Shaw Group (NYSE:SHAW) Lands Nuclear Deal with Toshiba

A number of interesting factors come with the news that Shaw Group (NYSE:SHAW) has landed a major contract with Toshiba Corporation to provide "engineering, procurement and construction services for new Toshiba Advanced Boiling Water Reactor (ABWR) nuclear power plants worldwide."

Canaccord said, "Shares of the other Shaw – the U.S. construction and Infrastructure development company – were up on news that the company and Japanese conglomerate Toshiba Corporation announced an expanded global strategic partnership in the nuclear power space. Under the agreement, Shaw will have certain exclusive opportunities for providing engineering, procurement and construction services for new Toshiba Advanced Boiling Water Reactor (ABWR) nuclear power plants worldwide, except Japan and Vietnam. Shaw immediately will assume the role of engineering, procurement and construction contractor for Nuclear Innovation North America's (NINA) South Texas Project Expansion, which will use ABWR technology for two new nuclear units, as a consortium team member with Toshiba America Nuclear Energy, a U.S.-based Toshiba subsidiary. Shaw will invest $250 million for an ABWR alliance with Toshiba, including a $100 million credit line available to a venture between Toshiba and NRG Energy (NYSE:NRG) that is expanding a nuclear plant in Texas. The credit facility will convert to equity in NINA upon the satisfaction of certain conditions including the project receiving full notice to proceed, which is expected in mid-2012.

This isn't considered a major game-changer for the nuclear and uranium markets, but it shows the scramble by companies to position themselves for the inevitable surge in demand for both.

Shaw's Chairman, President and CEO, J.M. Bernhard Jr., said, "Now with our agreement with Toshiba, Shaw is able to promote not only Westinghouse AP1000(TM), the world's first Generation III+ nuclear technology, but also ABWR, the world's most proven advanced nuclear technology, to our customers."

Shaw closed Tuesday at $32.05, falling $0.39, or 1.20 percent. For them this is a major deal for a long period of time.