LONDON (dpa-AFX) - CNH Industrial N.V. (CNH), a technology and services company, on Monday announced that it has entered into a definitive agreement with Kobelco Construction Machinery Co., Ltd. to establish a joint venture for its construction equipment business.
Kobelco Construction Machinery is a wholly owned subsidiary of Kobe Steel, Ltd. (5406.T)
Under the agreement, Kobelco will acquire a 70% stake in its' construction equipment business for $700 million in cash.
The company will retain a 30% ownership stake in the joint venture.
The transaction values the company's construction equipment business at an enterprise value of $1 billion.
The transaction is expected to close by the end of 2027.
The company said the transaction will sharpen its focus on agricultural equipment, technology and services.
The deal will strengthen the company's financial position.
The transaction will also enable the company to increase investment in agricultural products, precision technology and its global dealer network.
The joint venture will offer products across earthmoving, lifting and compaction applications, including excavators, loaders, graders, dozers, compact track loaders, skid steer loaders and tractor loader backhoes.
The products will continue to be sold under the CASE Construction, Eurocomach and New Holland Construction brands.
The company expects the transaction to be accretive to its margins.
The company plans to use the net cash proceeds to reduce debt and strengthen its balance sheet.
Humayun Chishti, President of CNH's Construction segment, is expected to continue leading the joint venture as CEO following the transaction's completion.
CNH will continue its agricultural equipment operations under the Case IH, New Holland, STEYR and CNH Tech brands. Its Raven precision technology platform and CNH Capital business will also remain part of the company.
CNH Industrial N.V. closed trading 2.76% higher at $11.56 on the New York Stock Exchange. In the overnight is 3.11% higher at $11.92.
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