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Chicago Bridge & Iron, Toshiba Stocks Fall As Nuclear Construction Deal Cost Issues Continue

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Chicago Bridge & Iron, Toshiba Stocks Fall As Nuclear Construction Deal Cost Issues Continue

Shares of Chicago Bridge & Iron Company N.V. (NYSE: CBI) fell more than 6 percent on Wednesday while shares of Japan-based TOSHIBA CORP NPV (OTC: TOSBF) plummeted more than 20 percent.

Chicago Bridge & Iron is a provider of services to the energy infrastructure market across the world. The company sold its nuclear construction business to a division of the Japanese electronics company called Westinghouse last year for $229 million.

Toshiba has spent billions of dollars to position itself as a top global nuclear power and its acquired property was intended to help in that role. Toshiba said in June it plans on building 45 nuclear reactors across the world by 2030.

Writing Off 'Several Billion' Dollars

However, on Tuesday, Toshiba warned investors that it needs to write off "several billion U.S. dollars" in relation to the acquisition of Chicago Bridge & Iron's property.

As noted by the New York Times, Toshiba and Chicago Bridge & Iron have actually been arguing over the unit's true value since the deal was finalized last year. Specifically, projects that the unit was working on have faced delays and cost overruns, which resulted in disputes over how expensive the delays will actually be and who is responsible for the costs.

"There is possibility of an impairment of all or part of the goodwill for both Westinghouse and Toshiba, depending on the results," Toshiba also cautioned investors in its warning.

Shares of Chicago Bridge & Iron have lost 18 percent throughout 2016 but some analysts suggested the stock is due for a turnaround. It is not yet clear what effect, if any, Toshiba's announcement will have on the stock in the coming year.

 

Related Articles (CBI + TOSBF)

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