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Japan's Sumitomo Forestry, Kumagai Gumi form alliance

Future survival at heart of homebuilder-contractor partnership

Sumitomo Forestry President Akira Ichikawa, right, shakes hands with Yasushi Higuchi, his counterpart at Kumagai Gumi, during a Thursday news conference.

TOKYO -- Major homebuilder Sumitomo Forestry and midsize contractor Kumagai Gumi will forge a capital and business partnership, with an eye toward survival amid an anticipated cool-off in construction demand after the 2020 Tokyo Olympics.

The duo said Thursday they will create a capital link by purchasing each other's shares on Nov. 28. Sumitomo will pay roughly 34.6 billion yen ($305 million) for a 20% stake in Kumagai in a private share placement, becoming the general contractor's top shareholder. Kumagai will take a 2.85% interest in Sumitomo Forestry by buying some 10 billion yen in newly issued shares.

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