Hitachi : Notification of the Agreement Including Share Transfer with Change in Subsidiary (Hitachi Astemo, Ltd.)

FOR IMMEDIATE RELEASE

Notification of the Agreement Including Share Transfer with Change in Subsidiary (Hitachi Astemo, Ltd.)

＜Key Messages＞

•  Hitachi has executed the agreements including the transfer of a part of Hitachi Astemo's common stocks owned by Hitachi with Hitachi Astemo and Honda. After a series of the transactions, Hitachi Astemo will be accounted as Hitachi's equity-method associate in September 2023 (Scheduled).

•  Hitachi and Honda support Hitachi Astemo's growth on an equal position and invite JIC Capital as a new joint partner to achieve further growth and enhancement of corporate value of Hitachi Astemo. Hitachi aims for further expansion of its green and digital business through collaboration with Hitachi Astemo, particularly in the areas of electrification and autonomous driving.

•  Hitachi plans to post an extraordinary gain of approximately 108 billion yen in gains on sale of affiliated companies' common shares in its unconsolidated statements of operations and a gain on business reorganization and others in the amount of approximately 94 billion yen in its consolidated accounts as other income for the fiscal year ending March 31, 2024, respectively.

Please refer to the text below for details.

Tokyo, March 30, 2023 --- Hitachi, Ltd. (TSE: 6501, "Hitachi") today announced that it has executed following (1) and (2) agreements for the purpose of changing capital structure of Hitachi Astemo, Ltd. ("Hitachi Astemo"), a consolidated subsidiary of Hitachi. (A series of transactions based on the (1) and (2) agreements as the "Transaction")

• (1) Share Subscription Agreement with JICC-01 Limited Partnership ("JICC-01") managed by JICC-01 G.K., which is a wholly owned subsidiary of JIC Capital, Ltd. ("JICC") including that (i) Hitachi Astemo issues Class shares*1 to JICC-01, and (ii) Hitachi Astemo purchases a part of shares of its common stocks held by Hitachi, using a portion of the funds raised through the issuance of Class shares

• (2) Agreement for investment in kind and share transfer with Honda Motor Co., Ltd. (TSE: 7267, "Honda") including that (i) Hitachi Astemo issues common stocks to Honda in exchange for Honda to invest the shares of Hitachi Astemo Electric Motor Systems, Ltd. ("Hitachi Astemo EMS") in kind and (ii) Hitachi transfers a part of shares of Hitachi Astemo's common stocks to Honda

After the Transaction, each party's ownership ratio of voting rights for Hitachi Astemo will change from Hitachi : Honda = 66.6% : 33.4% to Hitachi : Honda : JICC-01 = 40.0% : 40.0% : 20.0%, and Hitachi Astemo will be accounted as Hitachi's equity-method associate.

*1 At both the General Meeting of Shareholders and at the General Meeting of Class Shareholders the member of which are only Shareholders of Class shares, Class shares have one voting right per share.

1. Reasons for Transaction

After the management integration of Hitachi Automotive Systems, Ltd., Keihin Corporation, Showa Corporation, and Nissin Kogyo Co., Ltd., Hitachi Astemo has established its position as a global mega supplier which provides competitive mobility solutions in the CASE field by combining the strengths of each supplier and leveraging the relationships with existing shareholders Hitachi and Honda.

As the automobile and motorcycle industries are currently facing a revolution, Hitachi Astemo aims to realize sustainable growth and consolidate its position as a global mega supplier by leveraging its competitive software development technology with accelerating investment in advanced technologies such as electric powertrains for automobiles, autonomous driving/advanced driver assistance systems, advanced chassis and next-generation motorcycles.

Hitachi Astemo and its shareholders, Hitachi and Honda, have considered measures to achieve further growth and enhancement of corporate value of Hitachi Astemo. As a part of the consideration, the companies came to the conclusion that, taking IPO into consideration, it would be desirable that Hitachi and Honda, as existing shareholders, support Hitachi Astemo's growth on an equal position and invite JICC as a new joint partner to utilize its extensive track record of investment and support, including in the automotive industry, as well as its knowledge and information network based on that experience in order to realize Hitachi Astemo's sustained growth.

After the Transaction, Hitachi Astemo will become an equity-method associate of Hitachi and will not be consolidated by Hitachi. However, as a shareholder, Hitachi will continue to support Hitachi Astemo's sustained growth and enhancement of corporate value through human and technical assistance. Also, Hitachi aims for further expansion of its green and digital business through collaboration with Hitachi Astemo, particularly in the areas of electrification and autonomous driving.

Hitachi will use the proceeds obtained from the Transaction to enhance its corporate value by promoting social innovation business that support people's quality of life through fostering a sustainable society with data and technology.

