TOKYO, Oct 30, 2012 - Japan's Hitachi said Tuesday it would buy British atomic power venture Horizon to expand its nuclear business overseas, as Japanese remain wary about atomic power after the Fukushima disaster.
The company said it had agreed with Horizon Nuclear Power's 50-50 German owners E.ON and RWE to buy all Horizon shares from them next month.
A statement from RWE put the purchase price at 696 million pounds ($1.12 billion).
News of the deal came as Hitachi said its group net profit in the six months to September tumbled 40.9 percent from a year earlier to 30 billion yen ($376 million).
Horizon plans to build two or three 1,300-megawatt-class reactors at each of two nuclear power stations in Britain and Hitachi will take over the task, the Japanese company said in a statement.
The first reactor is expected to come online in the first half of the next decade, it added. Hitachi is seeking to expand its nuclear power business overseas after the Fukushima disaster of March 2011 effectively halted demand for new reactors in Japan.
The German utility firms launched Horizon in 2009 but decided to sell the unit following the German government's decision to phase out nuclear power after Fukushima.
A tsunami created by an earthquake swamped the Japanese plant's cooling systems and sent reactors into meltdown.
The Japanese government, which has not abandoned plans to export reactors, welcomed Hitachi's move and said Japan aims to provide “(nuclear) technology equipped with the world's highest standards of safety”.
Industry minister Yukio Edano said in a statement he hoped Hitachi would help promote nuclear power safety in the world. Hitachi said it had signed memorandums of cooperation with British nuclear firm Babcock International, Rolls-Royce and Canadian engineering firm SNC Lavalin.
Advanced boiling water reactors will be installed at the plants on the Isle of Anglesey in Wales and at Oldbury in Gloucestershire, Hitachi said, adding that about 1,000 workers are expected to be employed at each site.
Hitachi's nuclear power systems chief executive Masaharu Hanyu told Japanese media that his company may sell Horizon shares to investors in the future.
“As it is deemed difficult for Hitachi alone to prepare funds for constructing the power stations, we want to solicit investors,” he said, according to the online version of the Nikkei newspaper.
“It will depend on whether Hitachi can develop it into an attractive company,” he said, adding his company would not itself get involved in power generation.
In its half-year earnings report, Hitachi said its operating profit dropped 4.1 percent to 164 billion yen in a fallback reflecting a gain from its sell-off of a hard disk drive division a year earlier.
A profit decline in the group's construction machinery business, due to China's economic slowdown and its exposure to shares in Japan's troubled Renesas Electronics, also contributed to the setback, the statement said.
Hitachi's consolidated revenue fell 4.7 percent to 4.36 trillion yen. Sales of automotive systems jumped due to growing global demand for cars.
For the full year to March 2013, the company forecast a 42.4-percent drop in its net profit to 200 billion yen as earlier expected.
“The economic environment surrounding Hitachi is increasingly uncertain amid the prolonged sovereign debt crisis in Europe which is slowing down growth in China, India, Brazil and other emerging economies,” the statement said.