Mitsubishi Heavy Industries and Hitachi Reach a Basic Agreement on Business Integration in the Thermal Power Generation Systems Field
September 23, 2014     Japanese 
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Mitsubishi Heavy Industries and Hitachi Reach a Basic Agreement on Business Integration in the Thermal Power Generation Systems Field - JCN Newswire
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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 http://www.mhi.co.jp/en/news/story/121129en.html

(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.

(5) Schedule

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 June, 2013.

3. Outlook

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

Since its foundation in 1884, Mitsubishi Heavy Industries (MHI) has sought pioneering new monodzukuri (manufacturing) techniques, building the foundations for the development of the entire industry. Today, with environmental and energy issues to the fore, MHI provides people around the world with eco-friendly products, and contributes to society through its involvement in global infrastructure projects and other business activities. For more information, please visit the MHI website at www.mhi.co.jp.

About Hitachi

Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, delivers innovations that answer society's challenges with our talented team and proven experience in global markets. The company's consolidated revenues for fiscal 2013 (ended March 31, 2014) totaled 9,616 billion yen ($93.4 billion). Hitachi is focusing more than ever on the Social Innovation Business, which includes infrastructure systems, information & telecommunication systems, power systems, construction machinery, high functional materials & components, automotive systems, healthcare and others. For more information on Hitachi, please visit the company's website at http://www.hitachi.com.

Contact:

Mitsubishi Heavy Industries
Hideo Ikuno
h.ikuno@daiya-pr.co.jp
+81-3-6716-5277

 


Nov 29, 2012
Source: Mitsubishi Heavy Industries

Mitsubishi Heavy Industries (TSE: 7011) (U.S: MHVYF)
Hitachi (TSE: 6501) (U.S: HIT)

From the Japan Corporate News Network
http://www.japancorp.net
Topic: Business Tieup
View more news from these Sectors: Energy General, Engineering


 
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