TOKYO - Japanese industrial firms Hitachi and Mitsubishi Heavy Industries said Thursday they would merge their thermal power businesses by 2014 as they take on global giants Siemens and General Electric.
The pair said they would set up a joint venture company that was 65 per cent owned by Mitsubishi with the remaining 35 per cent held by Hitachi, creating a combined firm with about 1.1 trillion yen (US$13 billion, S$16 billion) in annual sales.
The merger would see the firms work together on a range of products including gas turbines for thermal power generation, environmental equipment and fuel cells.
"The global market has continued to expand, driven by the growth engines of China and other emerging countries," the companies said in a statement.
"Heightened environmental awareness around the world has presented a major opportunity for (Mitsubishi) and Hitachi to expand businesses where they both excel - businesses that solve global energy and environmental issues at the same time."
Mitsubishi Heavy produces a range of power plants, including thermal, wind and geothermal facilities. Its gas turbines for thermal plants rank among the most energy-efficient in the world.
Demand for natural gas-fired thermal plants has been surging in the wake of Japan's atomic crisis at the Fukushima Daiichi plant where reactors went into meltdown last year after being swamped by a quake-sparked tsunami.
Hitachi is a major player in steam turbines for coal-fired thermal plants, many of which are now planned for construction or are being built in emerging nations.
Last month, Hitachi announced it would buy British atomic power venture Horizon for about US$1.12 billion to expand its nuclear business overseas, as Japanese remain wary about atomic power after the Fukushima disaster.
Dow Jones Newswires contributed to this report.