Kobe Diesel acquires MHI marine engine business

Mitsubishi Heavy Industries is to sell the UE two-stroke marine engine business to former licensee Kobe Diesel Mitsubishi Heavy Industries is to sell the UE two-stroke marine engine business to former licensee Kobe Diesel

Mitsubishi Heavy Industries (MHI) Marine Machinery & Engine Co is to transfer its marine diesel engine business to former licensee Kobe Diesel, with a target date of 1 April.

The deal – which places the UE two-stroke engine range in the hands of Kobe Diesel - will be structured as an ‘absorption-split’ transaction which, unlike a conventional share purchase, allows the buyer to specify the assets and liabilities to be assumed. As reported, a basic agreement and a memorandum of understanding to integrate the two companies' marine diesel business were signed in November last year.

The agreement will see the previously distinct functions of licensor (development, design, after-sale servicing) and licensee (manufacture, marketing, after sale-servicing) combined under Kobe Diesel, with technical support from MHI for development and production.

The companies noted that the deal follows common recognition ‘that it is essential for sustainable growth and the development of the UE engine business to improve profitability and competitiveness while flexibly responding the business environment’.

Kobe Diesel will develop an integrated business plan for the merged business, as well as strengthening relationships with UE licensees. “At the same time the company will foster a sense of unity and will aim to further expand and develop Japan’s world-class marine diesel engines,” the companies concluded.

MHI and Kobe Diesel have worked together since 1957, when Kobe became an exclusive manufacturer of UE engines. Since then Kobe has produced and sold more than 2,000 of the engines.

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