HIROSHIMA, JAPAN—Ryobi Limited and Mitsubishi Heavy Industries Printing & Packaging Machinery have signed a shareholder agreement to establish a joint venture called Ryobi MHI Graphic Technology Ltd.

The agreement, dated June 20, 2013, is the culmination of a study process the companies began in January to explore the possibility of a business alliance in the field of sheetfed offset printing presses.

A joint released statement cites market conditions and shrinking demand, especially in developed countries, as the main thrust behind the partnership. "This downturn has led both companies to promote internal structural reforms in order to sustain their market competitiveness and financial soundness."

The signing finalizes plans to join the respective sheet-fed offset printing machinery businesses in an effort to bolster competitiveness, boost scale of operations and product line-up, cut costs, and improve sales and service networks. The new company's targets for the fiscal year of 2014 are 30 billion yen in sales (approximately $318 million), and 1.5 billion yen (roughly $16 million) in income before taxes.

The business scope will include manufacture and sale of printing machinery and related materials, the design and implementation of equipment installs, and the sale of used machinery.

"The commercial printing industry presently anticipates demand for printing machinery to strengthen in the emerging economies," reads the companies' statement. "Simultaneously demand for higher specification products is expected to grow further within the mature economies."

Ryobi's ownership stake is 60% and MHI-PPM's is 40%. On July 31, a preparatory company called RM Limited will be established. The company name will later change to Ryobi MHI Graphic Technology with operations commencing on January 1, 2014, at the head office located in Fuchu City, Hiroshima, Japan.