50/50 JV between trading house ITOCHU and investment fund JIP to become major shareholder of Hitachi Construction Machinery

Posted by Paul Moore on January 16, 2022

As part of a major change in ownership for Hitachi Construction Machinery (HCM), one of the world’s leading suppliers of large mining shovels and haul trucks, a 50/50 joint venture between major Japanese trading company ITOCHU Corp and investment fund Japan Industrial Partners, Inc (JIP) is to take control of 26% of the company through an acquisition of shares from Hitachi Ltd which is expected to be completed in June 2022. Hitachi Ltd currently owns 51.5% of HCM. The JV will be known as JIP Consortium SPC. While HCM equipment will continue to use the Hitachi brand, and Hitachi Ltd will still own 25.4% of HCM (the remainder being held by general shareholders), HCM will now become an affiliate of ITOCHU and an associated company by at Hitachi equity method but not consolidated. by Hitachi. The deal is worth 150 billion yen or more than $1.3 billion.

Hitachi Ltd said: “With the Support of Japan Industrial The partners and ITOCHU, Hitachi Construction Machinery will be help to enhance the Hitachi brand and the expansion of the Lumada Company by accelerating his global growth strategy. Hitachi will continue to goal for further expansion of tthe Lumada company by collaborating with Hitachi Construction Machinery in R&D like IoT, and parts and services Business who uses digital technologies.” Hitachi plans to discuss with HCM and enter into a transition services agreements with respect to various platformsrights and obligations among HCM and Hitachi and his group companies, including continued use of the Hitachi trademark, on the closing date of Share Tto transfer.

As the parent company, Hitachi says it has worked closely with HCM to support the company’s growth. Currently, HCM’s basic growth strategy policy is to contribute to solving the problems that its to customers and society by developing a value chain business (parts and services, rental, used equipment, etc.) in addition to its new machinery business, with a focus on major construction machinery, such as excavators, wheel loaders and dump trucks. Under the “Realizing Tomorrow’s Opportunities 2022” management plan, which ends in fiscal 2022, HCM strives to achieve sustainable growth and improved enterprise value through to the three pillars of its management strategy: (i) strengthening its value chain activities, (ii) providing improved solutions at every customer touchpoint, and (iii) creating a highly flexible corporate structure and resistant to change.

He adds: “Hitachello and HCM have took into consideration measures to pursue growth and improvement of enterprise value of HCM. As part of the consideration, Hitachi has initiated discussions with JIP and ITOCHU as new partners who can support the growth of HCM of a medium too longterm perspective. JIP has a extensive track record of investments and partnerships in Japan, and ITOCHU has the to knowwhat does this have to do with construction machinery and Dlate equipment companies within the group. Hitachi believes that HCM aims for new growth thanks to the collaboration with both companies with such strengths will lead to a improving the enterprise value of HCM, and at come to the conclusion that Hitachi will transfer part of the ordinary shares of HCM owned by Hitachi at CPS of the JIP consortium.

Hitachi will use the product obtained from andand To share Jto transfer as a source of funds for reinforcement his financial based, return at his shareholders, and invest in growth Opportunities, and go aspire at to improve his Company value Going through sustainable growth through social networks innovative company.

For its part, ITOCHU is considering aaccelerating multifaceted companies bthere generate synergies with its existing activities and develop its value chain in collaboration with Hitachi Construction Machinery in the United States and a variety of other geographies, as well as a wide range of fields of activity. For example, Hitachi Construction Machinery has been working to build its own dealer network immediately after reaching an agreement to dissolve its alliance with Deere & Company and plans to generate synergies by rebuilding its sales channels and cross-selling products using the network. North American ITOCHU customers. Hitachi Construction Machinery also plans to export Hitachi-branded excavators to North America after the Deere alliance ends and ITOCHU has entered into discussions with Hitachi Construction Machinery on collaboration for greater supply chain efficiency , for example by sharing logistics using land and sea logistics. networks between Japan and the United States and good inventory management in North America.

Hitachi Construction Machinery aims to contribute to the networkzero emissions initiative, on which mining companies around the world are working, through efforts concerning toh drums electric dump trucks in joint development with ABB Ltd, as well as operate efficiently and digitization of mines in in order to reduce costs and achieve a higher level of security in collaboration with the Hitachi group. ITOCHU will consider collaborating withh Hitachi Construction Machinery through initiatives which will contribute to the contribution to and commitments with the SDGs, including initiatives implemented through his Metals & Minerals VSbusiness, which holds interests in the metallic resources, and through his Energy & Chefriendly VSbusiness, which operates energy storage systems (ESS) Business.

ITOCHU said: “The construction machinery industry Is seeing a accelerated to flow from ownmastery (purchase) at use (rent). This will require business transformation to meet diversified customer needs, including preventive maintenance and improvement of the availablity ratio using construction machines availability data; online purchases again equipment and rooms and sales second hand equipment; and Support for rentals. ITOCHU will strive to provide customers with new value by tapping into its existing business base and jobing with Hitachi Co.Instruction machines for deepen the business of solutions on which it focuses, relying on a marketoriented perspective.”

ITOCHU and its group company, JOkyo Century Corporation already manage a construction machinery finance business jointly with Hitachi Construction Machinery in indonesia. Tokyo Century and Hitachi Construction Machinery manages a construction machinery finance company in Thailand also. ITOCHU and Tokyo Century too own commercial operators who provide financial services in the United States. Go forward, ITOCHU and Tokyo Century Plan to Collaborate by Providing Financial Services Together with Hitachi construction machinery in teehe United States and a variety of other geographic regions areas.

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