The transactions pursuant to the share exchange described in this press release involve securities of a Japanese company. The
share exchange is subject to disclosure requirements of Japan that are different from those of the United States. Financial
information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign
accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws,
since the issuer is located in Japan and some or all of its officers and directors reside outside of the United States. You may not
be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities laws. It
may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should
be aware that the issuer may purchase securities otherwise than under the share exchange, such as in the open market or throughprivately negotiated purchases.
This document has been translated from the Japanese-language original for reference purposes only. In the event of any conflictor discrepancy between this document and the Japanese-language original, the Japanese-language original shall prevail in all
respects.

January 9, 2024
Company Name: Mitsubishi Electric Corporation
Representative: Kei Uruma, President & CEO(Code No. 6503, Prime Market of the Tokyo Stock Exchange)
Contact: Etsuko Yamazaki, Senior General Manager of Public
Relations Division(TEL: +81-3-3218-2111)
Company Name: KITA KOUDENSHA Corporation
Representative: Tatsuo Takahashi, President and Representative
Director(Code No. 1734, Sapporo Securities Exchange)
Contact: Kazuhiko Sekine, Deputy Manager of Administrative
Control Office(TEL: +81-11-640-2231)

Notice Regarding Conclusion of a Share Exchange Agreement (Simplified Share Exchange) to Make
KITA KOUDENSHA Corporation a Wholly Owned Subsidiary of Mitsubishi Electric Corporation

It is hereby announced that Mitsubishi Electric Corporation (“Mitsubishi Electric”) and KITA KOUDENSHA
Corporation (“KITA KOUDENSHA”; collectively the “Companies”), an equity method affiliate of Mitsubishi Electric,
have resolved at the Executive Officers’ Meeting of Mitsubishi Electric and the Board of Directors’ meeting of KITA
KOUDENSHA held today respectively to conduct a share exchange (the “Share Exchange”) wherein Mitsubishi Electricis the wholly owning parent company resulting from the share exchange and KITA KOUDENSHA is the wholly owned
subsidiary resulting from the share exchange, and today, the Companies concluded a share exchange agreement (the “Share
Exchange Agreement”).
The Share Exchange is scheduled to be conducted with an effective date of April 15, 2024, without obtaining approval at
the General Meeting of Shareholders of Mitsubishi Electric in accordance with the simplified share exchange procedurepursuant to the provision of Article 796(2) of the Companies Act, and subject to obtaining approval of the Share Exchange
Agreement by a special resolution at the Extraordinary General Meeting of Shareholders of KITA KOUDENSHA
scheduled to be held on March 4, 2024.
1

