DAIKYO INCORPORATED : Announcement of Opinion in Support of the Tender Offer for Our Shares to be Conducted by ORIX ...

October 26, 2018

To Whom It May Concern:

Company: Representative:DAIKYO INCORPORATED

Kazuo Kojima, President and Representative Executive Officer

(Code No.: 8840; First Section of the Tokyo Stock Exchange)

Contact:

Yoichi Ouchi, Executive Officer Responsible for Head of Finance, Accounting and Corporate Planning Headquarters

Announcement of Opinion in Support of the Tender Offer for Our Shares to be Conducted by ORIX Corporation, a Controlling Shareholder, and Recommendation for our Shareholders to Tender their Shares in the Tender Offer

DAIKYO INCORPORATED (the "Company") hereby announces that it resolved at its board of directors meeting held today to express its opinion in support of a tender offer for its common shares (the "Company Common Shares") to be conducted by ORIX Corporation (the "Offeror"), which is a controlling shareholder and a parent company of the Company, (that tender offer, the "Tender Offer") and recommend that the Company's shareholders tender their shares in the Tender Offer as described in "3 Details and Grounds and Reasons for the Opinion on the Tender Offer" below.

The above resolution of the Company's board of directors meeting was made on the premise that the Offeror intends to make the Company a wholly-owned subsidiary and that the Company's shares will be delisted through the Tender Offer and procedures to be taken thereafter.

1. Outline of the Offeror

(1)Name	ORIX Corporation
(2)Address	4-1, Hamamatsu-cho 2-chome, Minato-ku, Tokyo
(3)Title and Name of Representative	Makoto Inoue, Representative Executive Officer
(4)Description of Business	Multifaceted financial services
(5)Stated Capital	221,111 million yen (as of September 30, 2018)

(6)Date of EstablishmentMajor Shareholders and Shareholding Ratios

(7)

(as of March 31, 2018)April 17, 1964

Japan Trustee Services Bank, Ltd. (Trust Account)

The Master Trust Bank of Japan, Ltd. (Trust Account) Japan Trustee Services Bank, Ltd. (Trust Account 9) Citibank, N.A. -NY, as Depositary Bank for Depositary Share Holders (Standing proxy: Citibank, N.A., Tokyo Branch)

Japan Trustee Services Bank, Ltd. (Trust Account 5)

State Street Bank and Trust Company (Standing proxy: The Hong Kong and Shanghai Banking Corporation Limited, Tokyo Branch)

State Street Bank West Client-Treaty 505234 (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Department) The Chase Manhattan Bank 385036 (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Department)

State Street Bank and Trust Company 505001 (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Department)

Japan Trustee Services Bank, Ltd. (Trust Account 7)

(8)Relationship between the Company and the OfferorCapital Relationship

8.93%

6.08%

2.98%

2.09%

1.96%

1.90%

1.89%

1.84%

1.73%

1.63%The Offeror directly owns, in addition to 53,749,006

(Note 1):

Company Common Shares, 1,000,000 class 1 preferred shares of the Company ("Preferred Shares") (Ownership Ratio (see Note 1): 67.92% (see Note 2)). The Offeror also indirectly owns (see Note 3) 17,521 Company Common Shares (Ownership Ratio: 0.02%) through ORIX Management Information Center Corporation ("ORIX MIC"). Altogether, the Offeror owns 53,766,527 Company Common Shares and 1,000,000 Preferred Shares (Ownership Ratio: 67.95%).
Personnel Relationship	One executive officer of the Company has been dispatched from the Offeror and one employee of the Company has been seconded to the Offeror. In addition to the foregoing, five employees of the Company Group (Note 4) have been seconded to the Offeror Group (Note 5), and 25 employees of the Offeror Group have been seconded to the Company Group.
Business Relationship	The Company engages in transactions related to the management of buildings and construction contracts with the Offeror.
Status as Related Party	The Offeror is a parent company of the Company; therefore the Offeror and the Company constitute related parties with respect to each other.

"Ownership Ratio" means the ratio of the shares owned (rounded to two decimal places; the same applies hereinafter unless otherwise stipulated) to 80,805,852 shares, which is the sum of (a) the difference (79,668,196 shares) of the total number of issued Company Common Shares as of September 30, 2018 (84,354,273 shares) stated in the "Summary of Financial Results for the Second Quarter of Year Ending March 31, 2019 (Japanese GAAP) (Consolidated)" announced by the Company today less the number of treasury shares held by the Company as of October 22, 2018 (4,686,077 shares) and (b) 1,137,656 shares, which is obtained by converting all of the Preferred Shares to the Company Common Shares (see Note 6) in consideration of the put option relating to the Preferred Shares (the "Put Option"). The Preferred Shares do not have voting rights at general shareholders meetings, but they have a Put Option which allows holders of the Preferred Shares to demand the Company to deliver the Company Common Shares in exchange for their Preferred Shares.

