IHI Corporation Announces the Sale of IHI Agri-Tech Corporation’s Small Engine Business
September 27, 2018
IHI Corporation (Headquarters: Koto-ku, Tokyo; President: Tsugio Mitsuoka; “IHI”) announces that it has executed an agreement to sell the commercial engine-focused small engine business of IHI’s wholly-owned subsidiary IHI Agri-Tech Corporation*１ (“IAT”) to U.S.-based Caterpillar Inc. *2 (“Caterpillar”). The closing of the transaction is expected to take place at the end of December 2018. Furthermore, IAT’s equity shares in its engine joint ventures with Caterpillar in England, the U.S., and China have been sold to Caterpillar, effective today.
In recent years, emissions regulations on diesel engines have tightened worldwide, and in addition to increased competition in the diesel engine industry, development costs and the burden of securing resources for engines that comply with next-generation emissions regulations are increasing year by year. In light of these circumstances, IHI and IAT received an offer for the sale of IAT’s small engine business from Caterpillar, the parent company of England-based Perkins Engines Company Limited*3 and its affiliates, which manufacture and sell engines overseas and are IAT’s joint venture partners, and IHI and IAT have agreed to sell the business to Caterpillar.
The purchaser of IAT’s small engine business, Caterpillar, is a world-leading manufacturer of construction and mining equipment and also has a global presence manufacturing and selling diesel, natural gas and other engines. With this transaction, Caterpillar is able to combine its global resources and its know-how from medium and large engines with IAT’s small engine know-how to create a broad product line that can provide greater value to both companies’ customers.
Following the close of the transaction, the manufacture, sale and after-service of Shibaura engines that are currently performed by IAT will be taken over by a new-formed subsidiary of Caterpillar – Perkins Japan LLC. This newly-formed subsidiary will be responsible for the continued manufacture, sale and servicing of products for customers of the small engine business.
IAT was established in October 2017 and is the combined company of IHI Shibaura Machinery Corporation, which focused on small engines and turf-care products, and IHI Star, which focused on agricultural machinery.
Following the close of the transaction, IAT will focus on agricultural machinery and turf-care products.
In order to strengthen its earnings foundations, IHI has been pursuing the selection and concentration of its businesses through new portfolio management in line with its “Group Management Policies 2016.” IHI will continue to implement these policies to strengthen its earning power and enhance its competitiveness.
<For inquiries related to the small engine business>
Caterpillar Japan LLC
|Attention||：||Atsuo Miura, Industrial Power Systems Division|
*1 IHI Agri-Tech Corporation
|Headquarters||：||1061-2, Kamiosatsu, Chitose-shi, Hokkaido|
|Representative||：||Kaoru Miyahara, President and Representative Director|
|Capital||：||1,111,000,000 JPY (end of March 2018)|
|Revenue||：||27,200,000,000 JPY (end of March 2018)|
|Number of Employees||：||618 (end of March 2018)|
|Description of Business||：||Develop, manufacture and sell agricultural machinery (roll balers, hay balers, broadcasters, etc.), turf-care products, engines, sterilization and deodorization equipment, machining, electronic control devices|
|*2 Caterpillar Inc.|
|Headquarters||：||510 Lake Cook Road, Suite 100, Deerfield, Illinois U.S.A. 60015|
|Representative||：||Ramin Younessi, Group President|
|Description of Business||：||
Develop, manufacture and sell construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.
Provide financial and related services through its Financial Products segment
|*3 Perkins Engines Company Limited|
|Headquarters||：||Peterborough, United Kingdom|
|Representative||：||Steve Ferguson, President|
|Description of Business||：||Develop, manufacture and sell off-highway diesel engines|
<Caterpillar’s new-formed subsidiary>
Perkins Japan LLC
|Headquarters||：||7-1, Minatomirai 3-chome, Nishi-ku, Yokohama-shi, Kanagawa|
|Representative||：||Atsuo Miura, Executive officer|
|Description of Business||：||Sell off-highway diesel engines|