Caterpillar has increased its stake in Shin Caterpillar Mitsubishi, its joint venture with Mitsubishi Heavy Industries to 67 percent, according to a definitive agreement announced last week. Caterpillar will acquire the shares for about U.S. $500 million.

Caterpillar and Mitsubishi formed Caterpillar-Mitsubishi in 1963, one of the first joint ventures in Japan to include partial U.S. ownership. The 50-50 joint venture was renamed Shin Caterpillar Mitsubishi in 1987. The company is primarily involved in the manufacture and sale of Caterpillar-branded hydraulic excavators, wheel loaders and track-type tractors. SCM also owns retail and rental stores in key Japanese markets, with manufacturing centers in Akashi and Sagami, Japan.

SCM has an option, exercisable after five years, to redeem the remaining shares owned by Mitsubishi, which would make Caterpillar the sole owner.

The companies added they will continue their long-term relationship with a separate joint venture to manufacture and market Caterpillar- and Mitsubishi-branded lift trucks.

In the fourth quarter of 2007, Caterpillar’s North American machinery sales dropped 11 percent, while machinery sales outside of North America were up 33 percent.

“This is a strategic decision for Caterpillar, and it is an important part of our comprehensive business strategy for competing and winning in the rapidly expanding emerging markets of Asia and the Commonwealth of Independent States,” said Caterpillar chairman and CEO Jim Owens. “Our joint venture with Mitsubishi Heavy Industries has been remarkably successful, and moving forward, I’m confident that as SCM is fully integrated with Caterpillar’s core operations, our customers will see greater benefits from this agreement.”

The business will be renamed Caterpillar Japan when the first phase of the deal closes, expected to be in the third quarter. Shouichi Hirano, current president of SCM, is expected to become president of Caterpillar Japan.