Nippon Piston Ring : Conclusion of Final Agreement Concerning the Consolidation by Nippon Piston Ring Co., Ltd. and Riken Corporation through Establishment of a Joint Holding Company by Means of Share Transfer

The transactions pursuant to the joint share transfer described in this press release involve securities of a Japanese company. The joint share transfer is subject to disclosure requirements of Japan that are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of United States companies.

It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuer is located in Japan and some or all of its officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court's judgment. You should be aware that the issuer may purchase securities otherwise than under the joint share transfer, such as in the open market or through privately negotiated purchases.

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. NPR and Riken assume no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

	May 23, 2023
Company:	Nippon Piston Ring Co., Ltd.
Representative: President and Representative Director
	Teruo Takahashi
	(Code: 6461, TSE Prime Market)
Contact:	Executive Officer, General Manager
	Corporate Planning Department
	Eiichi Chiyo
	(TEL: [phone])
Company:	Riken Corporation
Representative: President, CEO & COO
	Yasunori Maekawa
	(Code: 6462, TSE Prime Market)
Contact:	General Manager, Corporate Planning Div.,
	Corporate Management Head Office
	Tenya Mitsuboshi
	(TEL: [phone])

Conclusion of Final Agreement Concerning the Consolidation by Nippon Piston Ring Co., Ltd. and Riken

Corporation through Establishment of a Joint Holding Company by Means of Share Transfer

Nippon Piston Ring (hereinafter "NPR") and Riken Corporation (hereinafter "Riken") hereby announce that, based on a Memorandum of Understanding concerning a business merger signed by the two companies on July 27, 2022 (hereinafter the "Memorandum of Understanding"), and subject to approval at shareholders' meetings of both companies and the approval of relevant authorities, etc., the two companies have resolved in meetings of their respective Board of Directors convened today to enact a joint share transfer (hereinafter the "Share Transfer") to establish (hereinafter the "Consolidation") NPR- RIKEN CORPORATION (hereinafter the "Joint Holding Company"), which will become a wholly owning parent company of both companies effective October 2, 2023 (hereinafter the "Effective Date"). Moreover, the two companies have today

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signed a consolidation agreement (hereinafter the "Consolidation Agreement") grounded in a spirit of equality and have jointly prepared a share transfer plan (hereinafter the "Share Transfer Plan") to effect the share transfer, with details as follows.

1. Background to and purpose of the Consolidation

1. Background to the Consolidation

Since its establishment in 1934, NPR has contributed to the development of motorization worldwide through the provision of high-performance,high-quality piston rings, valve seat inserts, camshafts, and other parts primarily for use in internal combustion engines, manufactured using its own original techniques and technologies.

Riken was established in 1927 in order to commercialize the research of RIKEN (the Institute of Physical and Chemical Research), and has contributed to the development of the global automotive industry for over 90 years through its continued study of surface treatment, processing, and materials technologies for piston rings (the company's primary focus) and other parts.

The automotive industry is undergoing a remarkable transformation that is said to occur only once every 100 years, and the market for engine parts is becoming clearly more challenging. However, although environmental issues are attracting attention around the world, for the time being, the internal combustion engine will remain the primary form of power train and both companies believe that it is their mission to develop eco-friendly engine parts. At the same time, the companies believe it is necessary to think outside of the realm of internal combustion- related parts and increase investment in SDGs, ESG, decarbonization, and other new areas in line with global trends.

As the first step in development for the future, the two companies realize the need to utilize the brands they have nurtured over the years and to harness their integrated governance to promote management resource allocation and cultivate future core businesses. This will make it possible to achieve major synergy as the companies accelerate their efforts to achieve decarbonization, and thereby allow them to evolve into a completely new business entity capable of achieving sustainable growth and increasing corporate value.

As noted in the press release "Conclusion of a Memorandum of Understanding concerning Consolidation through the establishment of a joint holding company (stock transfer) between Nippon Piston Ring Co., Ltd. And Riken Corporation" dated July 27, 2022, the two companies have already discussed and examined the establishment of a Joint Holding Company by means of a joint share transfer based on the Memorandum of Understanding and the execution of a Consolidation. Today, adhering to that spirit of equality, the two companies have reached a final agreement and concluded a Consolidation Agreement under the conviction that the Consolidation is the optimal choice for the shareholders, employees, and all stakeholders of both companies.

As noted in the press release "Notice Regarding the Schedule for the Consolidation of Nippon Piston Ring Co., Ltd. and Riken Corporation," dated November 28, 2022, due to the time and other factors required for the review of the business combination by the Fair Trade Commission as a prerequisite for the Consolidation, the date of the Consolidation had been unscheduled. However, the companies submitted a notification to the Fair Trade Commission dated April 19, 2023 in accordance with the provisions of Article 15-3, paragraph 2 of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, and, as noted in the press release "Notice Regarding Result of the Fair Trade Commission Review of Consolidation by Nippon Piston Ring Co., Ltd. and Riken Corporation," dated May 8, 2023, they have received a notice dated May 2, 2023 to the effect that the Fair Trade Commission will not issue a cease and desist order.

