74of its issued shares by way of tender offer

It is alsoexpected that greater cooperation with Hitachi Group companies will drivegrowth 1. Purpose of the Tender Offer(1)Outline of the Tender OfferHitachi currently holds 37.98 of Hitachi Kokusai Electrics issued shares,including indirect shareholdings of 0.86, and thus accounts for Hitachi KokusaiElectric as an equity-method affiliate. However, Hitachi will conduct the TenderOffer, which will make Hitachi Kokusai Electric a consolidated subsidiary, withthe dual aims of establishing a stable equity-based relationship as well asstrengthening cooperative relationship. The Tender Offer aims to convert Hitachi Kokusai Electric into a consolidatedsubsidiary by obtaining a majority of voting rights in it. Hitachi thus plans topurchase up to 13,406,000 additional shares in Hitachi Kokusai Electric, 12.74of its issued shares, by way of tender offer. According to the statement, which was announced by Hitachi Kokusai Electric onJanuary 14, 2009, Hitachi Kokusai Electric Board of Directors resolved toapprove the Tender Offer at its meeting held on the same day. The Hitachi Group,which consists of Hitachi, Ltd., its subsidiaries and affiliated companies, isalso developing businesses in other fields such as Electronic Devices and HighFunctional Materials & Components.

Hitachi utilizes its laboratories to develop essential technologies for Groupbusiness divisions and companies in order to capture greater synergies acrossthe Hitachi Group. Furthermore, a key priority is to deliver even bettersolutions and address various business issues faced by customers. Hitachi hasworked to increase the responsiveness of Group company operations by sharingtechnologies within the Group, including mutual utilization of the HitachiGroups vast experience and expertise. Group companies maintain variouscooperative relationships with Hitachi in business and administrative areas, butare also developing businesses in line with proprietary strategies according tothe characteristics of their respective products and service fields. To this end, Hitachi has set forth a basicpolicy of generating synergies and strengthening overseas businesses by drawingon Group technologies, knowledge, experience and expertise. Hitachi is strivingto strengthen its operating base by upgrading its globally competitiveMONOZUKURI (manufacturing) capabilities and ensuring product reliability.Additionally, Hitachi is focused on recruiting and developing personnel who areideally suited to strengthening overseas businesses, cutting procurement costsby obtaining volume-based discounts, and raising the efficiency with which fundsare used within the Hitachi Group. In the information network business, and the Social Infrastructure Business andthe Life Infrastructure Business, where Hitachi is conducting transportationsystem, urban system and other businesses, Hitachi similarly aims to strengthenits operating base by generating synergies based on utilization of the Groupstechnologies, knowledge, experience and expertise.

In these fields, societysdemands are becoming increasingly sophisticated and complex, as highlighted bythe emergence of a ubiquitous network society and a society offering advancedsecurity, in addition to the convergence of broadcasting and telecommunications.Therefore, it is critically important to put in place foundations that willenable Hitachi to provide a swift and agile response to these needs. Hitachi Kokusai Electric was formed from the merger of three companies, formerlyknown as Kokusai Electric Co., Ltd., Hitachi Denshi, Ltd., and Yagi Antenna Co.,Ltd., in October 2000 with the goal of integrating companies in the HitachiGroup engaged in businesses related to wireless technologies. Since itsformation, Hitachi Kokusai Electric has pursued business development in threefields-Wireless Communications and Information Systems, Broadcasting and VideoSystems, and Semiconductor Manufacturing Systems-as a core company in theHitachi Group, based on a proprietary strategy, while maintaining variouscooperative relationships with Hitachi. Hitachi Kokusai Electric is currentlyseeking to create a highly profitable business structure by furtherstrengthening these businesses, while forging greater cooperation within theHitachi Group in new business fields and implementing business process reformsthat take advantage of the latest IT systems. Hitachi and Hitachi Kokusai Electric have cooperated in Hitachis informationnetwork business, and the Social Infrastructure Business and the LifeInfrastructure Business in areas such as transport systems, urban systems andother businesses, where Hitachi has utilized Hitachi Kokusai Electrics digitalwireless communications systems for business use, video monitoring systems, andbase stations for communications operators, among other technologies.

Lookingahead, the two companies believe it is necessary to strengthen cooperation tocapture more synergies in order to raise corporate value. Furthermore, with the cost and uncertainty of raising funds increasing in thewake of recent financial market turmoil, a stronger equity-based relationshipwith Hitachi should enable Hitachi Kokusai Electric to gain further trust backedby Hitachis solid financial base, allowing it to develop a stable financialstrategy. This is important as Hitachi Kokusai Electric develops its businessglobally moving forward. Under these environments, Hitachi and Hitachi Kokusai Electric have workedtogether and evaluated various initiatives with a goal of increasing theirrespective corporate values and began examining the Tender Offer in detailaround October 2008.