Kobe Steel, Kobelco Construction Machinery and CNH Global Determine Not to Renew Global Alliance
TOKYO, December 26, 2012 – Kobe Steel, Ltd. and group company Kobelco Construction Machinery Co., Ltd. announced today that the initial term of their global alliance with CNH Global N.V. will end on December 31, 2012. The parties determined not to renew their agreement.
Reason and Contents
The global alliance, which began in January 2002, was set for a 10-year period. With the market environment changing over the past 10 years, Kobe Steel, Kobelco Construction Machinery and CNH have been re-examining the agreement and discussing the future of their global alliance. Looking ahead at future market conditions, Kobelco Construction Machinery and CNH have mutually decided to operate their businesses on their own, and with the initial term of the original agreement ending on December 31, 2012, the three companies decided not to renew their alliance.
The cooperative relationship among the three companies for 10 years under the global alliance has been meaningful and significant. From now on, while respecting their positions, Kobelco Construction Machinery and CNH will grow their own business operations throughout the world.
Under the global alliance with CNH, Kobelco Construction Machinery’s sales and marketing rights were limited to the Asia and Pacific area, including Australia. From January 1, 2013, Kobelco Construction Machinery will market and provide services on its own in North America, Europe, South America, the Middle East, Africa, and the CIS countries.
With the ending of the global alliance, equity participation with CNH will also be terminated. At the end of the year, Kobe Steel will buy back the 20-percent equity that CNH currently holds in Kobelco Construction Machinery. As for the equity that Kobelco Construction Machinery holds in CNH’s affiliate companies, the shares will be sold back to CNH.
After the initial term of the global alliance ends, CNH will continue to be entitled to manufacture and sell hydraulic excavators currently licensed from Kobelco Construction Machinery. In addition, for a five-year period until the end of December 2017, CNH will have the right to procure hydraulic excavators from Kobelco Construction Machinery on an OEM basis. Servicing parts will continue for 10 years.
Kobelco Construction Machinery will have the right to receive running royalties for the licensed hydraulic excavators manufactured by CNH for a five-year period until the end of December 2017.
Global Alliance with CNH
In September 2001, Kobe Steel, Kobelco Construction Machinery and CNH signed an agreement to form a global alliance. In January 2002, Kobe Steel transferred 10% of its shares in Kobelco Construction Machinery to CNH. In addition, Kobelco America Holdings Inc. transferred 65% of its shares in Kobelco Construction Machinery America L.L.C. to CNH.
In July 2002, Kobe Steel transferred an additional 10% of its shares in Kobelco Construction Machinery to CNH. Kobelco Construction Machinery transferred 100% of its shares in Kobelco Construction Machinery (Europe) B.V. to CNH. At the same time, Kobelco Construction Machinery received from CNH 20% of the shares in New Holland Kobelco Construction Machinery S.p.A., a manufacturing and sales unit in Europe.