Hitachi Zosen Eyes M&A to Beef Up Energy-From-Waste Business

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  • Co. has set aside 40 billion yen for M&A through March 2017
  • Co. makes floating structures for Japan offshore wind

Takashi Tanisho.

Photographer: Kiyoshi Ota/Bloomberg

Hitachi Zosen Corp., a Japanese builder of plants and bridges, is pursuing mergers and acquisitions as it seeks to strengthen its waste-to-energy plant business and expand to South Asia and the Middle East.

The Osaka-based company set aside 40 billion yen ($389 million) for M&A as part of a three-year business plan running to March 2017. As of yet, little of that allocation has been used, President Takashi Tanisho said.

“There are many companies we are looking at for M&A right now,” he said in an interview in Tokyo on June 29. “Our focus is on the environment and green energy,” he said, adding that waste-to-energy is an attractive M&A target.

Waste-to-energy plants generate power and heat through the processing of trash. Hitachi Zosen set up the first of such plants in Osaka in 1965, and in 2010 the company acquired AE&E Inova AG, a Swiss company.

Inova and Hitachi Zosen have won orders for more than 840 waste-to-energy plants worldwide, with Japan accounting for more than half, according to a company document.

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Inova’s focus has been Europe, though it has also set up plants in the U.S., South America, Africa and Australia. Hitachi Zosen is shifting its focus from East Asia to Southeast Asia.

“There will be more projects in South Asia and the Middle East,” Tanisho said. “We want to work together in these new markets.”

Currently, Hitachi Zosen and Inova provide engineering, procurement and construction services, as well as operation and maintenance services. Tanisho said that he wants to expand to areas such as trash collection and business planning.

“There are many areas where we don’t have enough expertise and we need to find partners for each country,” he said. “There are ways to work together such as acquiring a company or setting up a joint venture.”

The company is also developing expertise in offshore wind with floating turbines. Hitachi Zosen subcontracted to make a floating structure for a 5-megawatt turbine for a government pilot project in Fukushima, according to Tanisho.

Offshore Wind

Hitachi Zosen is taking part in a separate pilot project near the southern island of Kyushu to supply floating structures for 3-megawatt and 4.4-megawatt wind turbines, the president said.

The company is also part of a 10-member group planning to build a 220-megawatt wind farm off the coast of Niigata prefecture in central Japan.

Hitachi Zosen was founded in 1881 by E. H. Hunter from England as Osaka Iron Works. The company retains “Zosen” -- which means “shipbuilding” in Japanese -- even though its shipbuilding operation was transferred to Universal Shipbuilding Corp. in 2002.

The company aims to expand its sales of movable flap-gate seawalls to respond to natural disasters and electron beam sterilization systems that allow for bottling without requiring chemicals and water, Tanisho said.

Projects such as offshore wind and methanation of carbon dioxide will become major businesses in 10 years to 15 years, he said.