(2) Purpose of the Consolidation and expected synergistic effects

The Consolidation will allow the two companies to integrate and make effective use of both companies' management resources to achieve desired synergistic effects as detailed below. By doing so, the companies seek to strengthen the profitability of their existing businesses centered on automobile engine parts, while also

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accelerating their efforts toward the creation of next-generation core products and new products in non-automotive engine component fields including marine vessels, hydrogen, new energy projects, thermal engineering, electromagnetic compatibility projects, metal powder injection molded parts, medical equipment, axial gap motors (disk-shaped, thin, high-torque motors), and other fields. The two companies aim to evolve into a new company that will lead the world in globally developing distinctive functional parts and key components through the companies' proprietary technologies, further enhancing each company's corporate value.

1. Reinforcement of existing businesses through the reallocation of management resources, and early development of products that will form the core of future business

In recent years, companies in the automobile industry have been compelled to improve their technical capabilities and reform their organizations in response to CASE, MaaS, and other new fields of development. NPR and Riken, too, in collaboration with research bodies and other external organizations, face the need to secure resources to create proprietary innovation and to nurture talent that will serve as sources of differentiation. Through the Consolidation, the companies aim to achieve the following:

Strengthening of cash flow creation capabilities in existing businesses

Both companies will work to enhance their business efficiency and development capabilities by means including adjustment of capital investment priorities, optimization of production over a wide range, and improved centralization and effectiveness of development themes. Through such efforts, the companies will achieve improved profitability and strengthened cash flow creation capabilities while meeting customers' expectations for the supply of high-quality,low-cost products.

Future core businesses and the creation of new products

Increasing business efficiency in the above-mentioned areas will enable integration of resources that had been dedicated to the development of products for internal combustion engines and allow for a bold shift toward future core businesses and the creation of new products. The companies will accelerate effective investment in effective new product development, promote reciprocal integration of technologies and corporate bases, and accelerate the development of new products that offer high added value and cost competitiveness.

(ii) Strengthening of capabilities to respond to an increasingly decarbonizing society

Amid the global movement toward the decarbonization of society, both companies face a need to respond to global environmental issues. By bringing together and expanding their product and production technologies, the two companies will advance their technologies in the environmental field and accelerate the decarbonization of products. At the same time, they will aggressively work to reduce carbon dioxide emissions throughout the supply chain and actively contribute to the creation of a sustainable society.

(iii) Reduction of costs through shared use of infrastructure and other resources

By enhancing productivity throughout the supply chain (from purchasing and production to sales), reducing external outflow costs through standardization of internal manufacturing in both companies, reducing procurement costs through joint purchasing, and eliminating duplication of systems and indirect operations to raise efficiency, the companies aim to enhance operational efficiency and cut costs to secure competitive advantages.

1. Reduction of manufacturing costs by enhancing production efficiency through shared product integration, and timely and appropriate fulfillment of supply responsibilities

Harnessing their technologies and infrastructures, the two companies will engage in unconventional shared utilization of factories and optimization of production hubs, with the goal of significant productivity improvements, enhanced capability for offering high-quality products, and reduction of fixed costs. Through

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the establishment of a sustainable production system, the companies will also fulfill their responsibilities to supply products to customers in a timely and appropriate manner.

(v) Upgrading of interpersonal abilities through exchanges of personnel and technologies

Through active exchanges of the knowledge and skills of their respective executives and employees, the two companies will harness the strengths of both to provide opportunities for new ideas to be born in varied areas and job positions. Through this, the companies will strive to build workplace environments that will raise employee engagement to new heights.

2. Abstract of the Consolidation

1. Schedule for the Consolidation

	Date of record of Ordinary General Meeting of Shareholders (both	March 31, 2023
	companies)
	Board of Directors meetings to approve the Consolidation Agreement	May 23, 2023 (today)
	and the Share Transfer Plan (both companies)
	Conclusion of the Consolidation Agreement and preparation of the	May 23, 2023 (today)
	Share Transfer Plan (both companies)
	Ordinary General Meetings of Shareholders to approve the Share	June 23, 2023 (scheduled)
	Transfer Plan (both companies)
	Date of delisting from the Tokyo Stock Exchange (both companies)	September 28, 2023 (scheduled)
	Effective Date of the Share Transfer (registration date for	October 2, 2023 (scheduled)
	establishment of the Joint Holding Company)
	Date of listing of shares of the Joint Holding Company	October 2, 2023 (scheduled)
Note:	The above represents current plans and is subject to change through discussion and agreement by the two companies
		if necessary for reasons pertaining to the progress of procedures for the Consolidation or for other reasons.