In addition, prior to the effective date of the Share Exchange (scheduled for April 15, 2024), the KITA KOUDENSHA’scommon stock (the “KITA KOUDENSHA Stock”) will be delisted from the Securities Membership Corporation Sapporo
Securities Exchange (the “SSE”) as of April 11, 2024 (the last trading day will be April 10, 2024).
In the event the Share Exchange takes effect, Mitsubishi Electric will become the only shareholder of KITAKOUDENSHA,
and the need for a record date system for KITA KOUDENSHA’s Ordinary General Meeting of Shareholders will be lost.
For this reason, KITA KOUDENSHA resolved at the Board of Directors’ meeting held today to submit a proposal to theExtraordinary General Meeting of Shareholders scheduled to be held on March 4, 2024, to amend the Articles ofIncorporation so that the provision concerning the record date for exercising the voting rights be deleted, subject to the Share
Exchange Agreement still being in effect. For further details, please refer to “Notice Regarding Abolition of the Provisions
Regarding Number of Shares Constituting One Unit and Partial Amendment of Articles of Incorporation” published today
by KITA KOUDENSHA.
1. Purpose and Background of the Share Exchange
Mitsubishi Electric, in addition to its management policy that balances “growth,” “profitability and efficiency,” and“soundness,” positions its contribution to the realization of sustainability as the cornerstone of its management, basedon its fundamental principle to “provide solutions to social challenges through its businesses.” In addition, Mitsubishi
Electric is transforming into a “Circular Digital-Engineering Company” that provides solutions centralized on enhanced
component systems and data through integration and co-creation of knowledge within and outside the Mitsubishi
Electric corporate group (the “Mitsubishi Electric Group”), thereby contributing to solving diversifying social issues.
On the other hand, KITA KOUDENSHA has been engaged in activities to establish social infrastructure, industrial
infrastructure, and comfortable office and living spaces mainly in Hokkaido, Japan, for more than 100 years since its
foundation in 1910, with the purpose to contribute to the local community through electrical equipment work. KITA
KOUDENSHA engages in business activities mainly including electrical equipment work and purchases and sales of
FA Residential Environment Equipment and Industrial Equipment.
The relationship between Mitsubishi Electric and KITA KOUDENSHA started with Mitsubishi Electric’s capital
investment in KITA KOUDENSHA in 1955, and in 1972, KITA KOUDENSHA transferred its Home Appliance Sales
Unit of the Trading Division to Sapporo Mitsubishi Electric Product Sales Corporation. Currently, KITA
KOUDENSHA receives orders for parts of electrical equipment work at facilities in the heavy electric-related business
which Mitsubishi Electric focuses on, such as water treatment facilities and power generation plants and substations,and also purchases and sells FA Residential Environment Equipment and Industrial Equipment manufactured by
Mitsubishi Electric.
The business environment surrounding KITA KOUDENSHA has changed drastically over the past few years. In
recent years, the business environment in Hokkaido, Japan, where KITA KOUDENSHA engages in business, has been
more severe and uncertain within and without, such as the rising energy prices due to the Russia-Ukraine conflict andthe sharp depreciation of the yen, chronic labor shortages, and increasing construction costs due to soaring construction
materials prices.
In addition, as a result of contractual default following the bankruptcy of a small wind turbine manufacturer’s
subsidiary for sales to Japan, which KITA KOUDENSHA had a sales agent agreement with, and due to the occurrenceof a blade falling accident caused by a manufacturing defect, KITA KOUDENSHA judged that it would be difficult toensure the quality and safety of the product, and decided to discontinue the import and sales of the products which led
KITA KOUDENSHA to compensate the power generation companies and incur expenses related to the withdrawal
from the small wind turbine business (the “Withdrawal From the Small Wind Turbine Business”).
