Japanese conglomerate Toshiba recently released its unaudited fiscal year report that projects a 1.01-trillion yen ($9.2 billion) loss. It has been reported that Toshiba financial statements reflect loss due to the poor performance of Westinghouse Electric and other investments in nuclear technology. Following this, Westinghouse Electric Co. filed U.S. Chapter 11 bankruptcy protection. Rumors of selling off the Westinghouse Electric business are swirling.
The U.S. is on high alert
Westinghouse Electric Co. supplied the world’s first commercial pressurized water reactor in Pennsylvania. Now, over half of the 430 nuclear power stations globally run on Westinghouse Electric technology. In the U.S., 60% of the 61 nuclear power plants rely on Westinghouse technology. According to USASpending.gov, the Department of Energy (DOE) has granted over 250 million directly to Westinghouse Electric (DUNS Number: 062661272) over the years. This doesn’t include the millions to fund projects they’ve been contracted to complete. For example, Westinghouse Electric is currently the principal contractor in the construction of Plant Vogtle in Georgia. This project received $8.3 billion in funding from the DOE. It’s easy to see why U.S. officials worry that the sale may compromise this project. Furthermore, the Chinese have already been accused of stealing trade secrets from Westinghouse via hacking. Bloomberg reported that U.S. officials are exploring options to keep Westinghouse Electric out of foreign hands. They are considering such tactics as:
- Blocking the sale through the Committee on Foreign Investment in the U.S. (CFIUS)
- Supporting a bid from U.S. or foreign investors in good relation
- Investing directly with equity stakes
U.S. Westinghouse Patents
Since the DOE already has rights to some of the Westinghouse technology through confirmatory licenses of patents, it could be a viable option for the U.S. Government to further invest in Westinghouse technology.
Westinghouse Patents Assigned to the U.S. Government
|Assets||Patent Publication Title||Patent Number||Assignee||Execution Date||Recorded Date||Conveyance Text|
|1||Pressurizer With A Mechanically Attached Surge Nozzle Thermal Sleeve||8,681,922||ENERGY UNITED STATES DEPARTMENT OF||11-01-2011||11-17- 2011||CONFIRMATORY LICENSE (SEE DOCUMENT FOR DETAILS).|
|1||Nuclear Reactor Internals Alignment Configuration||2010/119030||ENERGY UNITED STATES DEPARTMENT OF||12-07-2010||01-25-2011||CONFIRMATORY LICENSE (SEE DOCUMENT FOR DETAILS).|
|1||Solid State Neutron Detector Array||5,940,460||ENERGY US DEPARTMENT OF||06-25-2001||07-07-2003||ASSIGNMENT OF ASSIGNORS INTEREST (SEE DOCUMENT FOR DETAILS).|
|1||Method Of Making Straight Fuel Cell Tubes||6,217,822||ENERGY UNITED STATES DEPARTMENT OF||05-07-1998||04-05-1999||CONFIRMATORY LICENSE (SEE DOCUMENT FOR DETAILS)|
|1||Electrode Electrolyte Interlayers Containing Cerium Oxide For Electrochemical Fuel Cells||6,139,985||ENERGY UNITED STATES DEPARTMENT OF||02-17-1999||03-15-1999||CONFIRMATORY LICENSE (SEE DOCUMENT FOR DETAILS).|
|1||Retractable Pin Dual In-Line Package Test Clip||5,525,812||DEPARTMENT OF ENERGY UNITED STATES||09-27-1994||03-08-1996||ASSIGNMENT OF ASSIGNORS INTEREST (SEE DOCUMENT FOR DETAILS).|
|1||Vibration Isolated Cold Plate Assembly||4,631,635||AIR FORCE UNITED STATES OF AMERICA AS REPRESENTED BY THE SECRETARY OF||10-15-1984||05-13-1985||ASSIGNMENT OF ASSIGNORS INTEREST.|
Will CFIUS review a Westinghouse Electric transaction?
As we await news about Toshiba’s next move, it’s worth noting that a Westinghouse Electric transaction could end up as a highly-scrutinized acquisition on the plate of CFIUS to review. Last year, ktMINE looked at how CFIUS blocked the sale of Philips Lumileds to a Chinese-led investment group.
To fully investigate the risks of any acquisition or investment, is important to review the intellectual property portfolio and connections of the company for:
- Impacted technologies
- Directional trends
- Any other clues that might highlight a strategy or identify partners or players
IP transactions such as patent assignments and licensing agreements can reveal a lot about a company’s strategy.
What we can learn from this
It may seem obvious that when compared to the situations that Sharp, Panasonic, and Sony, are facing, Toshiba is just another Japanese conglomerate facing serious challenges. However, there is more behind Toshiba than just a global consumer electronics. While Toshiba’s failed bet into the nuclear industry may represent the woes of a single corporation, it is certain to reach deep into the U.S. and impact economic, energy, and security considerations. Given the current ambiguous political climate, any U.S. policy changes are likely to create its own fall out.
Photo from the collection of Richard Huppertz