Mitsubishi Heavy Industries and Hitachi announced on 11 June that they have signed a basic integration agreement and a joint venture agreement in relation to the business integration centred on the two companies' thermal power generation systems. The new company will be split off at the end of July, to take effect on 1 January 2014.
The move, following as it does the takeover in May of Pratt & Whitney's gas turbine business, will create a new entity in the global power business to rival GE and Siemens.
MHI and Hitachi agreed on 29 November 2012 to transfer their respective power generation businesses by way of company split and other methods to an integrated company, in which the equity interest of MHI and Hitachi will be 65% and 35% respectively.
The two companies have now signed the Definitive Agreements, specifying the terms and conditions related to their business integration. The preparatory company for the integrated company is planned to be established in due course, and the details of the Business Integration will be specified in a company split agreement to be concluded among MHI, Hitachi and the Preparatory Company around the end of July 2013.
The two companies have already established partnerships in a variety of fields. Examples include an alliance and the subsequent establishment of a joint venture in the steel production machinery field; collaboration in the overseas railway systems business; and 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.
In the thermal power generation field, the two companies both have extensive product lineups. In gas turbines, MHI has focused on high efficiency large models in recent years while 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 strengths in markets such as Europe and Africa.
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