2Furthermore, a suspicion of inappropriate accounting treatment for solar power plant construction work and someother projects (the “Inappropriate Accounting Treatment for Solar Power Projects”) arose, and as a result of theestablishment and investigation of the special investigation committee, it was decided to make some corrections to thesecurities reports and the like for the fiscal year ended March 31, 2021 and earlier. KITA KOUDENSHA takes seriously
the cause analysis and recommendations made by the special investigation committee in its investigation report, andupon repeatedly considering measures to prevent recurrence of such incident, KITA KOUDENSHA decided on themeasures to prevent the recurrence of the incident at the Board of Directors’ meeting and launched the implementationof such measures. Despite such effort, owing to the significant increase in the construction costs for part of the solar
power plant construction work, KITA KOUDENSHA recorded an operating loss of 2,741.628 million yen, an ordinary
loss of 2,588.925 million yen, and a net loss of 2,787.443 million yen, and the balance of loans increased to 3,700 million
yen in the fiscal year ended March 31, 2022, which has been giving significant impact on KITA KOUDENSHA’s fundmanagement plan.
Amid such a rapidly worsening financial situation, KITA KOUDENSHA, with the intent to rebuilding its
management, has been developing measures to prevent recurrence of the Inappropriate Accounting Treatment for Solar
Power Projects and formulating a medium- to long-term management plan. However, KITA KOUDENSHA recorded
net assets of 47.027 million yen as at the end of the third quarter of the fiscal year ended March 31, 2022 (net assets asat the end of the fiscal year ended March 31, 2021 was 3,109.903 million yen) due to the recording of losses related to
the Inappropriate Accounting Treatment for Solar Power Projects. Thus, in addition to the pressing issue of enhancing
capital, since there is a significant uncertainty regarding the going concern assumption due to the lack of prospect inrestoring a sound financial position, KITA KOUDENSHA reached the conclusion that it is difficult to rebuild on its
own. Accordingly, KITA KOUDENSHA came to believe that in order to enhance its corporate value over the mediumto long-term, it is necessary to first recover a sound financial position. Hence, on March 4, 2022, KITA KOUDENSHA
requested that Mitsubishi Electric consider making KITA KOUDENSHA its wholly owned subsidiary and also
additionally investing in KITA KOUDENSHA.
Under such circumstances, based on the history that KITA KOUDENSHA had been stably recording revenues andprofits grounded on a steady business management policy rooted in the region until the fiscal year ended March 31,
2020, when large losses were incurred due to the Withdrawal From the Small Wind Turbine Business as well as thesolar power plant construction work and some other projects, Mitsubishi Electric had been recognizing the necessity of
KITA KOUDENSHA developing a sound financial base and a robust corporate governance system in order to expand
the business by returning to solid business operations, targeting among others, the future redevelopment of Sapporo
City’s central area, the extension of the Hokkaido Shinkansen (the Series H5 Bullet Train) to Sapporo, and the
Hokkaido-Honshu HVDC link and equipment (the underground cable installation within the Seikan Tunnel). As such,in response to the request from KITA KOUDENSHA, Mitsubishi Electric started to consider various options forsupporting KITA KOUDENSHA, mainly on the Share Exchange.
However, in early December 2022, Mitsubishi Electric received a report from KITA KOUDENSHA that additionalloss has occurred in relation to the Takayama Solar Hills Solar Power Plant construction work (the “Takayama Project”)
resulting from significant delays in civil engineering work and the increase in civil engineering costs due to theunseasonable weather caused by long rainfall and measures to deal with soft ground and underground obstacles such as
and rocks and stones, and that it was unclear how much such loss would expand. As a result, Mitsubishi Electric decided
that it is difficult to proceed with the Share Exchange without the amount of loss from the Takayama Project being
determined, and had to suspend the considerations on the Share Exchange. Eventually, on January 25, 2023, Mitsubishi
Electric notified KITA KOUDENSHA of the discontinuation of the considerations on the Share Exchange and othersupporting measures.

