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Caterpillar Ups Mitsubishi JV Stake

The $500 million deal aims to expand Caterpillar’s Asian reach

March 26, 2008

Caterpillar, the listed Illinois-based construction equipment manufacturer, announced in Tokyo today that it has increased its stake in Shin Caterpillar Mitsubishi Ltd., a 44-year-old Japanese venture with Mitsubishi Heavy Industries Ltd.

Under the terms of the agreement, Mitsubishi will sell a 25% stake in the joint venture for ¥50 billion, or $500 million, to the joint venture. Caterpillar will increase its holding to 67% from 50%, and will retain the option to purchase the remaining 33% after five years.

The deal reflects an attempt on Caterpillar’s part to increase the company’s presence in Asia. Bloomberg reported that in a Tokyo press conference today chief executive officer James Owens called the Asia Pacific a "critical part" of the company's long-term global strategy.

Caterpillar will rename Shin Caterpillar Mitsubishi, the Japanese venture, Caterpillar Japan.

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