Hitachi to Make Hitachi Energy a Wholly Owned Subsidiary
Tokyo, Japan, 30 September, 2022

Hitachi to Make Hitachi Energy a Wholly Owned Subsidiary

Corporate News Energy

Hitachi to Make Hitachi Energy a Wholly Owned Subsidiary

Tokyo, September 30, 2022 --- Hitachi, Ltd. (TSE: 6501, "Hitachi") today announced that it has signed a share transfer agreement with ABB Ltd (SIX: ABBN, "ABB") to acquire 19.9% of the shares of Hitachi Energy Ltd. ("Hitachi Energy"), a consolidated subsidiary, from ABB to make the company a wholly owned subsidiary. On December 17, 2018, Hitachi and ABB signed the acquisition agreement for 80.1% of the shares of the company operating power grids business (now Hitachi Energy) that had been carved out from ABB*1 . On July 1, 2020, Hitachi acquired 80.1% of the shares of the company* 2 . Hitachi has exercised its call option that was agreed in the original agreement. The total acquisition price for the remaining shares will be US$1.679 billion (approximately JPY218 billion*3 ) based on the business valuation at the time of acquisition and the transfer will be completed by the end of December 2022, subject to regulatory approvals.

Since establishing the consolidated subsidiary, Hitachi and Hitachi Energy have combined the global industry-leading power grids business with Hitachi's digital technologies to provide Lumada solutions such as "Lumada Inspection Insights" for the inspection, monitoring, and optimization of critical assets, and "Lumada Asset Performance Management" which provides health and performance insights to prevent critical asset failures while optimizing asset lifecycle costs. Further synergies created by the two companies include the awards of large HVDC orders through enhanced collaboration.

By making Hitachi Energy a wholly owned subsidiary, Hitachi intends to further accelerate synergies and innovation through the fusion of the two companies as the global power market undergoes an unprecedented period of change in preparation for the energy transition. To achieve Hitachi's Mid-term Management Plan 2024, the acquisition will also accelerate the creation of synergies in the areas of rail solutions and digital systems and services, such as Hitachi Vantara and GlobalLogic, where collaboration is already underway, as well as in the field of connective industries.

This acquisition will have no impact on Hitachi’s consolidated financial forecast for the fiscal year ending March 31, 2023. Hitachi and ABB will continue to pursue comprehensive collaboration after this acquisition.

"We are pleased with the progress of Hitachi Energy, and we look forward to supporting the Hitachi Energy 2030 Plan, as announced during Hitachi Investor Day 2022," said Yoshihiko Kawamura, Executive Vice President and Executive Officer, CFO of Hitachi, and the Chair of the Board of Hitachi Energy.

"Electricity will be the backbone of the entire energy system and the urgency of the energy transition requires us to collaborate and innovate across stakeholders and sectors, and the good news is that we can act now. Hitachi and Hitachi Energy have been generating synergies by combining digital and energy technologies that are contributing to the global energy transition. We will accelerate the drive for synergies, digitalization and service and will continue to offer deployment of both IT and operational technology (OT) at scale and with speed, as we are advancing a sustainable energy future for all," said Claudio Facchin, Senior Vice President and Executive Officer, CEO of Power Grids Business Unit of Hitachi, and CEO of Hitachi Energy.

*1 News Release dated December 17, 2018: “Hitachi to Strengthen Energy Solutions Business with the Acquisition of ABB's Power Grids Business”

https://www.hitachi.com/New/cnews/month/2018/12/f_181217.pdf

*2 News Release dated July 1, 2020: “Hitachi Completes Acquisition of ABB’s Power Grids Business; Hitachi ABB Power Grids Begins Operation”

https://www.hitachi.com/New/cnews/month/2020/07/f_200701.pdf

*3 Calculations based on the assumed FX rate for the second to fourth quarter of the fiscal year ending March 31, 2023, announced on July 29, 2022, US$1 = JPY130

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