reportedly talking to Westinghouse.

For Siemens, currently the worlds number three supplier of power plant technology, the move would bolster its presence in the United States and Asia.

Some analysts thought the deal would pay off in the long-term after taking charges against a restructuring of the Westinghouse business.

Pronounced synergies are in store in R&D in particular, Bank Julius Baers Jochen Klusmann said in a recent report.

Westinghouse would give Siemens much better access to the American market (which) has few orders to offer at the moment, but the technical obsolescence of many plants promised renewed demand in the future, he said.

Siemens KWU power generation units had 1996/97 sales of 9.5 billion marks, with five to six billion coming from conventional or non-nuclear turbines, reactors and control systems.

Its main strength is in Europe, but it has gained ground in Asia, with seven plants in China and others in India, Malaysia and the Philippines.

Westinghouses unit, based in Orlando, Florida, had 1996 sales of just over $2 billion.

Siemens and Westinghouse have been talking over the past year about potential links between their power plant businesses. In the past year, KWU has bought Britains Parsons Power Generation Systems and a stake in a Hungarian producer.

The world leader in conventional power technology is General Electric Co. followed by Swiss-Swedish group ABB Asea Brown Boveri.