UPDATE 2-Toshiba, IHI to tie up in nuclear business-Yomiuri
(Recasts, adds details, background )
TOKYO, Feb 29 (Reuters) - Toshiba Corp (6502.T) and IHI Corp (7013.T) are in talks on an alliance in the energy business that could eventually lead to a merger of their operations in the area, including nuclear power plants, the Yomiuri newspaper reported on Friday.
Toshiba, which acquired U.S. nuclear plant firm Westinghouse in 2006, positions nuclear power as its core business along with semiconductors.
With demand for nuclear power on the rise amid growing concerns about global warming, Toshiba's domestic rivals have joined hands with major world suppliers. Hitachi Ltd (6501.T) has allied with General Electric (GE.N) of the United States, and Mitsubishi Heavy Industries Ltd (7011.T) has joined with France's Areva (CEPFi.PA).
The Yomiuri, citing several sources, said Toshiba and heavy machinery maker IHI are considering a plan in which IHI will spin off its energy and plant business and Toshiba will take a stake in a new company
Both Toshiba and IHI said they were not in talks on such an alliance.
IHI has long been working with Toshiba in the nuclear plant business, supplying critical reactor components such as pressure vessels.
The company has been mired in an accounting scandal following a loss warning in September due to deteriorating margins on plant and engineering projects for which costs had spiralled out of control.
Shares of Toshiba fell 1.7 percent to 795 yen while IHI was flat at 211 yen, both outperforming a 2.5 percent drop in the benchmark Nikkei average .N225. (Reporting by Taiga Uranaka; Editing by Mike Miller)
