Hitachi, Sagawa Form Alliance as Logistics Competition Increases

  • Hitachi Transport will buy 20 percent of Sagawa Express
  • Sagawa parent to buy 29 percent of Hitachi Transport

Hitachi Ltd. and Sagawa Express Co. agreed to buy stakes in each other’s distribution business as competition among Japanese logistics companies intensifies.

Hitachi Transport System Ltd. will buy 20 percent of Sagawa Express Co. for 66.3 billion yen ($591 million) from its parent SG Holdings Co., according to a joint statement Wednesday. Closely held SG Holdings will also buy 29 percent of Hitachi Transport for 87.6 billion yen, the statement showed. The companies are holding a press conference at 5 p.m. in Tokyo.

Sagawa, Japan’s second-largest courier service, and Hitachi Transport may also eventually merge, according to two people familiar with the situation, who asked not to be identified because the information isn’t public. Japan Post Holdings Co. and Kintetsu World Express Inc. have been leading a reorganization of the delivery and logistics business in Japan with takeovers last year.

Hitachi Transport rose 5.7 percent to 1,914 yen at the close of trading in Tokyo, its largest gain since Feb. 2 last year. Hitachi fell 1.7 percent to 524.7 yen and the Nikkei 225 Stock Average declined 1.3 percent.

Hitachi Transport has bought stakes in companies to help its expansion domestically and overseas, including Turkey’s Mars Logistics Group, Hong Kong’s CDS Freight Holding Ltd. in 2013 and Japan’s Vantec Corp. in 2011. SG Holdings has also expanded overseas, opening a delivery service in Vietnam and forming a business alliance with Korea’s Hanjin Transportation Co. in 2011 and China Courier Service Corp. in 2006.

Last year, Japan Post agreed to buy Australia’s Toll Holdings Ltd. for A$6.49 billion ($5 billion), gaining a transport network in the faster-growing Asian region.

Kintetsu bought Singapore-based Neptune Orient Lines Ltd.’s logistics business for 144.2 billion yen and Orix Corp. teamed up with Hyundai Merchant Marine Co. to buy 88.8 percent of Hyundai Logistics Co. for 600 billion won ($524 million) in 2014.

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