January 14, 2022

This document is an English translation

of a statement written originally in Japanese. The Japanese original should be considered as the primary version.

ITOCHU Corporation

(Code No. 8001, Tokyo Stock Exchange, First Section)

Representative Director and President and Chief Operating Officer: Keita Ishii

Contact: Suguru Amano

General Manager, Investor Relations Division (TEL. +81-3-3497-7295)

Announcement in Relation to Capital Alliance with Hitachi Construction Machinery Co., Ltd.

and a Change in Specified Subsidiaries

ITOCHU Corporation ("ITOCHU") is as of today to obtain the ordinary shares of Hitachi Construction Machinery Co., Ltd. ("Hitachi Construction Machinery") held by Hitachi, Ltd., jointly with Japan Industrial Partners, Inc. ("JIP") through the structure mentioned below (the "Share Acquisition"). ITOCHU agreed on the capital alliance with Hitachi Construction Machinery (the "Capital Alliance") on the premise of the Share Acquisition, and it is hereby announced as follows.

In connection with the Share Acquisition and the Capital Alliance, a change in ITOCHU's specified subsidiaries is expected, thus it is also hereby announced.

  1. Capital Alliance

1. Reason and Purpose of the Capital Alliance

In the construction machinery area, ITOCHU has maintained a wide array of business relationships with Hitachi Construction Machinery, such as through business developments by export trade finance projects and establishing joint ventures. Particularly in Indonesia, ITOCHU has been operating in the manufacturing, sales and finance business domains for 30 years jointly with Hitachi Construction Machinery. Further, ITOCHU owns ITOCHU TC CONSTRUCTION MACHINERY CO., LTD. ("ITOCHU TC CONSTRUCTION MACHINERY"), which operates sales businesses for construction machinery and finance businesses in Japan, and it also owns MULTIQUIP INC. ("MULTIQUIP"), which operates the manufacture and sales businesses for light construction equipment and power generators in North America. Through these businesses, ITOCHU has accelerated businesses utilizing its broad sales channels targeting domestic and overseas construction business operators and construction machinery rental companies, as well as other businesses including the rental business.

In addition to the above conventional approach, ITOCHU has made upfront investments that will help evolve the construction machinery business utilizing AI and IoT. To that end, ITOCHU has made capital participation through ITOCHU TC CONSTRUCTION MACHINERY in SORABITO Co., Ltd. which operates businesses such as used construction machinery online auctions and an online construction machinery rental marketplace in Japan and has made capital participation in BigRentz, Inc. ("BigRentz"), which operates an online construction machinery rental marketplace in North America.

JIP was established in November 2002 with the purpose of operating a Japanese-style private equity business contributing to corporate restructuring and business reconstruction of domestic companies. The company has since been providing capital and management support to encourage domestic corporations to revitalize their potential by utilizing their existing business foundations and to accelerate their

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business growth. JIP has a track record of a number of investments in carve-outs of business units (spin- offs of businesses or subsidiaries into independent companies) and delisting. At present, JIP manages Japan Industrial Partners V Investment Limited Partnership and other multiple investment partnerships.

The basic policy of Hitachi Construction Machinery with regard to growth strategy is to contribute to customers resolving issues that they face on-site through Hitachi Construction Machinery's new equipment sales business, as well as the value chain business (including parts service, rental, and used equipment businesses) by focusing on major construction machinery, such as hydraulic excavators, wheel loaders, and dump trucks. Hitachi Construction Machinery aims to intensively follow and further deepen its basic policy on growth strategy set out in its three-yearmedium-term management plan, "Realizing Tomorrow's Opportunities 2022" for the period ending in March 2023. In doing so, the company is working to achieve sustainable growth and enhance its corporate value by setting the following three management strategy pillars to: (i) strengthen its value chain business; (ii) provide enhanced solutions at every contact with customers; and (iii) build a highly flexible corporate structure that is resilient in the face of change.

In its North, Central and South American business, Hitachi Construction Machinery reached an agreement to dissolve its alliance with U.S. Deere & Company ("Deere & Company") which it had maintained since 1988. As a result, Hitachi Construction Machinery is working to rebuild its sales and service channels to directly provide customers with state-of-the-art products, technology and services through its independent distributor network across all markets from North through to South America.

Hitachi, Ltd. and Hitachi Construction Machinery had been seeking a new partner capable of assisting Hitachi Construction Machinery's growth from a medium- to long-term perspective. At the end of 2020, ITOCHU, which had a long business relationship history with Hitachi Construction Machinery, received a proposal through JIP for the transfer of Hitachi Construction Machinery shares, and started examining the proposal.

