Kokusai Electric Co., Ltd.(TSE: 6756), Hitachi Denshi, Ltd.(TSE: 6780), Yagi
Antenna Co., Ltd.(TSE: 6805) and Hitachi, Ltd.(TSE: 6501) today announced that
Kokusai Electric, Hitachi Denshi and Yagi Antenna have signed a memorandum of
merger under which the three companies agree to be equal parties in the merger to
take place on October 1 this year. The new company thus formed, provisionally
named Hitachi Kokusai Electric Inc., will provide complete continuity with respect to
the existing business operations of the three companies, providing all customers with
full support. At the same time, the consolidation of operations and the concentration
of the companies' extensive wireless communications technologies will be used to
develop business and customers in new sectors.
In the information and communications industry sectors, the rapid pace of
advances in mobile communications technology together with the high pace of IP
network growth, the start of digital broadcasting, the convergence of communications
and broadcasting and the trend toward deregulation are all helping to generate the
rapid expansion of new markets.
In November 1999, Hitachi announced its i.e. HITACHI medium-term business
plan, which sets out how the Company is focusing on the strategic use of Hitachi
Group resources as it restructures itself as a best solutions partner. Moreover, as part
of a basic policy of increasing the market capitalization of the Company, Hitachi is
promoting consolidated management by reorganizing, reviewing and strengthening
liaison and coordination among Hitachi Group companies.
Hitachi is currently reviewing its communications systems business on a
consolidated basis. As part of this, in contrast to the former focus on telephone
exchanges transmission equipment, the Company is now considering strengthening its
business operations in the areas of IP network systems, wireless communications,
optical products and network solutions and services to meet the increasing demand in
data communications.
The wireless communications business is a market sector that is undergoing
rapid change. The three companies agreed to the merger as a way of meeting the
challenge of such change by consolidating their operations, thereby helping to enhance
their management structure and strengthen their development system.
Hitachi Kokusai Electric Inc. will take over and continue the individual
business operations in which the three merger partners are engaged in the areas of
communications, broadcasting and semiconductors, and will use the consolidation and
improvement of sales bases to expand sales networks in Japan and abroad and
strengthen product service capabilities to thereby increase the scale of the business.
Hitachi Kokusai Electric Inc. will use its extensive strengths in wireless technology
combined with data and video technologies to provide a broad spectrum of wireless
communications solutions in the sectors of mobile communications systems, digital
broadcasting systems and customized communications systems and will also develop
new areas of business such as Intelligent Transport Systems (ITS) and the next
generation of information terminals.
To meet the challenges posed by the rapid pace of progress in digital
technology in the areas of communications and broadcasting, Hitachi Kokusai Electric
Inc. will focus on expanding its business with the emphasis on the following strategic
sectors.
1. Mobile communications systems: Base stations and other infrastructures,
systems, and mobile terminals
2. Digital broadcasting systems: Satellite/ground wave and TV/radio total systems
3. Customized communications systems: Customized wireless infrastructures for
subscriber-system based wireless access, and systems which ensure reliable
communication for disaster control, airport and public safety, and other such
applications.
4. New sectors: ITS, next-generation information terminals and other such new
wireless markets
With respect to the exchange ratios for the merger, Kokusai Electric will allot 0.44
new shares to shareholders of Hitachi Denshi, and 0.52 shares to shareholders of Yagi
Antenna, for each share of respective companies. The new company will be headed
by Makoto Endo.
Outline of the Companies
Hitachi Kokusai Electric Inc. (provisional)
Head office: 3-14-20 Higashi-Nakano, Nakano-ku, Tokyo, Japan
Establishment: Oct. 1, 2000 (planned)
Capital: 10 billion yen at startup
President: Makoto Endo
Business: Manufacture and sale of communications and information
equipment, electronic devices and electronic parts and
components, broadcast and video systems, antennas, electrical
communications construction works
Sales target (unconsolidated basis):
195 billion yen (for the year ended Mar. 31, 2001)
265 billion yen (for the year ended Mar.31, 2004)
No. of employees: 4,100 at startup
Kokusai Electric Co., Ltd.
Head office: 3-14-20 Higashi-Nakano, Nakano-ku, Tokyo, Japan
Establishment: Nov. 1949
Capital: 8,400 million yen (as of Sept. 30, 1999)
President: Makoto Endo
Business: Manufacture and sale of communications and information
equipment, electronic devices and electronic parts and
components
Net sales: 108,900 million yen (for the year ended Mar. 31, 1999)
No. of employees: 2,196 (as of Mar. 31, 1999)
Hitachi Denshi, Ltd.
Head office: 1 Kanda Izumi-cho, Chiyoda-ku, Tokyo, Japan
Establishment: Feb. 1948
Capital: 5,000 million yen (as of Sept. 30, 1999)
President: Masahiro Soga
Business: Manufacture and sale of broadcast and video systems,
communications systems
Net sales: 52,300 million yen (for the year ended Mar. 31, 1999)
No. of employees: 1,349 (as of Mar. 31, 1999)
Yagi Antenna Co., Ltd.
Head office: 1-6-10 Uchi-Kanda, Chiyoda-ku, Tokyo, Japan
Establishment: Jan. 1952
Capital: 3,500 million yen (as of Sept. 30, 1999)
President: Kyohei Kasaba
Business: Manufacture and sale of antennas and devices, electrical
communications construction works
Net sales: 16,200 million yen (for the year ended Mar. 31, 1999)
No. of employees: 507 (as of Mar. 31, 1999)
Cautionary Statement
Statements in this news release contain forward-looking statements which reflect management's
current views with respect to certain future events and financial performance. Words such as
"anticipate," "believe," "expect," "estimate," "intend," "plan," "project" and similar expressions
which indicate future events and trends identify forward-looking statements. Actual results may
differ materially from those projected or implied in the forward-looking statements and from
historical trends. Further, certain forward-looking statements are based upon assumptions of
future events which may not prove to be accurate.
Factors that could cause actual results to differ materially from those projected or implied in any
forward-looking statements include, but are not limited to, rapid technological change,
particularly in the field of information and communications equipment; uncertainty as to the
ability of the companies concerned to continue to develop products and to market products that
incorporate new technology on a timely and cost-effective basis and achieve market acceptance;
fluctuations in product demand and industry capacity; exchange rates and their fluctuations
between the yen and other currencies in which the companies concerned make significant sales or
in which assets and liabilities of the companies concerned are denominated, particularly between
the yen and the U.S. dollar; uncertainty as to the access of the companies concerned to liquidity
or long-term financing; uncertainty as to the ability of the companies concerned to implement
measures to reduce the potential negative impact of fluctuations in product demand and/or
exchange rates; general economic conditions and the regulatory and trade environment of major
markets for the companies concerned, particularly, the United States, Japan and elsewhere in
Asia, including, without limitation, direct or indirect restriction by other nations of imports;
uncertainty as to the access of the companies concerned to, or protection for, certain intellectual
property rights, particularly those related to information and communications equipment; the
dependence of the companies concerned on alliances with other corporations in designing or
developing certain products; and the market prices of equity securities in Japan, declines in which
may result in write-downs of equity securities the companies concerned hold.
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