MHI, Hitachi agree to integrate businesses

Mitsubishi Heavy Industries Ltd. and Hitachi (NYSE: HIT) signed a basic integration agreement and a joint venture agreement in relation to the thermal power generation systems business.

The companies signed an integration agreement in the thermal power generation systems field November 29, 2012 that would give MHI a 65 percent ownership and Hitachi a 35 percent share in the business unit effective January 1, 2014.

In accordance with the basic agreement, the companies have signed the definitive agreements that specify terms and conditions related to obtaining approvals of both companies’ boards of directors. A company split agreement is expected to be signed around the end of July, according to Power Engineering.

MHI will establish a preparatory company for the integration as predecessor of the integrated company. Both companies will transfer the integrated business to the integrated company through an absorption-type company split that will give MHI ownership of 683 company shares and Hitachi, 317 shares. MHI will then sell 33 shares of common stock of the integrated company to Hitachi for $4.8 billion.

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