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Business deals

Hitachi to enhance digital operations with $5bn tech unit takeover

Japanese conglomerate enters final stage of decadelong reorganization

Hitachi High-Technologies makes such devices as electron microscopes. (Photo courtesy of Hitachi High-Technologies)

TOKYO -- Hitachi will convert the unit Hitachi High-Technologies into a wholly owned subsidiary through a tender offer worth almost $5 billion, the company said Friday.

"We will be able to enhance our digital operations through the addition of measuring instruments and analytical systems," Hitachi Executive Vice President Keiji Kojima said Friday, explaining the aim of the buyout.

Hitachi, which owns nearly 52% of the listed unit, will purchase the rest of the shares by offering 8,000 yen per share in an open-market offer starting Feb. 17. The parent is expected to spend 531.1 billion yen ($4.88 billion) on the bid.

Apart from measuring and analytical devices, Hitachi High-Technologies also produces chipmaking equipment as well as industrial materials and systems.

Kojima lauded the Hitachi High-Technologies medical technology segment, especially the unit's blood and genetic analytical devices. The combination of Hitachi's artificial intelligence tech would potentially lead to more accurate diagnoses and efficient medical services.

The move follows the group's decision to sell Hitachi Chemical to Showa Denko, and to divest diagnostic imaging assets to Fujifilm Holdings. Hitachi President Toshiaki Higashihara has accelerated the group's structural reform efforts to achieve his goal of an operating profit margin exceeding 10% in fiscal 2021.

The conglomerate is now in the final stages of a decade-plus restructuring campaign carried out by three different leaders -- former Chairman Takashi Kawamura, current Chairman Hiroaki Nakanishi and Higashihara.

The conglomerate had 22 listed subsidiaries in fiscal 2008, when it logged a net loss of 787.3 billion yen -- a record for Japan's manufacturing sector -- amid the global financial crisis.

Under Kawamura, the company began following a strategy of narrowing its portfolio and concentrating on core businesses, turning five listed units into wholly owned subsidiaries. Nakanishi continued the reform drive, sparing no sacred cows: He arranged the sale of the U.S. hard drive operations that he once led.

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