The two companies, which have previously shared a joint venture in nuclear fuels, are planning to bid on a nuclear power plant that merchant power company NRG Energy Inc. (NYSE:NRG) aims to build in Texas. This plant could be among the first constructed in the U.S. in three decades.
The consolidation will be formed in the wake of both companies losing out in a bidding war for Westinghouse Electric Company, the world's largest designer of nuclear reactors, which was purchased for $5.4 billion by rival Toshiba (OTCPK:TOSBF) earlier in the year. In addition, France's Areva, the world's largest maker of nuclear reactors, and Japan's Mitsubishi Heavy Industries Ltd. said they would cooperate in this sector.
Hitachi and GE expect to build around 100 new reactors in the next 20 years to keep up with the growing demand for nuclear energy. The deal will create two operations, one dealing with Japan and 80 percent owned by Hitachi, and another controlled by GE and providing services worldwide. The companies are expected to sign the contract by June of 2007.
The GE and Westinghouse deals are of great importance if U.S. industry is to maintain its market share in the nuclear business.