As previously announced on March 30, 2011, Hitachi, Ltd. , Mitsubishi Electric Corporation and Mitsubishi Heavy Industries, Ltd. entered into a basic agreement calling for the three companies to consolidate their hydroelectric power generation system operations by way of simplified absorption-type company splits of their respective operations and the transfer of those operations to HM Hydro, Ltd. (“HM Hydro”), a Hitachi subsidiary. Effective today, the three companies have formally decided to authorize their respective splits. Because the resulting declines in gross assets at the three companies correspond in each case to less than 10% of the company’s net assets as of the close of the most recent fiscal year, and because the resulting declines in sales at each of the three companies are projected in each case to correspond to less than 3% of the company’s net sales in the most recent fiscal year, some items and contents of disclosure have been omitted from this notification.
In the coming years, hydroelectric power generation is expected to attract continuous demand as a clean renewable energy contributing toward the realization of a low-carbon society. In Japan, while the number of projects in planning to build large-scale new plants has been decreasing,demand is expected to remain solid for renovation and preventive maintenance of existing power generation facilities and for upgrading of power generation capacity. I n overseas markets, vigorous and sustained demand is anticipated in such countries as China, where large-scale electric power development projects leveraging that nation’s abundant water resources are in progress, as well as in Latin America and India. For Japanese manufacturers the business environment continues to be severe, however, due to competition against European manufacturers and expansion into overseas markets by Chinese manufacturers.Against this backdrop, Hitachi, Mitsubishi Electric and MHI reached a common recognition that the most effective means to strengthen and expand related business would be to pool their respective operating resources and engage jointly in hydroelectric power generation system operations by way of company splits.