Eaton to Own Remaining Share of Japanese Joint Venture Company
30 October 2000
Eaton to Own Remaining Share of Japanese Joint Venture Company
Business EditorsCLEVELAND--Oct. 27, 2000--Eaton Corporation and Sumitomo Heavy Industries of Tokyo, Japan today said they have signed a letter of intent in which Eaton will indirectly purchase Sumitomo's 50 percent interest in the two companies' Japanese hydraulic products joint venture, for an undisclosed amount. The transaction is expected to be concluded by the end of January, 2001.
"It is our goal to become a hydraulic systems leader in the Asia-Pacific Region, and the acquisition of SEHYCO is an extremely important first step in the execution of that strategy," said Alexander M. Cutler, Eaton chairman and chief executive officer. "This transaction is particularly advantageous because we are intimately familiar with the product lines, the customers and the workforce of a business that has a demonstrated record of excellent performance. Sumitomo has been a trusted and highly respected partner for more than a quarter century, and we are confident that our close working relationship will serve Eaton well when we begin the transition to full ownership." Cutler noted that the acquisition will make SEHYCO Eaton's first wholly-owned Japanese business.
Sumitomo Eaton Hydraulics Co., Ltd. (SEHYCO) was formed in 1974, and has been a leading manufacturer of hydraulic motors, primarily for the Japanese mobile equipment market. The joint venture employs 240, and expects 2000 sales to approach $110 million. Eaton said it does not anticipate any job loss when it assumes full ownership.
SEHYCO manufactures a complete line of hydraulic motors under the Orbit and Orbitrol brand names, and in 1999 sold its four millionth Orbit unit. The motors are used in steering and power transfer applications for construction and farm machinery products. The business has three facilities located in Kameoka, Japan, near Kyoto.
Yoshio Hinoh, Sumitomo president and chief executive officer, said, "Sumitomo Heavy Industries is pleased to be able to transfer full ownership of this business to Eaton. We have enjoyed a long and fruitful relationship with Eaton in developing SEHYCO into an industry leader. However, Sumitomo has determined that it is in our best interests to more closely focus our management resources on our core businesses. We believe this agreement is to the ultimate advantage of both companies, and will also improve the future prospects for SEHYCO and its employees."