Hitachi Ltd. will team up with Mitsubishi Heavy Industries Ltd. in a bid for Alstom SA’s power business, strengthening the partnership in energy charted by the two Japanese companies in recent years.
The Japanese duo would join the Siemens AG-led attempt to counter a $17 billion offer by General Electric Co. for the French company.
The plan is a “good thing” for Hitachi, Katsumi Nagasawa, president of Hitachi’s power systems unit, said today in Tokyo. The bid won’t affect Hitachi’s alliance with GE in nuclear energy, he added.
Mitsubishi Heavy and Hitachi may bid 500 billion yen ($4.9 billion) for Alstom’s steam turbine business while Siemens will pay 500 billion yen for Alstom’s gas turbine business, the Nikkei newspaper reported today, without saying where it got the information. Alstom’s grid business wouldn’t be part of the deal, the Nikkei said.
Mitsubishi Heavy and Munich-based Siemens AG will decide whether to submit a joint proposal to Alstom’s board of directors by June 16, the two companies said in a statement yesterday, confirming an earlier report by Bloomberg News. The companies didn’t give further details.
Hitachi’s involvement would build on ties already developed between the two Japanese companies.
Earlier this year, Mitsubishi Heavy formally began operating a venture with Hitachi. that combined their energy-equipment businesses. The venture, called Mitsubishi Hitachi Power Systems Ltd., was announced in November 2012.
Hitachi’s president at the time, Hiroaki Nakanishi, vowed to make the venture the world’s biggest provider of thermal-power equipment. Hitachi President Toshiaki Higashihara said in January that his company would consider mergers and acquisitions to expand. Higashihara also said the electronics maker would consider partnerships.
Mitsubishi Heavy supplies some of the turbines used by Iceland to tap that nation’s underground sources of renewable energy. It signed a memorandum of understanding in 2010 with Reykjavik Energy, an Icelandic geothermal power utility, to cooperate on the global development of geothermal energy.
In September, Mitsubishi Heavy agreed to form a venture with Vestas Wind Systems A/S to develop offshore wind power plants.
Mitsubishi Heavy also has ties with the French energy industry. French nuclear reactor maker Areva SA has a joint-venture with the Japanese company which designs and markets mid-sized nuclear reactors.
Power systems account for more than a third of Mitsubishi Heavy’s sales and the company has plans to become an even bigger player in the industry.