Komatsu Ltd. reached a basic agreement with Shantui Construction Machinery Co. that Komatsu (China) Ltd., a wholly owned subsidiary of Komatsu, will acquire 20 percent of the equity of Komatsu Shantui Construction Machinery Co.

The acquisition will be from Shantui, Komatsu's partner who currently owns 50 percent of the equity of Komatsu Shantui, a joint venture manufacturing and sales company for construction equipment in China. Komatsu and Komatsu (China) together will own 60 percent of the equity of Komatsu Shantui, which will become a subsidiary of Komatsu.

With approval by shareholders of Shantui, permission by the Chinese government and other legal requirements to be fulfilled, Komatsu and Shantui are planning to execute the transaction in September this year. The two companies have also reached a basic agreement to jointly facilitate Shantui's production of parts and components for use by Komatsu Shantui in tandem with expansion of production at Komatsu Shantui.

Komatsu Shantui was established in 1995 as a joint venture company to manufacture and sell medium-sized hydraulic excavators in China.