The number of treasury shares held by the Company was 4,354,872 shares as of September 30, 2018, but the Company completed acquisitions of 331,200 Company Common Shares on October 22, 2018, as stated in the press release announced by the Company on October 23, 2018 titled "Announcement of Status and Completion of Acquisition of Treasury Shares (Based on Article 37 of the Company's Articles of Incorporation Pursuant to Article 459, Paragraph 1, Item 1 of the Companies Act)", and the Company also acquired 5 Company Common Shares as a result of a request to purchase shares less than one unit, so the number of treasury shares held by the Company as of October 22, 2018 increased to 4,686,077 shares.

(Note 2):

As of today, the Ownership Ratio of the Offeror is calculated by using as a numerator 54,886,662 shares, which is the sum of (a) the number of Company Common Shares directly owned by the Offeror (53,749,006 shares) and (b) 1,137,656 shares, which is obtained by converting all Preferred Shares to the Company Common Shares (See Note 6) in consideration of the Put Option relating to issued Preferred Shares directly owned by the Offeror (1,000,000 shares) (the same applies hereinafter unless otherwise stipulated).

(Note 3):

ORIX MIC, a wholly-owned subsidiary of the Offeror, holds 17,521 Company Common Shares (Ownership Ratio: 0.02%). The Offeror has made no agreement or arrangement with ORIX MIC with respect to tendering shares in the Tender Offer.

(Note 4):

The Company Group means the Company and its subsidiaries and affiliates. As of today, the Company group consists of the Company, its 14 subsidiaries (including 10 domestic and 4 overseas subsidiaries), and its 4 affiliates, (including 3 domestic and 1 overseas subsidiary).

(Note 5):

The Offeror Group means the Offeror and its subsidiaries and affiliates. As of March 31, 2018, the Offeror Group consists of the Offeror, its 831 consolidated subsidiaries (including, among others, variable interest entities and SPEs that have been established for a specific project), including the Company, and 190 affiliates accounted for under the equity method.

(Note 6):

The number of the Company Common Shares to be delivered in exchange for the Put Option is stipulated in the terms and conditions of the Preferred Shares to be calculated by dividing the total amount of issue price (See, Note 7) of the Preferred Shares submitted by the holder of the Preferred Shares for the Put Option by their acquisition price (if there is a fraction less than one in the number of Company Common Shares to be delivered, that fraction will be rounded down). The acquisition price is 3,516 yen as of today, and that acquisition price is used in this Press Release. The same applies for the number of the Company Common Shares to be delivered in exchange for thePut Option hereinafter.

(Note 7):

The total amount of the issue price of all issued Preferred Shares (1,000,000 shares) is 4 billion yen.

2. Price of Tender Offer 2,970 yen per common share (the "Tender Offer Price")

Although the Company has issued the Preferred Shares in addition to the Company Common Shares, as all issued Preferred Shares are owned by the Offeror, the Preferred Shares are not subject to the Tender Offer.

3. (1)Details and Grounds and Reasons for the Opinion on the Tender Offer

Details of the Opinion

The Company resolved at its board of directors meeting held today, based on the grounds and reasons stated in "(2) Grounds and Reasons for the Opinion" below, to express its opinion in support of the Tender Offer and recommend that the Company's shareholders tender their shares in the Tender Offer.

The above resolution of the Company's board of directors meeting was made by the method described in "(E) Unanimous Approval of All Disinterested Directors of the Company" in "(6) Measures to Ensure Fairness of the Tender Offer, Including Measures to Ensure Fairness of the Tender Offer Price and Measures to Avoid Conflicts of Interest" below.

(2) Grounds and Reasons for the Opinion

(A) Outline of the Tender Offer

The following is an outline of the Tender Offer as explained by the Offeror to the Company.

As of today, the Offeror directly holds, in addition to 53,749,006 Company Common Shares listed on the First Section of Tokyo Stock Exchange, Inc. (the "Tokyo Stock Exchange"), 1,000,000 Preferred Shares (ownership ratio: 67.92%), and holds a total of 53,766,527 Company Common Shares and 1,000,000 Preferred Shares (ownership ratio: 67.95%), including those indirectly held by the Offeror through its wholly-owned subsidiary ORIX MIC (17,521 shares; ownership ratio: 0.02%), making the Company a consolidated subsidiary of the Offeror. According to the Offeror, the Offeror has recently decided to conduct the Tender Offer as part of the transaction intended to make the Company a wholly-owned subsidiary of the Offeror by acquiring all Company Common Shares (excluding those held by the Offeror and the treasury shares held by the Company; the same applies hereinafter) (the "Transaction").