BABCOCK-HITACHI

Yokohama, July 29, 2014 - Effective October 1, Mitsubishi Hitachi Power Systems, Ltd. (MHPS) will integrate with Babcock-Hitachi K.K. (BHK), a Yokohama-based group company handling boilers and air quality control systems (AQCS). The aim of the merger is to bring enhanced speed to business management and achieve greater efficiency and cost competitiveness in order to more swiftly and securely realize synergy merits from the business integration in February 2014 of Mitsubishi Heavy Industries, Ltd. (MHI) and Hitachi, Ltd. Also effective October 1, Mitsubishi Hitachi Power Systems Engineering Co., Ltd. (MHPS Engineering), an MHPS group company based in Yokohama, will merge with Bab-Hitachi Industrial Co., Ltd. (BHIC), a group company of BHK based in Kure, Hiroshima Prefecture.

BHK's products consist of core equipment of thermal power generation systems such as boilers and AQCS's, and, like MHPS, the company has functions within Japan in related to development, engineering and manufacturing. MHPS since its inauguration has pursued the integration of the technological and sales capabilities it took over from MHI and Hitachi, and it has also strengthened the ties among group companies in its global network. MHPS has now decided that a full merger with BHK is indispensable to MHI and Hitachi's business integration because it will bring BHK's functions for core equipment into MHPS's organization, proceeding further than the links among group companies.

Following the merger of MHPS Engineering and BHIC, companies that both handle industrial thermal power generation systems, MHPS Engineering will continue as the surviving company. Through the integration of the two companies - which target the same user markets in Japan and have mutually complementary product lineups - the new MHPS Engineering will aim to offer improved response to the needs of a broad range of industrial users. It will also carry on the two companies' strengths as resiliently adapting organizations capable of swift decision-making while fully encompassing design, procurement, construction and after-sale servicing functions - strengths that will enable further enhancement of customer response and cost competitiveness. The new MHPS Engineering will be a wholly owned subsidiary of MHPS.

BHK has for many years played a significant role as Hitachi's boiler and AQCS division. Merging a Japanese subsidiary of The Babcock & Wilcox Company (B&W) of the UK launched in 1908 and Hitachi's Boiler division, Babcock-Hitachi K.K. was founded in 1953 as a joint venture of Hitachi and B&W. In 1987, BHK then became 100 percent subsidiary of Hitachi, continuing in that status until February 2014 when it became an MHPS group company in tandem with Hitachi and MHI's business merger. BHK's offerings include high-efficiency boilers and high-performance AQCS, products of the company's long track record and accumulated technologies developed in-house. The company has manufacturing and service networks not only in Japan but also including the Philippines, China and Australia.

MHPS, having taken over the comprehensive strengths and product operations of MHI and Hitachi, now has ability to provide a full range of thermal power generation systems and total solutions. The forthcoming integration with BHK will add further to the company's strength, and going forward MHPS will continue to respond fully to the diverse needs of the thermal power generation systems market as it also steps up its marketing initiatives in this area.

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