MHI, Caterpillar and Shin Caterpillar Mitsubishi
Agree on Changes in Shareholding Ratio of Japanese Joint Venture

Based on the agreement, MHI will transfer half of its shares in SCM (25% of SCM’s total outstanding shares) to SCM by the end of the third quarter of 2008. Following that transaction, Caterpillar will own 67% of SCM’s outstanding shares and MHI will hold the remaining 33%. The value of the deal is 50 billion yen. The agreement also includes an option enabling SCM to purchase the remaining shares owned by MHI after five years.

Although MHI’s shareholding stake in SCM will decrease as a result of the change in ownership structure, MHI intends on further enhancing its value by strategically focusing its management resources into its core competency businesses having high growth potential.

MHI and Caterpillar have been in a firm collaborative relationship in the manufacture and marketing of Mitsubishi and Caterpillar brand forklift trucks, and they will maintain that relationship even after the shareholding changes. Both parties also agreed that MHI will continue to supply Caterpillar and SCM with engines for construction machinery, including hydraulic excavators.

SCM was originally established as Caterpillar Mitsubishi Ltd., an equally owned joint venture between MHI and Caterpillar, in November 1963; with technological assistance from Caterpillar, it began as a producer and domestic vendor of track-type tractors and wheel loaders. In 1987, MHI’s hydraulic excavator business was transferred to the JV and it was renamed Shin Caterpillar Mitsubishi Ltd. In 2001, SCM further took the transfer of most of MHI’s construction machinery business, including small-size construction machinery, crawler carriers and articulated dump trucks.

With the shareholding ratio changes, SCM will now be released from business territory limitations. As a result, the JV is expected to become an ever more important business strategy base for Caterpillar in the Asian construction machinery market.