Saturday, January 28, 2006

Toshiba + Westinghouse Deal

Angela MacDonald-Smith in Sydney wrote a couple of Days ago on January 24th for Bloomberg.com about the Westinghouse deal. And remember, Australia has the most uranium in the world so I think she probably knows what she's talking about.

Bidding for Westinghouse Electric Co., designer of 61 percent of the world's nuclear reactors, signals increasing demand in the atomic energy industry for the first time in decades.

Toshiba Corp. is set to buy Westinghouse from British Nuclear Fuels Plc, the U.K. company said today, without giving a price. Toshiba plans to pay about $5 billion, said two people with knowledge of the talks who declined to be named. General Electric Co. and Mitsubishi Heavy Industries Ltd. had also bid.

Analysis: Toshiba managed to outbid GE, that company with a market cap close to $400 billion. Pretty impressive. Or desperate..either one is fine for me.

The winning offer is more than four times what the U.K. government paid for the business almost seven years ago. Since then, oil prices have more than tripled, helping to drive a nuclear-power boom as Asian countries plan new reactors needed to meet energy demand. Developed nations need an alternative to fossil fuels, which are blamed for global warming.

Analysis: The Kyoto Protocol is an agreement under which industrialized countries will reduce their collective emissions of greenhouse gases by 5.2% compared to the year 1990. The agreement came into force on February 16, 2005. As of September 2005, a total of 156 countries have ratified the agreement (representing over 61% of global emissions). Australia and the US are not part of the accord.

I really doubt that alternative fuels can sustain developed nations. They have forever been development, without much mainstream success. Nuclear power is clean and will not contribute to the greenhouse effect.

After three decades of stagnation, the nuclear industry may receive more than $200 billion of investment by 2030, according to the International Energy Agency.

Demand for nuclear power investments stretches across the industry. FPL Group Inc. of Florida agreed in December to buy Constellation Energy Group Inc. of Baltimore for about $11 billion, doubling the size of its nuclear business. The shares of Saskatoon, Canada-based Cameco Corp., the world's largest uranium supplier, jumped 91 percent in the past year.


Analysis: Cameco is really a very well run company with rock-solid management and owns the most valuable uranium mine in the world. It's market cap is closing on $16 billion Cdn, it's P/E is 86.5, and it's enjoyed an unbelievable run-up already. But it also is the best of breed..(Disclaimer: I do not currently own any shares in Cameco)

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., was quoted in the Wall Street Journal in June saying that the threat of climate change means he's open to investing in nuclear energy.

Anaylsis: Once again, this guy's insight is pretty amazing. Here I am at the end of January writing about uranium and he's already been probing over investing prospects half a year ago. Actually, probably longer. I still remember the first time I looked up how much a share in Berkshire Hathaway would cost. Maybe if you take off a couple of zeroes I could afford a few.

Thoughts?


 

4 Comments:

Anonymous 300spartans said...

Thanks for posting the link on Stockhouse. Good site so far and I like the little tidbits of analysis you include.

Keep it up!

6:52 PM  
Anonymous benben said...

No doubt, CCO is the leader in Uranium market. However, because of the share price, it is not easy go get a hold of this stock with huge amount of shares. However, i heard some analyist mention a company, Symbol: U.

Current price is about 7.

8:54 PM  
Blogger Spelunca said...

U is about as close to buying uranium as you can get. basically the company hoards uranium and waits patiently as its price rises..simple as that. not a bad way to go if you are convinced uranium is going to keep on rising and do not have the time or the inclination to do DD on uranium companies

3:06 AM  
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7:17 AM  

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