Westinghouse Electric Corp. said Friday that it agreed to sell its power-generation business to Siemens of Germany for $1.5 billion in cash as part of its plan to divest its industrial businesses and become a media company.
Westinghouse said its divestiture timetable had been pushed back about six months but was expected to be completed by the middle of next year, after which it will be a "pure-play media company" led by its CBS television network.
The Pittsburgh-based company said that, effective Dec. 1, it will change its name to CBS Corp.
"With the actions and plans announced today, the CBS Corp. will be a pure-play media company, consisting of a high-growth, high-cash-flow television-radio stations group, cable networks and a resurgent CBS Television Network," Chairman Michael Jordan said in a statement.
Westinghouse said consolidation in the global power industry had created strong demand for its power-generation business. It said the Siemens deal was expected to close by the end of 1998's third quarter.
The Westinghouse industrial unit, a maker of control systems and gas and steam turbines for power plants, has about 8,000 employees and is based in Orlando, Fla.
With the purchase, Munich-based Siemens moves from third to second in the world's power-generation market.
The combined businesses will hold 12% of the steam turbine segment. General Electric Co. leads with 16%.
European analysts applauded the move for the long term, saying it removes one competitor from an industry that has been pressured by overcapacity and falling prices. But they added that the immediate impact on Siemens' profit remained unclear.
Westinghouse said Charles Pryor Jr., currently the head of the energy systems unit, will assume the position of president and chief executive of the company's remaining industrial businesses: energy systems, process control and government operations.
The acquisition still requires regulatory approval.
Westinghouse also reported results for its third quarter and said it lost $162 million, or 25 cents a share, on sales of $1.3 billion. A year earlier, it lost $28 million, or 6 cents a share, on sales of $910 million.
Westinghouse's stock rose 63 cents to close at $28.25 on the New York Stock Exchange.