Hitachi Announces Reorganization of Industrial Equipment Business through Company Split

Tokyo, October 25, 2018 --- Hitachi, Ltd. (TSE:6501, Hitachi ) has today decided to spin off the Industrial Products Business Unit that operates the business of large-sized industrial equipment as Hitachi Industrial Products, Ltd. ( Hitachi Industrial Products ), a company which will be newly established, to strengthen the product business in the Industry/Distribution/Water domain, one of Hitachi's four focus business domains; Power/Energy , Industry/Distribution/Water , Urban and Finance/Social/Healthcare.

The spin-off will take place on April 1, 2019. The spin-off will take place on April 1, 2019.

Through the spin-off, Hitachi will build an organizational structure in which its industrial equipment business is integrated into two companies, namely, Hitachi Industrial Products, a new company that undertakes large-sized industrial equipment with a focus on build-to-order items and Hitachi Industrial Equipment Systems Co., Ltd. ( Hitachi Industrial Equipment Systems ), a company that handles industrial equipment consisting mainly of mass-produced items. It will seek to achieve a flexible business operation as independent operating companies and dramatically strengthen manufacturing. In doing so, it will provide highly competitive products on a global basis. To proceed with the reorganization, Hitachi's Industrial Products Business Unit will be taken over by a company that will be established in the near future through an absorption-type split (the Company Split ). The disclosure items and details on the Company Split have been partially omitted since this is an absorption-type split in which a wholly owned subsidiary takes over a business from Hitachi.

1. Purpose of Company Split

Hitachi established the current Industrial Products Business Unit as an integrated organization for large-sized industrial equipment businesses in 2015, and through such efforts, has been working to strengthen its business base and enhance product competitiveness and profitability. Now, with an eye on the preparation of its 2021 Midterm Management Plan, which begins in fiscal 2019, it has decided to conduct a reorganization to spin off the Industrial Products Business Unit as Hitachi Industrial Products, a company which will be newly established.

As an independent operating company, the new company will expedite its decisionmaking processes, operate in a way flexible enough to compete with specialized companies, and establish an organizational structure in which products that can aim for the top positions on a global basis can be developed and supplied promptly. In addition, it will continue to strengthen its competitiveness globally by optimizing each operational process from manufacturing, sales to services, in addition to leveraging its competitive manufacturing capability utilizing digital technologies.

Through the reorganization, Hitachi Industrial Products that operates with a focus on build-to-order items and Hitachi Industrial Equipment Systems which mainly handles mass-produced items will lead Hitachi's product business under common business strategies, globally, while at the same time playing an important role in the Social Innovation Business of Hitachi, whose strength is the capability of offering Products, Operational Technology(OT) and Information Technology(IT) comprehensively. In addition, Hitachi will also bolster the business administration function of developing strategies on a cross-functional basis across business units and group companies in the Industry/Distribution/Water domain, so that business strategies can be executed in a manner that unifies the front-line promoting Lumada-based digital solution businesses and its competitive product business. It will seek to establish an optimal business structure in the industrial area by promoting the digital solution business and connected products business.

2. Outline of Company Split

(1) Schedule of Company Split

(Note) Hitachi will perform the Company Split without holding general meetings of shareholders to obtain approval for the absorption-type split agreement since the Company Split falls under an abbreviated split as set forth in Paragraph 2, Article 784 of the Companies Act with respect to Hitachi.

(2) Company Split Method

The split is an absorption-type split under which Hitachi will be the splitting company and a preparatory company that will be established going forward will be the succeeding company.

(3) Handling of Stock Acquisition Rights and Bonds with Stock Acquisition Rights

Accompanying Company Split

There will be no changes in the handling of stock acquisition rights issued by Hitachi due to the Company Split. Hitachi has no bonds with stock acquisition rights.

(4) Capitalization Changes Accompanying Company Split

There will be no changes in Hitachi's capitalization as a result of the Company Split.

(5) Other

Notification of other details of the Company Split will be provided as they are decided.

3. Profile of the Parties of Company Split

4. Overview of the Business to Be Split

(1) Business to Be Split

Development, manufacture and sales of products and provision of services in the electrical system business (high pressure motors, inverters, UPS (1), PCS (2), industrial computers, etc.) and machinery system business (pumps, blowers, centrifugal compressors, Dynamic simulating systems, compact and low-floor automated guided vehicles, etc.)

(1) UPS Uninterruptible Power Supply

(2) PCS Power Conditioning System

(2) Other Other details concerning the Business to Be Split will be announced as they are decided.

5. Status of the Parties After the Company Split

There will be no change in Hitachi's company name, head office location, representative's position or name, business activities, capital, or fiscal year due to the Company Split.

6. Profile of the Succeeding Com

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