3Subsequently, as announced by KITA KOUDENSHA on May 10, 2023 in the “Notice Concerning the Record ofExtraordinary Loss,” KITA KOUDENSHA received a claim for delay penalty that exceeded KITA KOUDENSHA’s
assumptions during the discussions with the project owner and the promoter regarding the civil engineering delay in the
Takayama Project, and consequently, KITA KOUDENSHA recorded 1,071.958 million yen as such delay penalty anda total extraordinary loss of 1,106.976 million yen in its fiscal year ended March 31, 2023.
Owing partly to the occurrence of such extraordinary loss, KITA KOUDENSHA recorded an operating loss of
2,059.254 million yen, an ordinary loss of 2,064.358 million yen, and a net loss of 2,880.902 million yen, resulting in
an insolvency of 2,638.814 million yen for the fiscal year ended March 31, 2023. As a result, KITA KOUDENSHA
received notification from the SSE of a stock in the grace period commencing on April 1, 2023 and ending on March
31, 2024 pertaining to delisting on and effective as of June 29, 2023, pursuant to the provision of Article 2(1)(v) of theStock Delisting Criteria.
On July 18, 2023, Mitsubishi Electric received a written report from KITA KOUDENSHA informing that thedelivery to the promoter of the Takayama Project has been completed as of June 30, 2023 and that the closing of the
project is now in sight, and that KITA KOUDENSHA requests (the “Reconstruction Support Request”) that the plan tosupport its reconstruction be reconsidered including the plan to making KITA KOUDENSHA a wholly owned
subsidiary of Mitsubishi Electric and also additionally investing in KITA KOUDENSHA, which was suspended due tothe reason that the effect of the Takayama Project on the corporate valuation cannot be foreseen.
In this regard, if the Share Exchange is not carried out, in light of the fact that KITA KOUDENSHA has recorded
operating loss, ordinary loss and net loss for the past three consecutive fiscal years up to the fiscal year ended March 31,
2023, it is realistic to assume that KITA KOUDENSHA will also be insolvent in the fiscal year ending March 31, 2024
and become delisted. In the event that KITA KOUDENSHA is delisted, KITA KOUDENSHA’s shareholders will not
be able to trade their shares on the stock exchange, and there is a possibility that KITA KOUDENSHA’s shareholders
may suffer the disadvantage of their KITA KOUDENSHA Stock becoming virtually difficult to be traded. Furthermore,
as it will be difficult for KITA KOUDENSHA to repay and refinance, as agreed, its loans which will mature in April
2024 given KITA KOUDENSHA’s financial situation without the Share Exchange, if the Share Exchange is not
carried out, it can be concretely envisioned that KITA KOUDENSHA’s cash flow will be disrupted and it will becomebankrupt.
At the same time, however, despite KITA KOUDENSHA’s efforts to resolve the insolvency on its own as stated in
the “Notice Concerning the Plans for the Resolution of Insolvency” published on June 30, 2023,it has not managed topromptly and radically improve its business conditions through such efforts, and it will be difficult for it to maintain its
market listing and continue business on its own without carrying out the Share Exchange.
In order to explore measures advantageous for minority shareholders than the Share Exchange, parallel to the Share
Exchange negotiations with Mitsubishi Electric, KITA KOUDENSHA sounded out eight prominent revitalizationtype investment funds (the “Market Check”), but the terms proposed were less favorable terms for minority shareholders
than the Share Exchange proposed by Mitsubishi Electric. As a result, KITA KOUDENSHA concluded that it isdifficult to find a candidate that could offer measures more advantageous for minority shareholders than the Share
Exchange.
Based on the above, KITA KOUDENSHA believes the Share Exchange is the sole measure that avoids
disadvantages of delisting and subsequent bankruptcy for stakeholders of KITA KOUDENSHA such as shareholders,clients and trading banks.
In light of this situation, Mitsubishi Electric has been considering various options to support KITA KOUDENSHA
in response to the Reconstruction Support Request mentioned above from KITA KOUDENSHA.
If KITA KOUDENSHA continued to be insolvent, were to be delisted with its current shareholder composition, andfurther went bankrupt, its business and corporate values would be impaired, and Mitsubishi Electric will suffer, among4other things, damage to the value of KITA KOUDENSHA’s shares held by Mitsubishi Electric and loss in transactions,and there will be significant impact on the stakeholders of Mitsubishi Electric and KITA KOUDENSHA. Thus,
Mitsubishi Electric decided that there is a need to avoid such situation.
Based on the above considerations, Mitsubishi Electric reached a conclusion that, making KITA KOUDENSHA awholly owned subsidiary of Mitsubishi Electric through the Share Exchange and then considering all options that
contribute to the maintenance and enhancement of the corporate value of both KITA KOUDENSHA and Mitsubishi
Electric while Mitsubishi Electric provides financial support to KITA KOUDENSHA, will allow KITA
KOUDENSHA’s business to continue in the future and it is the optimum measure to contribute to the maintenance andenhancement of the corporate value of both Mitsubishi Electric and KITA KOUDENSHA, and has decided to conduct
the Share Exchange.
Furthermore, as it is difficult for KITA KOUDENSHA to maintain its listing and continue business on its own due
to the realistic assumption that it will become delisted and bankrupt if the Share Exchange is not carried out, and as theresult of the Market Check shows that there is no potential candidate who could propose more favorable terms forminority shareholders, KITA KOUDENSHA came to conclude that the Share Exchange that Mitsubishi Electric
proposes is the sole measure wherein KITA KOUDENSHA can benefit from maintaining credibility from thestakeholders while avoiding the disadvantage from KITA KOUDENSHA becoming delisted and bankrupt, and it is the
optimum measure from the perspective of business continuity and maintenance and enhancement of KITA
KOUDENSHA’s corporate value.
2. Outline of the Share Exchange(1) Schedule of the Share Exchange
Date of decision of the Executive Officers’ Meeting regarding theShare Exchange Agreement（Mitsubishi Electric）
Date of resolution of the Board of Directors’ meeting regarding
the conclusion of the Share Exchange Agreement (KITA
KOUDENSHA)
Date of conclusion of the Share Exchange Agreement (Mitsubishi
Electric and KITA KOUDENSHA)
Date of publication of the record date of the Extraordinary General
Meeting of Shareholders (KITA KOUDENSHA)
Record date of the Extraordinary General Meeting of
Shareholders (KITA KOUDENSHA)
Date of the Extraordinary General Meeting of Shareholders toapprove of the Share Exchange Agreement (KITA
KOUDENSHA)
Last trading day (KITA KOUDENSHA)
Date of delisting (KITA KOUDENSHA)