ITOCHU believes that ITOCHU can contribute to achieving the growth strategy and enhancing the corporate value of Hitachi Construction Machinery by making the capital participation in it based on the structure outlined below, through HCJI Holdings G.K. (the "Joint Venture") to be invested in by the 50/50 contribution of ITOCHU operating a broad range of businesses in diverse domains, and of JIP with an abundant track record of providing capital and management support.

Through the Capital Alliance, ITOCHU contemplates accelerating multifaceted businesses by generating synergies with its existing businesses and expanding its value chain in collaboration with Hitachi Construction Machinery in the United States and a variety of other geographical areas, as well as a wide range of business domains. The specific contemplated initiatives are as outlined below.

  1. Sales and service domain in the North American business
    Since its establishment in 1973, MULTIQUIP, ITOCHU's wholly-owned subsidiary, has been manufacturing and selling light construction equipment and power generators across North America. MULTIQUIP has more than 4,000 customers, including the U.S. government and major construction companies, and has a high market share in North America. BigRentz, in which ITOCHU made a capital participation in 2020, operates a next-generation online construction machinery rental business and is working to diversify its customer contact points through a network of over 30,000 end users across North America. Hitachi Construction Machinery has been working to build its own distributor network immediately after reaching an agreement to dissolve its alliance with Deere & Company and contemplates generating synergies by rebuilding its sales channels and cross-selling products utilizing ITOCHU's North American customer network.
    The construction machinery industry is seeing an accelerated flow from "ownership (purchasing)" to "use (renting)." This will require a business transformation to cater to

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diversified customer needs, including preventive maintenance and enhancement of the uptime ratio by utilizing construction machinery uptime data; online purchases of new equipment and parts and sales of used equipment; and support for rentals. ITOCHU will endeavor to provide customers with new value by tapping into its existing business foundation and working with Hitachi Construction Machinery to deepen the solution business on which it focuses, based on

  1. a market-oriented perspective.

  2. Financial domain
    ITOCHU and its group company, Tokyo Century Corporation ("Tokyo Century") already manage a construction machinery finance company jointly with Hitachi Construction Machinery in Indonesia. Tokyo Century and Hitachi Construction Machinery manage a construction machinery finance company in Thailand as well. ITOCHU and Tokyo Century also own business operators that provide financial services in the United States. Going forward, ITOCHU and Tokyo Century contemplate collaborating by providing financial services together with Hitachi Construction Machinery in the United States and a variety of other geographical areas.
  3. Logistics domain
    Hitachi Construction Machinery plans to export Hitachi-branded hydraulic excavators to North America after dissolving its alliance with Deere & Company. ITOCHU has commenced discussions with Hitachi Construction Machinery on a collaboration for higher supply chain efficiency, such as by sharing logistics utilizing land and marine logistics networks between Japan and the United States and properly managing inventory in North America.
  4. SDGs domain
    Hitachi Construction Machinery aims to contribute to the net-zero emission initiative, on which mining companies across the world are working, through efforts relating to electric dump trucks under joint development with ABB Ltd, as well as efficiently operating and digitizing mines in order to reduce costs and achieve a higher level of safety in collaboration with the Hitachi group.
    ITOCHU will consider collaborating with Hitachi Construction Machinery through initiatives that will assist in the contribution to and engagements with the SDGs, including initiatives implemented by its Metals & Minerals Company, which owns interests in metal resources, and by its Energy & Chemicals Company, which operates the energy storage systems (ESS) business.

2. Outline of the Share Acquisition Structure and Details of the Capital Alliance

  1. Outline of the Share Acquisition Structure

    1. The Joint Venture concluded a share transfer agreement as of today (the "Share Transfer Agreement") to obtain 55,290,000 common shares in Hitachi Construction Machinery held by Hitachi, Ltd. (voting rights ownership ratio: 26.0%). The Joint Venture will be held jointly by
    2. the company ITOCHU will newly establish (the "Investment Company") and (b) HCJ Holdings2 G.K. ("JIP SPC"), a special purpose company 100% contributed by the fund which JIP manages, operates, and provides information to.
      The Share Acquisition structure is as outlined below.

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Before Share Acquisition

General shareholders

Hitachi, Ltd.

51.5

Hitachi Construction Machinery

After Share Acquisition

100.0

ITOCHU

JIP

manages, operates and provides information

100.0

ITOCHU Treasury

Fund

loan

loan

100.0

General shareholders

Hitachi, Ltd.

Investment Company

JIP SPC

50.0

50.0

25.4

Joint Venture

26.0

Hitachi Construction Machinery

(Note 1) All percentages in the above figure are voting rights ownership ratios or percentages of the amount of contribution to the total amount of contribution (any fractions less than one have been rounded off to one decimal place).

(Note 2) ITOCHU Treasury Corporation is ITOCHU's wholly-owned subsidiary that is a registered money lender providing financial services.

