Press Information

MHI, Caterpillar and Shin Caterpillar Mitsubishi
Agree on Changes in Shareholding Ratio of Japanese Joint Venture

No.1229
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Tokyo, March 26, 2008 - Mitsubishi Heavy Industries, Ltd. (MHI), Caterpillar Inc. (Caterpillar) of Illinois, U.S.A., and Shin Caterpillar Mitsubishi Ltd. (SCM), the Japanese joint venture equally owned by MHI and Caterpillar, have agreed on changes in their shareholding ratio in the JV. The three companies’ respective aims have meshed in concluding the new agreement. MHI is currently promoting selection of focused business areas and concentrating its business resources into those areas; Caterpillar is seeking to strengthen its global business operations in the construction machinery business; and SCM is looking to strengthen its marketing in Asia based on its own strategy. Going forward, each company will promote expansion of its own business while maintaining strong business relationships with its partners.

Based on the agreement, MHI will transfer half of its shares in SCM (25% of SCM’s total outstanding shares) to SCM by the end of the third quarter of 2008. Following that transaction, Caterpillar will own 67% of SCM’s outstanding shares and MHI will hold the remaining 33%. The value of the deal is 50 billion yen. The agreement also includes an option enabling SCM to purchase the remaining shares owned by MHI after five years.

Although MHI’s shareholding stake in SCM will decrease as a result of the change in ownership structure, MHI intends on further enhancing its value by strategically focusing its management resources into its core competency businesses having high growth potential.

MHI and Caterpillar have been in a firm collaborative relationship in the manufacture and marketing of Mitsubishi and Caterpillar brand forklift trucks, and they will maintain that relationship even after the shareholding changes. Both parties also agreed that MHI will continue to supply Caterpillar and SCM with engines for construction machinery, including hydraulic excavators.

SCM was originally established as Caterpillar Mitsubishi Ltd., an equally owned joint venture between MHI and Caterpillar, in November 1963; with technological assistance from Caterpillar, it began as a producer and domestic vendor of track-type tractors and wheel loaders. In 1987, MHI’s hydraulic excavator business was transferred to the JV and it was renamed Shin Caterpillar Mitsubishi Ltd. In 2001, SCM further took the transfer of most of MHI’s construction machinery business, including small-size construction machinery, crawler carriers and articulated dump trucks.

With the shareholding ratio changes, SCM will now be released from business territory limitations. As a result, the JV is expected to become an ever more important business strategy base for Caterpillar in the Asian construction machinery market.

 

Outline of Shin Caterpillar Mitsubishi Ltd.
Company nameShin Caterpillar Mitsubishi Ltd.
Major activities Manufacture and sale of construction machinery, including hydraulic excavators, wheel loaders and track-type tractors
EstablishedNovember 4, 1963
PresidentShouichi Hirano
Head office4-10-1, Yoga, Setagaya-ku, Tokyo 158-8530, Japan
Capital and shareholders 23.1 billion yen, equally invested by Mitsubishi Heavy Industries, Ltd.
and Caterpillar International Investments Coöperatie U.A.
Number of employees5,989 (as of end of 2007, consolidated)
Consolidated sales410.9 billion yen (fiscal year 2006)