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Komatsu to Transform Komatsu Shantui Construction Machinery into Subsidiary

Komatsu Ltd. (hereinafter, Komatsu) today reached a basic agreement with Shantui Construction Machinery Co., Ltd. (hereinafter, Shantui) that Komatsu (China) Ltd., a wholly owned subsidiary of Komatsu, will acquire 20% of the equity of Komatsu Shantui Construction Machinery Co., Ltd. (hereinafter, Komatsu Shantui). This acquisition will be from Shantui, Komatsu's partner who currently owns 50% of the equity of Komatsu Shantui, a joint-venture manufacturing and sales company for construction equipment in China, and that Komatsu and Komatsu (China) together will own 60% of the equity of Komatsu Shantui. As a result, Komatsu Shantui will become a subsidiary of Komatsu. With approval by shareholders of Shantui, permission by the Chinese government and other legal requirements to be fulfilled, Komatsu and Shantui are planning to execute the transaction in September this year. The two companies have also reached a basic agreement that they will jointly facilitate Shantui's production of parts and components for use by Komatsu Shantui in tandem with expansion of production at Komatsu Shantui.

1. Reasons for Equity Acquisition

Komatsu Shantui was established in 1995 as a joint-venture company to manufacture and sell medium-sized hydraulic excavators in China. Since then, the company has gained recognition from customers, particularly for the high quality and reliability of its products, and has grown while keeping pace with the outstanding expansion of the Chinese construction equipment market. Komatsu and Shantui have come to a mutual understanding that Komatsu will play a leadership role of aggressive business expansion of Komatsu Shantui in response to high-growth potential of the Chinese hydraulic excavator market by capitalizing on its globalization know-how of the construction equipment business. It is mutually beneficial for each to foster the long-range growth of Komatsu Shantui as a major production center for hydraulic excavators in China. 
At the same time, the two partners will work together to expand the production of parts and components for hydraulic excavators at Shantui. They have also agreed that Shantui will establish a new joint venture company either with Komatsu or Komatsu's supplier when needed. 

Komatsu, Shantui and Komatsu Shantui, as a unified team, will work together to reinforce competitiveness of the hydraulic excavator business and develop new cooperative relations for a long-range expansion of profits for each. Komatsu and Shantui have also agreed that the two will continue to hold a broad range of discussions to maintain and build on mutually beneficial relations as partners for the construction equipment business in China.


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