Mitsubishi Heavy Industries Ltd and Hitachi Ltd agreed to merge energy equipment businesses with combined sales of JPY 1.1 trillion (USD 13 billion), deepening ties between two of Japan's largest industrial manufacturers.
Mitsubishi will own 65% of the venture, which will make gas turbines, boilers and fuel cells. Hitachi will hold the rest.
The combination unites Mitsubishi Heavy's large turbine technology with Hitachi's expertise in smaller models as Japan steps up investment in thermal-power plants following a shutdown of atomic facilities triggered by last year's Fukushima disaster. The new business will also compete with Siemens AG and General Electric Co overseas as growth in Asia spurs demand for electricity-generating equipment.
Mr Masayuki Kubota, who oversees the equivalent of $1.8 billion in assets in Tokyo at Daiwa SB Investments Ltd said that "It's very positive. The businesses have growth potential and merging with each other gives them a stronger competitive edge."
Hitachi President Hiroaki Nakanishi told reporters that the new venture will aim to become the world's biggest provider of thermal power equipment. It will target opportunities in Asia and work to bolster its service businesses, he said. The company is due to begin operations in 2014.
