Toshiba 2007 Annual Report Download - page 111

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27. ACQUISITION OF WESTINGHOUSE
On October 16, 2006 (Eastern Standard Time), Toshiba completed its procedure to acquire all the shares of BNFL USA
Group Inc., the holding company for the Westinghouse Group whose main business is nuclear power systems, and of
Westinghouse Electric UK Limited (collectively “Westinghouse”) for $5.4 billion. On acquiring Westinghouse, Toshiba
established two special-purpose acquisition companies in the U.S. and U.K. (Toshiba Nuclear Energy Holdings (US) Inc. and
Toshiba Nuclear Energy Holdings (UK) Limited; collectively “TNEHs”), and acquired it through these TNEHs. By build-
ing a collaborative relation, Toshiba’s Nuclear Energy System Business, with its forte in boiling water reactors mainly in the
Japanese market, and Westinghouse, with its advantage in pressurized water reactors in the world market, would be able to
complement each other in the fields of manufacturing, marketing and technology, and exert synergistic effects by penetrating
new business fields that neither Toshiba nor Westinghouse have been able to handle independently.
Westinghouse’s operating results for the period between October 1, 2006, and March 31, 2007, are included in Company’s
Consolidated Statements of Income.
In connection with the acquisition, Toshiba entered into an equity participation agreement with The Shaw Group Inc., a
leading U.S. general engineering firm (“Shaw”) and Ishikawajima-Harima Heavy Industries Co., Ltd. (“IHI”), and Shaw and
IHI participated as Toshiba’s strategic partners in the acquisition of Westinghouse. In accordance with the equity participa-
tion agreement, Shaw and IHI acquired 20% (for $1,080 million) and 3% (for $162 million) of the issued and outstanding
shares of TNEHs, respectively. Consequently, Toshiba’s current equity percentage stands at 77% ($4,158 million).
Toshiba initially raised the funds for acquisition ($4,158 million) from commercial papers and bank loans, but is currently
moving ahead to repay and replace them with a long-term financing obtained from issuance of bonds (¥100 billion) and long-
term syndicated loans (¥250 billion).
Pursuant to the terms of the sale/purchase agreement with British Nuclear Fuels plc as seller, Westinghouse’s assets and
liabilities at the time of acquisition of the shares will be revalued and the purchase price* is to be adjusted. The allocation
process of the relevant purchase price has not been finalized.
* $5.4 billion was agreed based on the Westinghouse’s balance sheets as of March 31, 2005 subject to price adjustment.
The following table summarizes the preliminary estimated fair values of Westinghouse’s assets acquired and liabilities
assumed as of acquisition date:
Thousands of
Millions of yen U.S. dollars
Current assets ¥ 119,530 $ 1,012,966
Intangible assets subject to amortization 201,677 1,709,127
Intangible assets not subject to amortization 50,299 426,263
Goodwill 350,785 2,972,754
Other fixed assets 222,775 1,887,924
Current liabilities 117,042 991,881
Long-term liabilities 181,320 1,536,610
Minority interest 148,742 1,260,526
Net assets acquired 497,962 4,220,017
Goodwill based on the preliminary valuation and other intangible assets are as follows:
Thousands of
Millions of yen U.S. dollars
Core and current technology
(Weighted-average amortization period: 22.4) ¥ 171,377 $ 1,452,347
Other intangible assets subject to amortization
(Weighted-average amortization period: 18.1) 30,300 256,780
Brand name 50,299 426,263
Goodwill 350,785 2,972,754