Tuesday, January 9, 2024 (today)
Tuesday, January 9, 2024 (today)
Tuesday, January 9, 2024 (today)
Tuesday, January 9, 2024 (today)
Wednesday, January 24, 2024 (scheduled)
Monday, March 4, 2024 (scheduled)
Wednesday, April 10, 2024 (scheduled)Thursday, April 11, 2024 (scheduled)

Scheduled date of the Share Exchange (effective date) (Mitsubishi Monday, April 15, 2024 (scheduled)Electric and KITA KOUDENSHA)(Note 1) Mitsubishi Electric plans to carry out the Share Exchange without obtaining approval by the resolution of
the General Meeting of Shareholders in accordance with the simplified share exchange procedure pursuant
to the provision of Article 796(2) of the Companies Act.
(Note 2) The above schedule is subject to change due to necessities in proceeding with the Share Exchange or otherreasons, or by agreement between the Companies.
(2) Method of the Share Exchange
In the Share Exchange, Mitsubishi Electric will become the wholly owning parent company resulting from theshare exchange and KITA KOUDENSHA will become the wholly owned subsidiary resulting from the shareexchange. For Mitsubishi Electric, the Share Exchange will be conducted without obtaining approval by the5resolution of the General Meeting of Shareholders in accordance with the simplified share exchange procedurepursuant to the provision of Article 796(2) of the Companies Act. With respect to KITAKOUDENSHA, the Share
Exchange will be conducted upon obtaining approval for the Share Exchange Agreement by the resolution of theExtraordinary General Meeting of Shareholders scheduled to be held on March 4, 2024.
(3) Details of the Allotment Pertaining to the Share Exchange
Mitsubishi Electric
KITA KOUDENSHA
Company name
(Wholly owning parent company(Wholly owned subsidiary
resulting from the share exchange)
resulting from the share exchange)
Allotment ratio of shares pertaining to
10.260
the Share Exchange
Number of shares to be delivered as aCommon stock of Mitsubishi Electric: 118,834 shares (planned)
result of the Share Exchange(Note 1) Allotment ratio of shares
0.260 shares of Mitsubishi Electric common stock (the “Mitsubishi Electric Stock”) shall be allotted anddelivered for each KITA KOUDENSHA Stock. Provided, however, that no shares will be allotted throughthe Share Exchange for KITA KOUDENSHA Stock held by Mitsubishi Electric (173,600 shares as oftoday). The aforementioned share exchange ratio is subject to change upon consultation and agreement
between the Companies in the event of any material change in the terms and conditions on which thecalculation is based.
(Note 2) Number of Mitsubishi Electric Stock to be delivered as a result of the Share Exchange
Mitsubishi Electric shall deliver the number of Mitsubishi Electric Stock calculated based on theallotment ratio (the “Share Exchange Ratio”) applicable to the shares pertaining to the Share Exchange thatwill be used in the Share Exchange as described in 2. (3) “Details of the Allotment Pertaining to the Share
Exchange” above to the shareholders of KITA KOUDENSHA (excluding Mitsubishi Electric) at the time(the “Standard Time”) immediately prior to the time when Mitsubishi Electric acquires all KITA
KOUDENSHA Stock (excluding KITA KOUDENSHA Stock held by Mitsubishi Electric) through the
Share Exchange in exchange of the KITA KOUDENSHA Stock they hold. Furthermore, pursuant to theresolution of the Board of Directors’ meeting of KITA KOUDENSHA to be held no later than the day prior
to the effective date of the Share Exchange, KITA KOUDENSHA plans to cancel all of the treasury shares
it holds and the treasury shares it will hold up to the Standard Time (including the treasury shares to beacquired through the purchase of shares pertaining to the dissenting shareholders’ appraisal rights asprovided in Article 785(1) of the Companies Act to be exercised in connection with the Share Exchange) asof the Standard Time. The number of shares to be delivered by Mitsubishi Electric as a result of the Share
Exchange is subject to change in the future due to the acquisition and cancellation of KITA KOUDENSHA’s
treasury shares.
The Mitsubishi Electric Stock to be delivered through the Share Exchange are planned to be allocatedentirely from the treasury shares held by Mitsubishi Electric, and Mitsubishi Electric does not plan to issue
new shares.
(Note 3) Handling of shares less than one unit
Shareholders who will hold shares less than one unit of Mitsubishi Electric as a result of the Share
Exchange may use the following systems applicable to Mitsubishi Electric Stock. Shares less than one unit
cannot be sold on the financial instruments exchange market.
① System requiring additional purchase for shares less than one unit (additional purchase to constitute 100
shares)Pursuant to the provision of Article 194(1) of the Companies Act, shareholders who hold shares lessthan one unit of Mitsubishi Electric may purchase from Mitsubishi Electric additional number of sharesthat constitute one share unit together with the number of shares they already hold.
6

