1 Dec 2012

Shares up after merger announcement

6:33 am on 1 December 2012

Shares in Hitachi and Mitsubishi Heavy have soared since they said they would merge their thermal power businesses.

Hitachi rose 2.8% in Tokyo trade on Friday and Mitsubishi added 3%.

On Thursday the companies announced a joint venture to make gas turbines, boilers and fuel cells.

The BBC reports the move is aimed at competing with General Electric and Siemens as demand for electricity-generating equipment grows in Asia.

"There are many Japanese companies today that are battling each other domestically and then again with foreign competitors," said Mitsubishi Heavy chief executive Hideaki Omiya.

"Instead of wasting our energy doing that, we should be banding together to become even bigger to take on our foreign rivals."

Mitsubishi will own 65% of the venture and Hitachi the rest, the companies said in a statement. Operations will begin in 2014.

In September, General Electric and Toshiba beat Mitsubishi to win a contract to expand Chubu Electric Power Company's gas turbine combined cycle plant.