Japan's Mitsubishi and Hitachi to merge thermal power units

Japanese firms versus German and American.

The new Japanese business ventiure will compete with Germany's Siemens AG and General Electric Co. of the United States as economic growth in Asia spurs demand for electricity-generating equipment.

Mitsubishi Heavy Industries Ltd. and Hitachi Ltd. have agreed to merge their thermal power businesses to expand their product lineups and global sales reach.

The former will take a 65 percent stake in the new venture, with Hitachi holding the rest, the companies announced. Operations will commence in January 2014.

The combination will unite MHI's focus on large gas turbines with Hitachi's expertise in smaller models.

"It's very positive," said Masayuki Kubota, who oversees the equivalent of around ¥148 billion in assets at Tokyo-based Daiwa SB Investments Ltd. 

MHI's earned 36 percent of sales in the six months to September from its power systems unit. The figure for Hitachi came to less than 10 percent.

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