② System requesting purchase of shares less than one unit (sale of shares less than one unit)
Pursuant to the provision of Article 192(1) of the Companies Act, shareholders who hold shares lessthan one unit of Mitsubishi Electric may request Mitsubishi Electric to purchase the shares less than one
unit that they hold.
(Note 4) Handling of fractional share
Pursuant to the provision of Article 234 of the Companies Act and other related laws and regulations, theshareholders of KITA KOUDENSHA who will receive an allotment of fractional share of Mitsubishi
Electric Stock through the Share Exchange shall be entitled to sell the number of Mitsubishi Electric Stockequivalent to the total number of such fraction (any fraction of less than one share in the total number shallbe rounded down), and Mitsubishi Electric shall pay the proceeds of the sale to such shareholders inproportion to the fraction of the share.

(4) Handling of Stock Acquisition Rights and Bonds with Stock Acquisition Rights Associated with the Share Exchange
KITA KOUDENSHA, which will become a wholly owned subsidiary through the Share Exchange, has notissued any stock acquisition rights or bonds with stock acquisition rights, so this item is not applicable.
3. Basis for the Details of Allotment Pertaining to the Share Exchange(1) Basis and Reasons for the Details of the Allotment
In order to ensure fairness and appropriateness in calculating the Share Exchange Ratio, Mitsubishi Electric and
KITA KOUDENSHA have separately requested third-party valuation institutions independent of the Companies tocalculate the Share Exchange Ratio. Mitsubishi Electric appointed Daiwa Securities Co. Ltd. (“Daiwa Securities”)
around late September 2022 and KITA KOUDENSHAappointed AGS Consulting Co., Ltd. (“AGS”) around midNovember 2022 as its financial advisor and third-party valuation institution, respectively. Further, KITA
KOUDENSHA selected Plutus Consulting Co., Ltd. (“Plutus”) as an additional third-party valuation institution
around mid-December 2023 as nominated by the Special Committee (defined below).
As described in 3. (4) “Measures to Ensure Fairness” below, as a result of extensive negotiations and discussions
between the Companies, based on the share exchange ratio valuation report received as of January 5, 2024 andfinancial advice from Daiwa Securities, which is Mitsubishi Electric’s financial advisor and third-party valuation
institution, as well as advice from Mori Hamada & Matsumoto, which is Mitsubishi Electric’s legal advisor, and theresults of due diligence conducted by Mitsubishi Electric on KITA KOUDENSHA, and upon comprehensively
considering factors including the financial conditions, asset conditions, future outlooks of Mitsubishi Electric and
KITA KOUDENSHA, Mitsubishi Electric reached the conclusion that the Share Exchange Ratio is appropriate andwill not harm the interests of the shareholders of Mitsubishi Electric, and thus, Mitsubishi Electric determined that
it is appropriate to carry out the Share Exchange based on the Share Exchange Ratio.
Meanwhile, KITA KOUDENSHA conducted a careful examination and discussion upon taking into account theshare exchange ratio valuation report received from AGS, which is KITA KOUDENSHA’s financial advisor andthird-party valuation institution, the share exchange ratio valuation report received from Plutus, an additional thirdparty valuation institution, as nominated by the Special Committee, and the written opinion stating that the Share
Exchange Ratio is appropriate or fair from a financial point of view (the “Fairness Opinion”), advice from HibiyaNakata, which is KITA KOUDENSHA’s legal advisor, results of due diligence conducted by KITA KOUDENSHA
on Mitsubishi Electric, and instructions, advice, reports, etc. from a special committee (the “Special Committee”)
consisting of independent members who have no interest in Mitsubishi Electric as described in (2) ② “Outline of
the calculation” below and 3. (4) “Measures to Ensure Fairness” below regarding the Share Exchange Ratio. As aresult, KITA KOUDENSHA has determined it is appropriate to carry out the Share Exchange based on the Share
Exchange Ratio and that it will not harm the interests of the shareholders of KITA KOUDENSHA. Although theexchange consideration for the Share Exchange is a discount from the recent market value of KITA KOUDENSHA,
7

