Cat to buy-out Mitsubishi
By Chris Sleight27 March 2008
Cat has agreed to spend JPY 50 billion (US$ 500 million) to increase its share in Shin Caterpillar Mitsubishi (SCM) from 50% to 67%. The Japanese joint venture was set up between Caterpillar and Mitsubishi Heavy Industries in 1964 to manufacture and sell Caterpillar-branded equipment in Japan.
Under the terms of the agreement SCM will buy half of Mitsubishi's holding in the joint venture with cash injected by Cat. This will take Cat's holding in SCM to 67% and the company also has a ‘call option' to fully acquire SCM after five years should it wish to.
Following the close of the deal, expected in the third quarter of the year, SCM will be re-named Caterpillar Japan. Shouichi Hirano, the current president of SCM is expected to takeover as president of the re-named company.
Commenting on the deal, Cat chairman & CEO Jim Owens said, "This is a strategic decision for Caterpillar and it is an important part of our comprehensive business strategy for competing and winning in the rapidly expanding emerging markets of Asia and the Commonwealth of Independent States (CIS).
"Our joint venture with Mitsubishi Heavy Industries has been remarkably successful, and moving forward, I'm confident that as SCM is fully integrated with Caterpillar's core operations, our customers will see greater benefits from this agreement."
SCM has factories in the Japanese cities of Akashi and Sagami, serving Japan and the wider Asian region. In addition, the facility at Akashi is the global home fro the development of Cat's hydraulic excavator range.