Westinghouse sale update January 20, 2006

On 3 July 2006, I published a post titled “Nuclear referendum in the market”. The topic of the post was the announcement from BNFL that they had decided to put its Westinghouse division up for sale. Since the division focuses almost exclusively on nuclear technology, the gist of my post was that watching the progress of the sale would be a good way to determine what the market really thinks about the prospects for growth in the industry.

Here is a quote from that post:

The beginning price that is being discussed is about $1.8 Billion US dollars – which is also approximately a billion pounds stirling. I will go out on a limb and predict that the final selling price will be at least 10% higher than that.

If the bidding approaches a frenzy, it will be a resounding vote for new nuclear power!

I have to admit that it is occasionally nice to be able to say “I TOLD YOU SO!”

The Westinghouse sale has not yet been consummated, but The Times published an article this morning – 20 January 2006 – titled Nuclear revival doubles value of Westinghouse in which they have reported that “The sale of Westinghouse, the nuclear-reactor maker, is set to raise almost $5 billion (£2.8 billion) for the government, twice the original estimate.”

Great comment, but lousy math. It seems to me that it is closer to THREE times the original estimate from just 6 months ago, a rate of increase that would even make Larry and Sergey sit up and take notice. (For those readers of this blog that are not business news or technology geeks like me, Larry Page and Sergey Brin are the billionaire founders of Google.)

In other words, the market is speaking loud and clear about the perceived value of nuclear technology for future growth. I just wish that there were more ways for private investors to participate in the nuclear rally, but most of the focused market participants are government owned or privately held businesses. The public firms in the space are so large and diversified that their nuclear businesses are only a small portion of their total revenue so their impact on company stock price is minimal.