2. Outline of the Transaction

3. Outline of the Parties of the Transaction I. Outline of Subsidiary Subject to Change

(1)Name	Hitachi Astemo, Ltd.
(2)Address	2520 Takaba, Hitachinaka-shi, Ibaraki
(3)Job Title / Name of Representative	Brice Koch, President & CEO
(4)Description of Business	Development, manufacture, sale, and service of automobile parts, transportation and industrial machinery and appliances, and systems
(5)Capital (as of March 30, 2023)	51.5 billion Japanese yen

(6)Date of Incorporation	January 6, 2021
(7)Major Shareholders and Shareholding Ratios (as of March 30, 2023)	Hitachi, Ltd.	66.6%
Honda Motor Co., Ltd.	33.4%
(8)Relationship Hitachi and Astemobetween Hitachi	Capital relationship	Hitachi owns 66.6% of the aggregate number of issued shares (excluding treasury stock) in Hitachi Astemo.
Personnel relationship	Executive officer of Hitachi has been appointed as director of Hitachi Astemo.
Transaction relationship	Hitachi Astemo has a business relationship with Hitachi and Hitachi group companies for products and services. Hitachi Astemo receives R&D services from Hitachi.
Status as related party	Hitachi Astemo is a consolidated subsidiary of Hitachi and falls under a related party.
(9)Consolidated financial conditions and business results for past three fiscal years (IFRS)
Fiscal year-end	March 2020	March 2021	March 2022
Revenues (million yen)	811,567	987,583	1,597,718
Operating income (million yen)	30,148	34,704	58,751

II. Outline of Underwriter of Class Share

(1)Name	JICC-01 Limited Partnership
(2)Address	1-3-1 Toranomon, Minato-ku,Tokyo
(3)Job Title / Name of Representative	JICC-01 G.K. Representative Partner Osamu Itabashi, Executive Member, JIC Capital, Ltd.
(4)Description of Business	1. Owing Class shares of Hitachi Astemo 2. Execution of all incidental tasks
(5)Date of Incorporation	March 29, 2023
(6)Major Shareholders and Shareholding Ratios (as of March 30,2023)	JIC PEFJ1 Limited Partnership	56.0%
JIC PEF1 Limited Partnership	44.0%
(7)Relationship between Hitachi and the company	Capital relationship	Not applicable.
Personnel relationship	Not applicable.
Transaction relationship	Not applicable.
Status as related party	Not applicable.

III. Outline of the Party Investing Shares of Hitachi Astemo EMS in Kind and Purchasing

Common Shares

(1)Name	Honda Motor Co., Ltd.
(2)Address	2-1-1, Minami-Aoyama, Minato-ku, Tokyo
(3)Job Title / Name of Representative	Director, President and Representative Executive Officer / Toshihiro Mibe
(4)Description of Business	Development, manufacture, sales and services of

automobiles, motorcycles and power products
Capital (5) (as of December 31, 2022)	86,067 million yen
(6)Date of Incorporation	September 24, 1948
Total Equity (7) (as of December 31, 2022)	11,403,064 million yen
Total Asset (8) (as of December 31, 2022)	24,142,591 million yen
(9)Major Shareholders and Shareholding Ratios (as of September 30, 2022)	The Master Trust Bank of Japan, Ltd. (Trust Account)	15.7%
Moxley & Co. LLC	6.9%
Custody Bank of Japan, Ltd. (Trust Account)	6.8%
Meiji Yasuda Life Insurance Company	3.0%
SSBTC CLIENT OMNIBUS ACCOUNT	2.6%
Tokio Marine & Nichido Fire Insurance Co., Ltd.	2.1%
STATE STREET BANK WEST CLIENT - TREATY 505234	1.7%
Nippon Life Insurance Company	1.7%
JPMorgan Chase Bank 385781	1.4%
MUFG Bank, Ltd.	1.2%
(10)Relationship between Hitachi and the company	Capital relationship	Not applicable.
Personnel relationship	Not applicable.
Transaction relationship	Not applicable.
Status as related party	Not applicable.

4. Number of Hitachi Astemo's Common Shares Transferred by Hitachi, Total Amount of the Transfer Price, and Status of Hitachi's Ownership Ratios of Voting Rights on Hitachi Astemo Before and After the Transaction

(1)Number of common shares owned before the Transaction	666,000 shares (Number of voting rights: 666,000) (Ratio of voting rights owned: 66.6%)
(2)Number of transferred shares	1. Number of transferred shares to Hitachi Astemo 170,532 shares (Number of voting rights: 170,532) 2. Number of transferred shares to Honda 69,552 shares (Number of voting rights: 69,552)
(3)Total amount of the transfer price	Approximately 158.0 billion yen (657,300 yen per share)
(4)Number of common shares owned after the Transaction*2	425,916 shares (Number of voting rights: 425,916) (Ratio of voting rights owned: 40.0%)

*2 Number of Voting Rights and Ratios of voting rights owned are the figures after issuance of Class shares by Hitachi Astemo and investment of shares of Hitachi Astemo EMS in kind by Honda to Hitachi Astemo.