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Considerations to begin for merger of Kobelco Construction Machinery and Kobelco Cranes

Kobe Steel, Ltd. and its group companies, Kobelco Construction Machinery Co., Ltd. and Kobelco Cranes Co., Ltd., have agreed to begin considering a business merger of Kobelco Construction Machinery and Kobelco Cranes. Considerations will commence with the aim of integrating the two companies on April 1, 2016.

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The Kobe Steel Group’s construction equipment business, consisting of hydraulic excavators and cranes, currently operates through two companies, with the launching of Kobelco Construction Machinery in October 1999, followed by an alliance with the former CNH Global N.V. in October 2002, and a spin-off of the crane business into a separate company in April 2004.

To capture growing demand throughout the world, both Kobelco Construction Machinery and Kobelco Cranes have been implementing their respective strategies and plans for global expansion, and both companies have continued to grow. With combined sales of nearly 400 billion yen from the two operations, the construction equipment business is an important segment, comprising about a 20 percent share of the Kobe Steel Group’s consolidated sales.

Under the medium-term business plan launched in May 2013 covering fiscal years 2013 to 2015, the Kobe Steel Group said it would adopt a policy of strategically expanding its machinery-related businesses. In the United States where demand continues to be strong, Kobelco Construction Machinery is undertaking active developments, making a decision at the end of 2014 to build an excavator plant in that country. Furthermore, establishing a presence in the global market — including India, the Middle East and other emerging countries and regions where demand is anticipated to grow — is an urgent issue for Kobe Steel’s construction equipment business.

The Kobe Steel Group intends to enhance cooperation between the two companies to improve business efficiency, from development to procurement, and covering production, quality and sales. The Group has previously been considering ways of further enhancing its global development capabilities in growth markets. At this time, the Group has decided to earnestly begin considerations for a merger of the two construction equipment companies.

Through the business merger, the combined excavator and crane businesses will benefit from more efficient operations that will further strengthen their business foundation. At the same time, the merger is anticipated to accelerate global development of the excavator and crane businesses, further contribute to spreading the KOBELCO brand, and increase the enterprise value of the Kobe Steel Group.

Source: Kobelco