| Nissin Kogyo | 2,250 | 1,793 | Toyota Deepens Ties With Subaru to Face Auto Industry Shifts The transaction announced Wednesday will take place in two steps, Honda and Hitachi said. First, Honda will make a tender offer for all shares of Nissin Kogyo, Keihin and Showa and Hitachi will make Hitachi Automotive Systems a subsidiary. Then, the four suppliers will merge, with Hitachi owning about 67% and Honda the remaining third. A timetable for the steps hasn't been determined, the companies said. Stock of the targeted companies may climb a second day Thursday, after jumping by the exchange-imposed limit Wednesday, to levels still below Honda's tender offers. Keihin shares rose 21%, the most on record, to close at 2,298 yen. The manufacturer supplies electrification systems for hybrid and electric vehicles along with valves and controls for fuel cell vehicles. It also makes conventional engine components including management systems for natural gas vehicles. Showa manufactures differential gears, shafts and other drivetrain components along with shock absorbers and steering systems. Its stock surged 22% to 2,206 yen, while Nissin Kogyo, which makes brakes and engine mounts, soared 22% 2,193 yen as of the close Wednesday in Tokyo. “There might be more mergers among auto component makers seeking scale,” said Koji Endo, an analyst at SBI Securities. “Small auto part makers could merge together, or big manufacturers could actively buy small ones. Clearly we will see such moves in Japan and elsewhere in the world.” Electric Cars Could Be a Job Killer for Japan's No. 1 Industry The four-way combination would create a parts maker with about 1.8 trillion yen ($16.5 billion) in sales, compared with Japan-based Denso Corp., a Toyota affiliate that had sales of 5.3 trillion yen in the year ended March and Aisin Seiki Co., which had about 4 trillion yen. Hitachi Automotive Systems had sales of 971 billion yen in the year ended March, while Keihin, Nissin Kogyo and Showa combined had about 825.6 billion yen. Parent Hitachi, which makes everything from nuclear power equipment to telecommunications gear and construction machinery, counted on automotive systems for about 19% of earnings last fiscal year. The conglomerate has been selling off and merging non-core units as it focuses on growth from information technology systems. Nissin Kogyo and Showa count on Honda for more than half of their revenue, while also supplying carmakers including Suzuki Motor Corp., Mazda Motor Corp. and Subaru, according to data compiled by Bloomberg. Keihin is more dependent on its affiliate, relying on Honda for 85% of sales, while also supplying some to Volkswagen AG, Ford Motor Co. and Daimler AG, the data show. Both Honda and Toyota have cut their profit and sales forecasts for the current fiscal year as demand in the U.S. and China, the two biggest export markets, has been worse than projected. To contact the reporters on this story: Shiho Takezawa in Tokyo at stakezawa2@bloomberg.net;Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, ;Sam Nagarajan at samnagarajan@bloomberg.net, Dave McCombs, Reed Stevenson ©2019 Bloomberg L.P.
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