Mitsubishi Heavy Industries' <7011.T> president said his company has no plans to start merger talks with Hitachi <6501.T>, the Mainichi daily reported on Monday, in the first public denial by its top executive.
There is no truth that we are entering talks at this moment, Mitsubishi Heavy President Hideaki Omiya told the newspaper in an interview, referring to merger talks with Hitachi.
Executives at Mitsubishi Heavy, Japan's leading heavy machinery maker, had remained silent since media reports on Thursday that the firm and Hitachi have begun talks on what could lead to Japan's biggest domestic merger.
A clear rift emerged between the two almost immediately after the first news reports.
Hitachi Chief Executive Hiroaki Nakanishi told reporters early on Thursday his company would make an announcement later that day regarding reports on their merger talks. But Hitachi later issued a statement denying the reported merger talks, and the announcement did not take place.
In a separate statement the same day, Mitsubishi Heavy said it had no plans to agree to a merger as reported by the media.
Sources have told Reuters that Mitsubishi Heavy had been considering a partial integration of their social infrastructure businesses, including power generation systems, while Hitachi is eyeing a full merger.
For Mitsubishi Heavy, there are strong misgivings about a merger, because it would likely be the one that is gobbled up given their sheer size difference.
Hitachi has annual revenue of 9 trillion yen and Mitsubishi has 3 trillion... Mitsubishi Heavy people take pride in being a leader of the Mitsubishi group and we don't want to be taken over, said a Mitsubishi Heavy source, who declined to be named.
In the interview with the Mainichi newspaper, Mitsubishi Heavy President Omiya said his company had various talks with Hitachi, confirming it had been considering integration of some of its operations including social infrastructure systems.
But he flatly denied the possibility of an all-out merger of the two, saying his company had no plan to set up a merger preparation committee, as was reported by some media, the paper said.
We should not try to do everything by ourselves when we venture into overseas markets as the domestic market shrinks, he was quoted as saying.
If merit can be found for both sides, we would like to tie up with not only Hitachi but with foreign companies, he told the paper.
(Reporting by Taiga Uranaka; Editing by Chris Gallagher)