KITA KOUDENSHA determined that the exchange consideration for the Share Exchange is appropriate in lightof, as mentioned above, the difficulty in KITA KOUDENSHA maintaining its listing and continuing business on
its own due to the realistic assumption that it will become delisted and bankrupt if the Share Exchange is not carriedout, and the result of the Market Check showing that there is no potential candidate who could propose morefavorable terms for minority shareholders, as well as the discount rates adopted in similar cases in similar
circumstances.
Accordingly, in accordance with the resolutions of the Executive Officers’ Meeting of Mitsubishi Electric and
the Board of Directors’ meeting of KITA KOUDENSHA held today respectively regarding the implementation of
the Share Exchange based on the Share Exchange Ratio, the Companies concluded the Share Exchange Agreement.
Pursuant to the Share Exchange Agreement, the Share Exchange Ratio is subject to change upon consultation
between the Companies in the event of any material change in the terms and conditions on which the calculation isbased.
(2) Matters Concerning Calculation① Name of the valuation institution and relationship with the listed company
Daiwa Securities, the third-party valuation institution of Mitsubishi Electric, and AGS and Plutus, the thirdparty valuation institution of KITA KOUDENSHA, are both valuation institutions independent of Mitsubishi
Electric and KITA KOUDENSHA. Daiwa Securities and AGS are not related parties of Mitsubishi Electric or
KITA KOUDENSHA, and do not have any significant interest in the Share Exchange that should be noted.
In addition, after confirming that there are no independence issues with AGS and Plutus, the Special
Committee approved it as a third-party valuation institution of KITA KOUDENSHA.
The compensation to AGS and Plutus pertaining to the Share Exchange is comprised solely of fixedcompensation to be paid regardless of the success or failure of the Share Exchange, and does not include
contingency fees to be paid upon the condition of successful completion of the Share Exchange.
② Outline of the calculation
For Mitsubishi Electric, since it is listed on a financial instruments exchange and there exists a market shareprice, Daiwa Securities adopted the market share price average method for the calculation (using January 5,2024 as the base date, which is the calculation base date, the market share price was analyzed based on thesimple average closing price of Mitsubishi Electric Stock on the Prime Market of Tokyo Stock Exchange, Inc.
(the “TSE”) over the last six-months period from July 6, 2023 to the calculation base date, the last three-months
period from October 6, 2023 to the calculation base date, the last one-month period from December 6, 2023 tothe calculation base date, and the closing price as of the base date).
As to KITA KOUDENSHA, since it is listed on a financial instruments exchange and has a market shareprice, the market share price average method was adopted (using January 5, 2024 as the base date, which is thecalculation base date, the market share price was analyzed based on the average closing price for the days which
trading volumes were recorded for KITA KOUDENSHA Stock on the SSE over the last six-months period
from July 6, 2023 to the calculation base date, the last three-months period from October 6, 2023 to thecalculation base date, the last one-month period from December 6, 2023 to the calculation base date, and theclosing price as of the base date), as well as the discounted cash flow (the “DCF”) method in order to reflect thestatus of future business activities in the evaluation.
Under the DCF method, the corporate value and share value are assessed by discounting the future cash flows
based on the business plan for the fiscal years ending March 31, 2024 through March 31, 2027, prepared by
KITA KOUDENSHA, to the present value at a certain discount rate. The discount rate ranges from 7.08% to7.91%. The perpetual growth rate method is used to calculate the going concern value, and the perpetual growthrate is 0.00% to 0.50%.
The calculation range of the share exchange ratio of KITA KOUDENSHA Stock under the respective
8

valuation methods when the share value per share of Mitsubishi Electric Stock is set at one is as follows.
Adopted method
Mitsubishi Electric
KITA KOUDENSHA
Market share price average
Market share pricemethodaverage method
DCF method

