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Business

Otis to take over Schindler's Japanese elevator business

TOKYO -- The local unit of major U.S. elevator maker Otis Elevator said Tuesday it will acquire a Swiss rival's elevator service operations in Japan.

     Schindler Elevator will sell its elevator maintenance, repair and other service operations in the country to Nippon Otis Elevator for an undisclosed sum. The Japanese subsidiary of Switzerland-based Schindler Group also plans to liquidate its escalator business and exit Japan. The two local units will set up a new company and transfer their elevator service businesses and employees. 

     The deal will help Nippon Otis go after replacement demand for Schindler's existing elevators. Stephane de Montlivault, president of Nippon Otis, said the company wants to provide Otis' renewal solutions to Schindler's elevators.

     Schindler Group, the world's No. 2 elevator company, has suffered a string of scandals in Japan. After a fatal accident in 2006, the company stopped installing new elevators in the country and shifted its focus to maintenance and repair. But another fatal accident occurred in 2012. Last year, an employee was arrested for intentionally stopping elevators and trapping people inside.

     Industry insiders previously speculated that the Swiss headquarters was leaning toward leaving Japan altogether in light of the scandals and the low growth potential of the Japanese market.

     By contrast, Nippon Otis has announced an intention to bolster its operations. Upon bringing its first new model in two years to Japan in 2014, de Montlivault said that the company would step up efforts to secure orders for elevator installations. Otis Elevator is the global leader, but Nippon Otis currently ranks fourth or fifth in Japan.

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