How Hitachi Maxell Will Become Wholly-Owned Subsidiary of Hitachi?

Hitachi, Ltd. and Hitachi Maxell, Ltd. have determined the method for the share exchange to make Hitachi Maxell a wholly-owned subsidiary of Hitachi. Details of the Share Exchange including the exchange ratio, the effective date and the status following the Share Exchange, etc. will be announced when they are finalized.  
 
1. Purpose of Making Hitachi Maxell
a Wholly-Owned Subsidiary via the Share Exchange
As announced in its news releases "Hitachi to Commence Tender Offer for the Shares of its Subsidiary, Hitachi Maxell" on July 28, 2009, and "Hitachi Amends ‘Hitachi to Commence Tender Offer for the Shares of its Subsidiary, Hitachi Maxell’" on August 19, 2009, Hitachi conducted a tender offer for the shares of Hitachi Maxell from August 20 to October 8, 2009, to make Hitachi Maxell a wholly-owned subsidiary. As a result, as of today, Hitachi holds 90,553,354 shares of Hitachi Maxell, which corresponds to 90.98% of Hitachi Maxell’s total issued shares (99,532,133 shares as of September 30, 2009) and 94.27% of the total voting rights of Hitachi Maxell (see note).
 
As noted in the Tender Offer News Releases, Hitachi intends to make Hitachi Maxell its wholly-owned subsidiary. In the event that Hitachi was unable to acquire all of the issued shares of Hitachi Maxell (exclusive of treasury stock held by Hitachi Maxell) via the Tender Offer, Hitachi intended to make Hitachi Maxell its wholly-owned subsidiary by acquiring all the issued shares of Hitachi Maxell (exclusive of Hitachi Maxell shares held by Hitachi) by means of a share exchange, with Hitachi as the wholly owning parent company in share exchange and Hitachi Maxell as the wholly-owned subsidiary in share exchange after the Tender Offer. (However, a different method was to be used if, as of a designated record date after settlement of the Tender Offer, U.S. shareholders held more than 10% of Hitachi Maxell’s common stock (calculated as per the U.S. Securities Act of 1933; the same shall apply hereinafter) and Hitachi’s obligation to submit a registration statement based on the U.S. Securities Act of 1933 arises.).  
 
As Hitachi was unable to acquire all the issued shares of Hitachi Maxell (exclusive of treasury stock held by Hitachi Maxell) in the Tender Offer, and as of November 16, 2009, a designated record date after settlement of the Tender Offer, U.S. shareholders did not hold more than 10% of Hitachi Maxell’s common stock, Hitachi and Hitachi Maxell have determined that Hitachi Maxell will be made a wholly-owned subsidiary of Hitachi via the Share Exchange.  
 
(Note) Calculated as the 905,533 voting rights corresponding to the Hitachi Maxell shares held by Hitachi as a percentage of the 960,595 total voting rights of Hitachi Maxell. The total number of voting rights of Hitachi Maxell corresponds to 96,059,532 shares; this is obtained by subtracting the 3,472,601 shares of treasury stock held by Hitachi Maxell as of September 30, 2009, from its 99,532,133 shares issued as of the same date. The figures were rounded to two decimal places.
 
The purpose of Hitachi making Hitachi Maxell its wholly-owned subsidiary is outlined in the Tender Offer News Releases and Hitachi Maxell’s announcements “Announcement Concerning Expression of Opinion for Tender Offer by Hitachi Ltd., for Shares of the Company” on July 28, 2009, and “Hitachi Maxell Amends ‘Announcement Concerning Expression of Opinion for Tender Offer by Hitachi, Ltd. for Shares of the Company’” on August 19, 2009.
 
2. Overview of the Share Exchange
Both companies plan to implement the Share Exchange without obtaining the approval of a General Meeting of Shareholders, with Hitachi using a simplified share exchange (kani kabushiki kokan) procedure pursuant to Article 796, Paragraph 3 of the Companies Act, and Hitachi Maxell using a summary share exchange (ryakushiki kabushiki kokan) procedure pursuant to Article 784, Paragraph 1 of the Companies Act. The effective date of the Share Exchange is yet to be determined but will be by around April 2010. The effective date of the Share Exchange will be announced when it is determined.  
 
The Share Exchange intends to deliver Hitachi shares as consideration for the Hitachi Maxell shares held by Hitachi Maxell’s shareholders other than Hitachi. The share exchange ratio for the Share Exchange will be finally determined upon consultations between Hitachi and Hitachi Maxell. In determining the consideration, which will consist of Hitachi shares; provided, however, that if fractional shares less than one share are to be allotted, the sales price equivalent to such fractional shares will be distributed, to be received by the shareholders of Hitachi Maxell through the Share Exchange, Hitachi Maxell shares are expected to be evaluated to be equivalent in value to the purchase price for the Hitachi Maxell shares in the Tender Offer (¥1,740 per share).  
 
3. Likelihood of and Reason for Delisting of Shares
Hitachi Maxell will become a wholly-owned subsidiary of Hitachi as of the effective date of the Share Exchange. Hitachi Maxell shares will be delisted as of three business days prior to the effective date of the Share Exchange pursuant to the delisting standards and procedures of the Tokyo Stock Exchange and the Osaka Securities Exchange. Trading of Hitachi Maxell shares will become unavailable on the Tokyo Stock Exchange and the Osaka Securities Exchange after the delisting.