(2) Method of the Consolidation

NPR and Riken will conduct a joint share transfer that will leave the two companies as wholly owned subsidiaries following share transfer and will leave the new established Joint Holding Company as the wholly owning parent company following share transfer.

(3) Allotments related to the Share Transfer (share transfer ratio)

	Riken	NPR
Share transfer ratio	2	1.02

Note 1: Details of share allotments related to the Share Transfer

For each share of common stock of NPR, 1.02 shares of common stock of the Joint Holding Company will be allotted and granted, and for each share of common stock of Riken, 2 shares of common stock of the Joint Holding Company will be allotted and granted. However, in the event of material change in the conditions underlying the calculation of the above share transfer ratio, the ratio may be changed through consultation between the two companies.

The number of shares that constitute one unit of shares of the Joint Holding Company is scheduled to be 100 shares.

If, as a result of the Share Transfer, the number of shares of common stock of the Joint Holding Company that must be granted to a shareholder of NPR or Riken includes a fraction of less than one share, a monetary amount corresponding to the fraction of less than one share will be paid to the shareholder, in accordance with Article 234 of the Companies Act and related laws and regulations.

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Note 2: Number of new shares to be granted by the Joint Holding Company through the Share Transfer (scheduled): Common stock: 28,031,005 shares

The above number is based on the total number of outstanding shares (8,374,157 shares) of NPR as of March 31, 2023 and on the total number of outstanding shares (10,688,866 shares) of Riken as of March 31, 2023. However, as NPR and Riken intend, by resolutions of meetings of their respective Boards of Directors convened by the day before the Effective Date of the Share Transfer, to cancel all treasury stock held by each company (including treasury shares acquired by the companies on the occasion of the Share Transfer through share purchase requests made pursuant to the provisions of Article 806, paragraph 1 of the Companies Act) immediately prior to the Effective Date (hereinafter the "Base Time"), 583,728 shares of common stock that are treasury shares held by NPR as of March 31, 2023 and 646,482 shares of common stock that are treasury shares held by Riken as of March 31, 2023 are excluded from the scope of the granting of new shares in the above calculation. The number of treasury shares that will be retired by the Base Time is currently undetermined, and the number of new shares to be granted by the Joint Holding Company is subject to change in the future.

Note 3: Handling of odd-lot shares, etc.

Shares of the Joint Holding Company that will be allotted to shareholders of NPR and Riken as a result of the Share Transfer are scheduled to be listed on the Tokyo Stock Exchange via application. If said application is approved, trading of shares of the Joint Holding Company on the Tokyo Stock Exchange will be possible. Accordingly, the companies intend for shares of the Joint Holding Company to offer continued liquidity to shareholders of NPR or Riken who hold 99 or more shares of stock of NPR or 50 or more shares of stock of Riken and who receive allotment of 100 or more shares, i.e., one unit of shares, of the Joint Holding Company through the Share Transfer.

While shareholders of NPR and Riken who receive an allotment of less than 100 shares of stock of the Joint Holding Company will not be able to sell said allotted shares on the Tokyo Stock Exchange or on other financial instruments exchanges, it will be possible to request the purchase of such odd-lot shares to the Joint Holding Company. Pursuant to provisions scheduled to be stipulated in the Articles of Incorporation of the Joint Holding Company, the ability to purchase additional shares from the Joint Holding Company that, in combination with the number of odd-lot shares held, constitute one unit of shares is also planned.

1. Handling of subscription rights to shares and of bonds with subscription rights to shares associated with the Share Transfer

In the Share Transfer, subscription rights to shares of the Joint Holding Company will be allotted and granted to holders of, and in place of, subscription rights to shares issued by NPR and Riken as of the Base Time, based on details of said subscription rights to shares and on the share transfer ratio.

Neither NPR nor Riken has issued bonds with subscription rights to shares.

(5) Dividends of surplus

Under the Consolidation Agreement, the two companies have agreed on the payment dividends of surplus as follows: NPR may pay dividends of surplus in the amount of (1) 50 yen per share to shareholders or registered share pledgees of common shares of NPR listed or recorded in the final shareholder registry on March 31, 2023 or

(2) up to 35 yen per share to shareholders or registered share pledgees of common shares of NPR listed or

recorded in the final shareholder registry on September 30, 2023; and Riken may pay dividends of surplus in the amount of (1) 60 yen per share to shareholders or registered share pledgees of common shares of Riken listed or recorded in the final shareholder registry on March 31, 2023 or (2) up to 60 yen per share to shareholders or registered share pledgees of common shares of Riken listed or recorded in the final shareholder registry on September 30, 2023.

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