Mitsubishi Heavy Industries and Hitachi Reach a Basic Agreement on Business
Integration in the Thermal Power Generation Systems Field
Tokyo, Nov 29, 2012 - (JCN Newswire) - Mitsubishi Heavy Industries, Ltd. (TSE:
7011, "MHI") and Hitachi, Ltd. (TSE: 6501, "Hitachi") today
announced that the two companies have reached a basic agreement on integrating
businesses in fields centered on thermal power generation systems and jointly
managing these operations.
The two companies plan to integrate this business by consolidating their
respective operations centered on thermal power generation systems within a
joint venture company by January 1, 2014. MHI and Hitachi will take equity
interests of 65% and 35%, respectively, in the joint venture company.
The global market has continued to expand, driven by the growth engines of
China and other emerging countries. Heightened environmental awareness around
the world has presented a major opportunity for MHI and Hitachi to expand
businesses where they both excel - businesses that solve global energy and
environmental issues at the same time. These sources of buoyant demand require
that companies respond in detail based on highly advanced technologies, quality
and reliability, unfettered by the traditional frameworks of companies. In this
regard, they must be able to harness engineering capabilities as well as sales
and service capabilities closely tied to each region.
MHI and Hitachi share the same corporate credo of "Contribute to society
through the development of superior, original technologies and products."
Over the years, the two companies have established partnerships harnessing
their technical skills and expertise in a variety of fields. Examples include
an alliance and subsequent establishment of a joint venture in the steel
production machinery field; the collaboration in the overseas railway systems
business; and the integration of the hydroelectric power generation system
business. Another example has been joint support for the Fukushima Daiichi
Nuclear Power Station of Tokyo Electric Power Company.
Based on the extensive partnership, the two companies have reached a basic
agreement on business integration to address buoyant global demand for thermal
power generation systems by harnessing superior technical skills, quality and
reliability, with the aim of prevailing against intensifying global
competition. The two companies aim to expand this business by swiftly reaping
integration benefits. This will be done by consolidating their respective
businesses centered on thermal power generation systems within a joint venture
company by January 1, 2014. MHI and Hitachi will take equity interests of 65%
and 35%, respectively, in the joint venture company. Furthermore, the
integration process will see the two companies rapidly co-organize an
Integration Preparation Committee, with the view to cooperating on promoting
the work needed to achieve the integration.
In the thermal power generation field, the two companies both have expansive
product lineups. For example, in gas turbines, MHI has focused on highly
efficient large models in recent years. Meanwhile, Hitachi sees its mainstay
products as small and medium-sized models. Regionally, MHI has strengths mainly
in Southeast Asia and the Middle East, while Hitachi has harnessed its
strengths in markets such as Europe and Africa. The two partners will strive to
leverage the complementary strengths of both companies. Moreover, the two
companies will further enhance their ability to address customer needs and
provide services by taking advantage of their respective strengths in providing
total solutions across all aspects of thermal power plants.
Through this agreement, MHI and Hitachi will develop a stable and efficient
management base for the new company, while accelerating global business
expansion by pursuing synergies through business integration. At the same time,
the two companies will make the most of their collective capabilities, along
with synergies and complementary strengths in technologies and product
businesses. In this process, both companies aim to establish a leading global
company in the thermal power generation systems field.
Further details, including an outline of the new company, will be announced as
soon as they are determined.
Overview of the business integration
(1) Scope of the business integration
Businesses to be integrated are as follows.
- Thermal power generation system businesses (gas turbines, steam turbines,
boilers, generators, etc.)
- Geothermal power system business
- Environmental equipment
- Fuel cells business
- Other related business
Certain subsidiaries and equity method affiliates engaging in these businesses
will be subject to the integration.
(2) Measure of integration
Businesses subject to the integration will be transferred to a joint venture
company by way of company split and other method. Details of the integration
will be determined after the consultation between MHI and Hitachi by the
execution of the final agreement on the integration.
(3) Overview of the parties of the integration
Please see the original release at
(4) Overview of the joint venture company
MHI and Hitachi will have equity interests of 65% and 35%, respectively, in
the joint venture company. Calculation of the equity interest ratio will be
examined through the planned due diligence, etc. Other details of the joint
venture company will be announced as soon as determined.
November 29, 2012 - Execution of basic agreement
Late April, 2013 - Execution of final agreement
January 1, 2014 - Closing
The business reorganization relating to the integration may be subject to the
approval by the shareholders meeting of the MHI. In such case, MHI board will
propose necessary items to its annual shareholders meeting to be held in late
The impact of the business integration on the business results of MHI and
Hitachi will be announced when it becomes clear.
About Mitsubishi Heavy Industries
Mitsubishi Heavy Industries, Ltd. (MHI), headquartered in Tokyo, Japan, is one
of the world's leading heavy machinery manufacturers, with consolidated
sales of 2,820.9 billion yen in fiscal 2011, the year ended March 31, 2012.
MHI's diverse lineup of products and services encompasses shipbuilding,
power plants, chemical plants, environmental equipment, steel structures,
industrial and general machinery, aircraft, space rocketry and air-conditioning
systems. For more information, please visit the MHI website at www.mhi.co.jp.
Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, is a leading global
electronics company with approximately 320,000 employees worldwide. Fiscal 2011
(ended March 31, 2012) consolidated revenues totaled 9,665 billion yen ($117.8
billion). Hitachi will focus more than ever on the Social Innovation Business,
which includes information and telecommunication systems, power systems,
environmental, industrial and transportation systems, and social and urban
systems, as well as the sophisticated materials and key devices that support
them. For more information on Hitachi, please visit the company's website
Mitsubishi Heavy Industries
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