Japan firms in merger talks

The proposed joint venture would create about 1.1 trillion yen (10 billion euros, $1.28 billion) in combined annual sales and was planned to be carried out by 2014, the two Japanese industrial conglomerates said Thursday.

Under the plan, Mitsubishi Heavy Industries is to hold 65 percent in the new company, while Hitachi will own 35 percent.

"The combination of Hitachi and Mitsubishi Heavy Industries' thermal power businesses is the best mix in Japan in terms of technology and human resources to offer total solutions to clients," Hitachi President Hiroaki Nakanishi told a news conference in Tokyo.

Mitsubishi Heavy Industries produces thermal, wind and geothermal power plants, and is said to have developed the most energy efficient gas turbine in the world. Hitachi is among the world's largest producers of steam turbines for coal-fired power plants.

"In the global market, our rivals are not in Japan but major foreign players," said Nakanishi, referring to global market leaders, Germany's Siemens and US company General Electric, with which the Japanese joint venture would seek to compete.

In a joined statement, the two firms said that greater environmental awareness around the world was presenting a major opportunity for expanding their thermal power businesses.

Hitachiand Mitsubishi already collaborate in their overseas' steel businesses and the manufacturing of trains for markets outside of Japan. However, the Chief Executives of the two firms dismissed speculation that they would eventually merge all of their operations.

uhe/mz (AFP, dpa, Reuters)