Japanese industrial conglomerate Hitachi Ltd. will sell about half of its stake in its construction machinery unit to a group including Itochu Corp. for 182.5 billion yen ($1.6 billion).
The company will sell a 26.1% holding in Hitachi Construction Machinery Co. for 3,300 yen a share in June, Tokyo-based Hitachi Ltd. said Friday in a statement. That’s a premium to its closing price of 2,976 yen.
Hitachi will retain a 25.4% stake after the sale, which also includes Japan Industrial Partners Inc. as a buyer.
For Hitachi, the sale is the latest in a decade-long portfolio overhaul aimed at shifting focus to its higher-margin digitalization business. Bloomberg News reported in December that the company was working with a financial adviser to field interest for its 40% stake in Hitachi Transport System Ltd.
The industrial conglomerate has signed a string of multi-billion-dollar deals including the purchase of U.S. software development company GlobalLogic Inc. for $9.6 billion. A $3.5 billion deal announced in April to sell its stake in Hitachi Metals Ltd. to a group led by Bain Capital has faced regulatory delays.
Hitachi Construction Machinery was established in 1970 and is a major global equipment maker, building and selling excavators, loaders and dump trucks for the construction and mining industries. It had sales of 813.3 billion yen last fiscal year and employs about 25,000 people worldwide, according to the company’s website.
For Itochu, a Japanese trading giant whose business spans from textile to convenience store chains, the deal will expand its construction machinery business. Itochu and Hitachi Construction Machinery have already operated a joint venture in Indonesia for 30 years.
The deal will help Hitachi Construction develop an independent distribution and service network for its products in North America, after it announced plans to end a longtime alliance with U.S. partner Deere & Co. last year.
Hitachi Construction Machinery shares plunged 18% on Friday, the biggest drop since October 2008, a day after broadcaster NHK reported the sale of the company.
(By Masumi Suga)
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