Hitachi to acquire Taiwan’s Yungtay to capitalize on China’s growing elevator market
By Gloria Cho
TAIPEI, NNA - Japanese conglomerate Hitachi Ltd. is set to fully acquire Taiwan’s Yungtay Engineering Co. to strengthen its presence in China’s elevator market that is expected to grow further post-pandemic.
Hitachi, which together with its affiliates, already owns a 71.1 percent stake in Yungtay as of Sept. 27, is planning to acquire all the remaining shares at NT$65.1 ($2.34) each.
Now presided by Makoto Nagashima from Hitachi group, Yungtay plans to convene a shareholders’ meeting to formally approve the share transfer on Nov. 16. It will then apply for delisting from Taiwan Stock Exchange after becoming a fully-owned subsidiary of Hitachi, the company said in a statement.
The strategic takeover occurs at a time when the Japanese group aims to boost its presence in China and Asia significantly.
China's elevator market is the world’s largest, hitting operating revenues amounting to $33.96 billion in 2020. Further growth is anticipated to continue in the coming years, according to a Statista report.
Already ranked among top three elevator manufacturers in China, Hitachi’s China subsidiary is capable of delivering around 120,000 elevators a year. It raked in more than 22 billion yuan ($3.4 billion) in 2020.
A Hitachi group executive told NNA that the takeover will enable Hitachi to accelerate its global expansion of its elevator and escalator business. It will expand the product lineup and improve cost competitiveness to increase the number of new installations in China and Asia.
The company also “expects to improve profitability by increasing the scale of elevator and escalator maintenance through the promotion of measures including the strengthening of cooperation with Yungtay,” he added.
Founded in 1966 as the first local elevator and escalator brand in Taiwan, Yungtay has grown into a leading player locally and in China, covering all key aspects of its segment from design and production to installation and maintenance.
Yungtay managed to receive investment backing from Hitachi way back in 1968 which led to a long and fruitful partnership for over 50 years.
Yungtay became a major elevator supplier for residential buildings in China following its entry in 1993.
Yungtay will leverage Hitachi’s advanced technologies for smart elevators, such as remote control, ultra-fast speed and energy efficiency. It will also use Hitachi's digital cloud application to enhance its products and carry out maintenance remotely.
Yungtay’s general manager Tsai Shang-yu told a media briefing on Sept. 27 that his firm’s future brand operation will be subjected to “global business plan to fully boost the synergy with Hitachi”.
The firm registered revenues of NT$11.54 billion for the first eight months of this year, representing a 22.7 percent growth over the same period last year.
Growth in construction in the residential and non-residential sectors, rising public expenditure on infrastructural developments, and increasing shift toward eco-efficiency, flexible design and safety in Asia Pacific countries such as China, India, Philippines, and Indonesia have fueled a strong demand for elevators, according to a Research and Markets report.
The global market for elevators and escalators is projected to value at $154.91 billion in 2025, growing at a CAGR (compound annual growth rate) of 7.15 percent from 2021 to 2025, it said.