(Note 3) Hitachi Construction Machinery is scheduled to become ITOCHU's affiliate through the Share Acquisition.

  1. Details of Capital Alliance
    The Capital Alliance intends to achieve the business growth in the medium- to long-term and enhance the corporate value of Hitachi Construction Machinery. To that end, the Joint Venture concluded a capital alliance agreement (the "Capital Alliance Agreement"), on the premise that it will hold Hitachi Construction Machinery shares in the medium- to long-term. The main contents of the Capital Alliance Agreement are as follows:
    1. the proposal of one candidate to be Hitachi Construction Machinery's director to its nominating committee; and
    2. the establishment of a capital alliance committee to regularly discuss Hitachi Construction Machinery's business management and business development policies.

The Share Acquisition and the Capital Alliance are subject to the acquisition of permissions and approvals of relevant authorities required in the execution of the Share Acquisition (the "Acquisition of Permissions").

The number of shares to be acquired by the Joint Venture through the Share Acquisition, the acquisition value, and the number of shares held before and after the acquisition are as set forth below.

(1)

Number of Shares Held Before

Hitachi Construction Machinery's common shares: ‒ shares

the Change

(Voting rights ownership ratio: - %)

(2)

Number of Shares to be

Hitachi Construction Machinery's common shares:

Acquired

55,290,000 shares

(3)

Acquisition Value

182,457 million yen (3,300 yen per share) (Note 1)

Number of Shares Held After the

Hitachi Construction Machinery's common shares:

(4)

55,290,000 shares

Change

(Voting rights ownership ratio: 26.0%) (Note 2)

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(Note 1) The acquisition value has been reasonably calculated using multiple corporate valuation methods such as the market share price of such shares and the discounted cash flow method.

(Note 2) The percentage of the earnings contribution to ITOCHU through the Investment Company is scheduled to be 13.0%.

3. Outline of the Counterparties to the Capital Alliance

(1)

Name

Hitachi Construction Machinery Co., Ltd.

(2)

Location

16-1 Higashi Ueno 2-chome,Taito-ku, Tokyo

(3)

Name and Title of

Kotaro Hirano, Executive Officer, President & CEO

Representative

Description of Business

Manufacturing, sales, rental and after service of construction

(4)

machinery, transportation machinery, environment-related products,

Activities

and other machines and devices

(5)

Capital

81,577 million yen (as of September 30, 2021)

(6)

Date of Establishment

October 1, 1970

Hitachi, Ltd.

51.42%

The Master Trust Bank of Japan, Ltd. (Trust Account)

14.69%

Custody Bank of Japan, Ltd. (Trust Account)

5.33%

Custody Bank of Japan, Ltd. (Securities Investment Trust

1.14%

Account)

Custody Bank of Japan, Ltd. (Trust Account 9)

0.97%

Custody Bank of Japan, Ltd. (Trust Account 7)

0.96%

STATE STREET BANK WEST CLIENT - TREATY

0.90%

505234

Major Shareholders and

(Standing Proxy: Mizuho Bank, Ltd., Settlement &

Clearing Services Department)

(7)

Ownership Percentages

The Bank of New York Mellon (International) Limited

0.75%

(as of September 30,

131800

2021)

(Standing Proxy: Mizuho Bank, Ltd., Settlement &

Clearing Services Department)

HSBC Hong Kong Treasury Services Account Asian

0.71%

Equities Derivatives

(Standing Proxy: The Hong Kong and Shanghai Banking

Corporation Tokyo Branch Custodian Service

Department)

JP MORGAN CHASE BANK 385781

0.62%

(Standing Proxy: Mizuho Bank, Ltd., Settlement &

Clearing Services Department)

(8) Relationship between ITOCHU and Hitachi Construction Machinery

ITOCHU holds 18,980 common shares of Hitachi Construction

Machinery's subsidiary, P.T. Hitachi Construction Machinery

Indonesia (11.0% of its total voting rights); 210,400,000 common

Capital Relationship

shares of Hitachi Construction Machinery's subsidiary, P.T. Hexindo

Adiperkasa Tbk (25.0% of its total voting rights); and 150,000,000

common shares of Hitachi Construction Machinery's affiliate, P.T.

Hexa Finance Indonesia (50.0% of its total voting rights (including

indirectly owned portions)).

One ITOCHU employee holds posts as both a director of Hitachi

Personnel Relationship

Construction Machinery's subsidiary, P.T. Hitachi Construction

Machinery Indonesia, and a director of Hitachi Construction

Machinery's subsidiary, P.T. Hexindo Adiperkasa Tbk.

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Itochu Corporation published this content on 14 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 January 2022 06:11:01 UTC.