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Finance GreenWatch » 6CSR, 8.Eathquake & Nuclear accident, unclassified » M’bishi Heavy, Hitachi To Merge Power Ops In ’14(Nikkei)

M’bishi Heavy, Hitachi To Merge Power Ops In ’14(Nikkei)

TOKYO (Nikkei)–Mitsubishi Heavy Industries Ltd. (7011) and Hitachi Ltd. (6501) will integrate their power system operations under a joint venture to be set up in spring 2014, The Nikkei learned Thursday.

The companies decided at separate board meetings the same morning to start the merger talks. They are scheduled to announce the decision later the same day.

Sources say the integration will cover such operations as gas turbines for thermal power plants but not nuclear plants.

The joint venture, to be set up in April 2014, will have annual sales of about 1.5 trillion yen, putting it in a good position to make up ground on the two dominant global players — Siemens AG of Germany and General Electric Co. of the U.S.

The global social infrastructure market is expanding rapidly. The merger plan by Mitsubishi Heavy and Hitachi is aimed at better enabling them to survive the increasingly tough international competition for social infrastructure projects amid growing uncertainty over the global economy.

The firms have yet to work out the details of the joint venture, though Mitsubishi Heavy, which has larger annual sales than Hitachi from the power system business, is expected to own a majority stake in the new company.

Mitsubishi Heavy produces a range of power plant types, including thermal, wind and geothermal facilities. Its gas turbines for thermal plants are among the most energy-efficient in the world.

Demand for natural gas-fired thermal plants has been surging in the wake of last year’s accident at Tokyo Electric Power Co.’s (9501) Fukushima Daiichi nuclear plant, which resulted in the shutdown of most of the nation’s power plants.

Hitachi has a competitive advantage in the global market for steam turbines for coal-fired thermal plants, many of which are now planned for construction or are being built in emerging-market countries.

Hitachi also has advanced IT know-how and control technology, which Mitsubishi Heavy lacks. The firms are expected to complement each other well.

Mitsubishi Heavy’s sales from the power system business, including nuclear plants, totaled 950 billion yen in the year ended in March 2012.


Filed under: 6CSR, 8.Eathquake & Nuclear accident, unclassified