Itochu will buy Hitachi's stake for 3,300 yen a share with Japan Industrial Partners. Hitachi currently owns a 51.5% stake in the construction company.
The sale would represent a final tranche of Hitachi's decade-long business portfolio overhaul, in which it sold chip-making equipment manufacturer Hitachi Kokusai Electric and chemicals maker Hitachi Chemical in recent years.
Hitachi Construction, the smaller rival of Komatsu Ltd and Caterpillar Inc, generated 813 billion yen in its last full business year from sales of excavators, wheel loaders, dump trucks and their parts.
It employs about 25,000 people worldwide with around three-quarters of sales outside Japan.
($1 = 113.7100 yen) (This story corrects headline to clarify Hitachi is selling half of its own stake, not half of construction unit)
(Reporting by Sakura Murakami; Editing by Sherry Jacob-Phillips)