Mitsubishi Heavy wins $ 4-5 bln TXU reactor deal

TOKYO, Mar 14 (Reuters) Mitsubishi Heavy Industries Ltd unexpectedly snatched up an order to build two nuclear reactors for U.S. power plant operator TXU Corp., in its first overseas reactor deal estimated to be worth as much as .2 billion.

With nuclear power back in vogue amid concerns about global warming and high prices for coal, natural gas and oil, TXU has joined other U.S. utilities in planning the construction of new nuclear capacity.

The deal puts to rest worries that Mitsubishi Heavy may have been at a competitive disadvantage after rival Toshiba Corp. bought Westinghouse last year to become the world's largest nuclear reactor maker.

Mitsubishi's stock gained 1.9 percent to 656 yen, making it the second-biggest percentage gainer on the Nikkei 225, which fell 2.9 percent amid concerns over the U.S. economy and a strong yen.

Toshiba's shares sank 3.9 percent.

''It's definitely a positive surprise,'' said Masanori Wakae, a machinery analyst at Shinko Securities.

''But the approval for the new reactor won't even come until 2011 so it's far too early to factor this into earnings,'' he added.

The deal comes after TXU last month agreed to be taken over in a billion deal led by private equity firms and suspended plans to build eight coal-fired power units.

Mitsubishi Heavy declined to disclose the value of the order for the two 1.7 million-kilowatt advanced pressurised-water reactors, but a person familiar with the matter said it was worth between 500 billion yen to 600 billion yen (.3 billion to .2 billion).

The reactors, which will be built at TXU's Comanche Peak nuclear power station near Dallas, would come on line some time around 2015, the source added.

TXU, which will be acquired by a group led by Kohlberg Kravis Roberts and Co. and Texas Pacific Group, plans to file construction and operating license applications with the U.S. Nuclear Regulatory Commission to build two to six gigawatts of new nuclear capacity.

That could mean the construction of another three nuclear reactors whose orders Mitsubishi Heavy, Japan's biggest machinery maker, would be in a prime position to win.

Mitsubishi Heavy, which also builds ships, aircraft parts and other heavy machinery, will construct the reactors in cooperation with Washington Group International, an engineering and construction firm.

In Japan, Mitsubishi Heavy has worked on the construction of 23 pressurised water reactors and the building of one nuclear power plant.

Mitsubishi Heavy has an agreement with Areva to cooperate in the sector but Wednesday's deal does not involve the French company.

Toshiba has said it expects to win about 16 orders for new nuclear power plants in the United States.

Hitachi Ltd. and U.S. conglomerate General Electric Co. plan to pool their nuclear units and have teamed up on a bid to construct a nuclear power plant that merchant power company NRG Energy Inc. aims to build in Texas.

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