Business News

Notice of Stock Acquisition of Demag Ergotech GmbH and Van Dorn Demag Corporation

Tuesday 12. February 2008 - On February 8, 2008, the board of directors of Sumitomo Heavy Industries, Ltd. (hereinafter "SHI" or the "Company") resolved to acquire 100% share of Demag Ergotech GmbH (hereinafter "Demag") and Van Dorn Demag Corporation (hereinafter "Van Dorn") both of which manufacture and sell injection molding machinery. Demag and Van Dorn are group companies of MPM Holdings.

1. Purpose of Stock Acquisition

SHI has positioned injection molding business as its core business and focused on strengthening / expanding this segment. Currently, the foreign sales ratio is slightly over 60% among the total sales of injection molding business, over half of which is occupied by the sales in Asia (mainly China). Therefore, strengthening the sales in areas other than Asia has been SHI’s challenge.

Demag is a highly renown injection molding manufacturer, incorporated in Germany in 1922. In addition to its strong presence in Europe, Demag’s sales channels are located within the emerging markets such as Eastern-Europe and Russia. Production facilities are located in Germany, China and India. In Europe, electric molding machine is prevailing and the present production ratio within Demag is approximately 10% of total sales.

Van Dorn is a manufacturer of injection molding machinery, incorporated in 1872. MPM Holdings acquired Van Dorn in 1993 and Van Dorn joined Demag Plastics Group. Van Dorn withdrew from the manufacturing business last year due to the cooling consumption in the US market and presently operates as a sales and service company.

SHI decided to acquire 100% share of Demag and Van Dorn anticipating the expansion of injection molding business in US, Europe, Russia, India and Brazil markets with the company’s competitive electric machinery technology.