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Japanese tunnelling manufacturers announce merger

IHI, JFE Engineering (JFEE), Japan Tunnel Systems (JTS), Mitsubishi Heavy Industries (MHI) and Mitsubishi Heavy Industries Mechatronics Systems (MHI-MS) have agreed to merge their respective shield tunnelling machine businesses.

The five companies plan to finalise a formal contract this summer which will outline the conditions for the establishment and operation of the new company. The merger is expected to be complete by January 2016.

Under the agreement, JTS, a consolidated subsidiary of IHI with 49% of the shares held by JFEE, and MHI-MS, a wholly-owned subsidiary of MHI, will split off their shield businesses which will be transferred to the new operating company.

The merger is intended to reinforce the business’ strength in the market and capture domestic demand while also accelerating expansion overseas.

Japanese demand for shield tunnelling machinery is anticipated to rapidly expand leading up to the 2020 Olympic and Paralympic Games in Tokyo. While there is likely to be a significant drop in domestic demand after the Olympics, international demand for tunnelling machinery is expected to grow due to the need for infrastructure maintenance and subway route expansion. Such projects include the development of inland urban areas in China and India and further urbanisation in ASEAN nations, the Middle East, Turkey and other areas.

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