Japanese engineering giant Hitachi Zosen is to spin off its marine engine manufacturing business into a joint venture company with compatriot Imabari Shipbuilding.

The newly formed company will bring together one of Japan’s leading main engine manufacturers with the country’s largest shipbuilder.

The name of the new company, which will be launched in April next year, has not yet been decided.

It has been agreed under the deal that Imabari will own 35% of the business and Hitachi the remaining 65%.

The value of the transaction has not been disclosed.

Hitachi said the move to separate its engine business is in response to “severe business conditions” caused by increased competition and the pressure to develop technology for zero-emission engines.

“The company and Imabari Shipbuilding believe that this transaction will contribute to the stable supply and procurement of marine engines, as well as boosting sales by strengthening the sales supply network, improving profitability through cost reductions utilising the material procurement capabilities of Imabari Shipbuilding, securing funds for development investment and strengthening the development system,” Hitachi said.

In disclosure documents provided by Hitachi it was revealed that Imabari achieved sales of ¥356bn ($2.5bn) and a net profit of ¥8.2m last year.

Hitachi is one of Imabari’s main suppliers of marine engines. It is the only manufacturer in Japan licensed to build marine engines designed by both Germany’s MAN Energy Solutions and Swiss company WinGD.

Since it was established in 1940 Hitachi has produced 2,975 marine engines of 42.8m horsepower.

Growing network

In a separate transaction between the two companies, Imabari has also agreed to acquire all the shares in Hitachi deck machinery manufacturer Nihon Pusnes.

The deals are another example of Imabari's growing network of shareholdings across the Japanese maritime cluster.

As earlier reported by TradeWinds, Imabari is an equity partner in Japan Marine United and Nihon Shipyard, its shipbuilding joint venture with JMU.

It is also one of the top ten shareholders in Mitsui E&S Holdings.