Westinghouse plans industrial spin-off
Westinghouse Electric Corp. has announced plans to separate its $4.6 billion industrial business via a tax-free spin-off to shareholders, forming a new publicly traded company, to be called Westinghouse Electric Co. (WELCO). “The new company will focus on two major technologies: transport temperature control and power generation, including nuclear,” said Michael H. Jordan, Westinghouse Electric Corp. chairman and CEO. WELCO headquarters will be in Pittsburgh, Pa., current home of Westinghouse Electric Corp. The broadcast arm will continue to be based in New York.
Completion of the separation is subject to several conditions, including a favorable ruling from the Internal Revenue Service that the transaction will not be taxable to Westinghouse shareholders or to Westinghouse and registration of WELCO stock with the Securities & Exchange Commission. The company anticipates it will take approximately nine months to formally separate the two companies. WELCO will consist of four business units: Thermo King, Power Generation, Energy Systems and Government Operations.
Westinghouse Power Generation`s technology represents 25 percent of the world`s installed power generation capacity, according to Westinghouse statistics. Westinghouse Energy Systems was a pioneer in the commercial nuclear power business and is still a world leader for this technology. Westinghouse is also planning to streamline its Industries and Technology Group by reorganizing staff support functions and reducing the number of employees in the Energy Systems and Power Generation units. In total, approximately 1,100 positions, including approximately 300 from this fall`s voluntary separation program, will be eliminated.
The reduction is attributed to the groups` smaller size following divestitures in 1995 and the softness in demand for power plant services. Westinghouse expects a charge of approximately $125 million in the fourth quarter of 1996 to cover the severance program costs. The reductions will reduce Westinghouse`s cost structure by approximately $80 million on an annual basis.