Hitachi, M'bishi Heavy eye integrating infrastructure business

TOKYO, Aug. 4 Kyodo -
Hitachi Ltd. and Mitsubishi Heavy Industries Ltd. are considering integrating their social infrastructure businesses, sources close to the matter said Thursday, but denied the companies plan to start negotiating a management integration of the two companies.
Hitachi and Mitsubishi Heavy will seek to establish a new company to integrate their social infrastructure businesses, including their nuclear and other power generation divisions, with an eye to secure more infrastructure projects in emerging economies, the sources said.
The new company is also expected to engage in businesses such as railway transportation systems, aerospace, and industrial machinery, the sources said.
Hitachi and Mitsubishi Heavy will negotiate how to deal with their defense-related businesses under the integration, according to the sources.
The envisioned integration is aimed at responding to fierce competition with foreign rivals such as General Electric Co. of the United States and Siemens AG of Germany in the fast-growing infrastructure market, particularly in emerging countries, the sources said.
Meanwhile, Hitachi, Mitsubishi Heavy and Mitsubishi Electric Corp. announced Thursday that they agreed on consolidating their hydroelectric power generation system operations.
The developments came as Hitachi President Hiroaki Nakanishi revealed Thursday morning that Hitachi and Mitsubishi Heavy have agreed to start negotiations on management integration, a move that if realized would create one of the world's largest infrastructure companies.
''We will negotiate a merger from now,'' Nakanishi told reporters in Yokohama early in the morning, adding that a news conference would be held Thursday afternoon.
The two firms' combined annual sales of over 12 trillion yen are exceeded only by those of Toyota Motor Corp.
But Hitachi and Mitsubishi Heavy later in the day separately denied the move to integrate their business operations, apparently reflecting cautious views within each company about such a move.
Hitachi said in a statement that the business integration plan ''is not based on facts.''
Mitsubishi Heavy said in separate statements that the reports are not based on its own disclosure and the company ''has no plan to enter into any of the arrangement reported.''
The two companies teamed up last year in the urban railway business overseas and are studying joint efforts to help the government and Tokyo Electric Power Co. resolve the nuclear crisis at the Fukushima Daiichi power plant.
Leading Japanese electric machinery maker Hitachi, founded in 1910, has a reputation for its capacity for technological development and booked 9.32 trillion yen in consolidated sales with a group workforce of about 361,700 in the year ended in March.
Mitsubishi Heavy, a core company of the Mitsubishi group, is Japan's largest heavy machinery maker. Founded in 1884 as a shipyard, it maintains strong market positions in the nuclear power and defense businesses. It posted group sales of 2.90 trillion yen with a workforce of about 68,800 in the past year to March.