Hitachi Ltd. said Friday that it has agreed to sell half of its stake in subsidiary Hitachi Construction Machinery Co. for about ¥182.4 billion.
The electronics and heavy machinery company currently owns about 51% of the unit. Of the total, 26% will be sold to a joint venture between trading house Itochu Corp. and investment fund Japan Industrial Partners Inc.
The sale will mark the final step in Hitachi's reorganization of publicly traded units in which the company has been shedding operations with few synergies and focusing on digital businesses.
Hitachi's stake in Hitachi Construction Machinery will fall to about 25% after the sale, slated to take place in June. Hitachi is expected to post some ¥77 billion in profit from the sale for the year ending in March 2023.
Hitachi Construction Machinery will continue to use the Hitachi brand and maintain cooperation with Hitachi on digital technology as well as research and development.
Itochu and Hitachi Construction Machinery already have close ties, jointly running a business in Indonesia for years. With the help of the trading house, Hitachi Construction Machinery aims to increase its presence in North America and enhance its financial business and logistics.
In a press briefing, Kotaro Hirano, president and CEO of Hitachi Construction Machinery, expressed hopes for significant synergy effects from the capital partnership with Itochu. The trading house is a "very reliable partner in terms of finance and logistics," Hirano said.
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