Hitachi and Mitsubishi Heavy Industries are ready to walk away from merger talks, sources said yesterday, dashing hopes for a groundbreaking marriage of two of Japan’s oldest conglomerates.

The suspension of talks comes after news first surfaced on Thursday that the two companies, which can trace their histories back more than 100 years, were discussing a limited combination of some businesses such as next-generation power operations and smart grids, with an eye towards a complete merger later on. Sources yesterday said talks had stalled because Hitachi is keen to pursue a full merger while Mitsubishi Heavy prefers combining selected operations.

A merger would create a $150 billion revenue infrastructure firm second only to General Electric and could provide the impetus for cost cuts, which are essential if the two companies are to cope with a strong yen and fierce global competition. – (Reuters)