Toyota Tsusho Corp. and Takeuchi Mfg. Co. last week agreed to enter into a capital and business alliance agreement to further strengthen the cooperative relationship between the two companies.

Toyota Tsusho plans to purchase 620 million yen (U.S. $6.24 million) of new shares in Takeuchi Mfg. Co. as part of a move to expand capital and business ties with the construction machinery maker. The private placement will push up the Toyota Motor Corp. group trading company’s stake in Takeuchi to 6.99 percent from 0.78 percent, making it the second-biggest shareholder.

Toyota Tsusho currently only handles Takeuchi’s products in Japan, however, it aims to leverage the strengthened ties with Takeuchi to boost emerging market sales of mini power shovels used for housing construction.

Toyota Tsusho is seeking to transform its business by expanding its non-automotive business operations to co-exist with the company’s core automotive s business, with the aim of achieving a more balanced revenue structure.

The companies will strive to achieve synergies by building their value chain and strengthening their functional capabilities by combining Toyota’s production procurement, distribution, IT function and sales channels with Takeuchi’s technology and manufacturing capabilities, and sales expertise to develop its construction machinery businesses in emerging markets such as Brazil, Central and South America, Russia, the Middle and Near East, and Africa, and strengthen the businesses in North America and Europe.

Toyota Tsusho is headquartered in Nagoya, Japan. Takeuchi is based in Nagano, Japan.