Calculation range of the share exchange ratio
0.644 to 0.682
0.098 to 0.745

In calculating the above share exchange ratio, Daiwa Securities used materials and information that wasprovided from the Companies and information available to the public principally on an as is basis on theassumption that the entire materials and information used for the analysis and examination are accurate andcomplete, and Daiwa Securities has not independently verified, and assume no obligation to do so, the accuracy
or the completeness of such materials and information. Daiwa Securities assumed, among other things, that
there are no facts undisclosed to Daiwa Securities that could have a material impact on the calculation of theshare exchange ratio. Daiwa Securities has not undertaken an independent evaluation, appraisal or assessmentof any of the assets or liabilities (including, but not limited to, financial derivative instruments, off-balance-sheet
assets and liabilities, and other contingent liabilities) of Mitsubishi Electric and KITA KOUDENSHA and theirsubsidiaries and affiliated companies, including analysis and evaluation of the individual assets and liabilities,
nor did it make any request to a third party for an evaluation, appraisal or assessment. Daiwa Securities assumed
that the financial forecasts and other forward-looking information provided by the Companies have beenreasonably reviewed, considered or prepared based on the best currently available forecasts and judgments by
the management of KITA KOUDENSHA, and with the consent of KITA KOUDENSHA, Daiwa Securities
has relied on such information without independent verification. Calculations by Daiwa Securities are based on
financial, economic, market and other conditions as of January 5, 2024.
The calculation results of the share exchange ratio submitted by Daiwa Securities do not express an opinion
on the fairness of the share exchange ratio in the Share Exchange.
The business plan of KITA KOUDENSHA, which Daiwa Securities used as the premise for the calculation
using the DCF method, includes a fiscal year in which a significant increase or decrease in profit is expected.
Specifically, increase in profit is expected in the fiscal year ending March 31, 2024 owing to the facts that thedelivery to the promotor of the Takayama Project has been completed, and the cost of revenue due to thesignificant increase in civil engineering costs for the Takayama Project that was recorded in the fiscal years
ended March 31, 2022 and 2023 respectively will not be recorded. In addition, excluding the reduction in costs
to maintain listing, the synergy effects expected to be realized by the implementation of the Share Exchange are
not reflected in the financial forecasts used as the basis for the DCF method valuation, because it is difficult toestimate specifically the impact on earnings at this time. However, as the financial forecasts reflect the impactof the financial support expected to be realized from the implementation of the Share Exchange, assuming thecontinuation of KITA KOUDENSHA’s business, it is based on the assumption that the Share Exchange will be
implemented. The financial forecasts that do not assume the implication of the Share Exchange anticipate
difficulties in continuing the business during the planned term, so they are not used as the basis for the DCF
method valuation.
In addition, the business plan of KITA KOUDENSHA, which Daiwa Securities used as the basis for the
calculation using the DCF method, has factored in the tax burden reduction effect from the reduction of capitaland capital reserve with an effective date of March 29, 2024, which is described in 8. “Other Matters” below.
Meanwhile, for Mitsubishi Electric, since it is listed on a financial instruments exchange and there exists a
market share price, AGS adopted the market share price method for the calculation, and for KITA
KOUDENSHA, since it is listed on a financial instruments exchange and there exists a market share price, themarket share price method was adopted, as well as the DCF method in order to reflect the status of futurebusiness activities in the evaluation.
9

The calculation range of the share exchange ratio of KITA KOUDENSHA Stock under the respective
valuation methods when the share value per share of Mitsubishi Electric Stock is set at one is as follows.
Adopted method
Mitsubishi Electric
KITA KOUDENSHA
Market share price method
Market share pricemethodDCF method

Calculation range of the share exchange ratio

0.644 to 0.682
0.000 to 0.529

Under the market share price method, for Mitsubishi Electric, using January 5, 2024 as the calculation basedate, the simple average closing price of Mitsubishi Electric Stock on the Prime Market of TSE over the lastsix-months period from July 6, 2023 to the calculation base date, the last three-months period from October 6,2023 to the calculation base date, the last one-month period from December 6, 2023 to the calculation base date,
and the closing price as of the base date were adopted. For KITA KOUDENSHA, using January 5, 2024 as thecalculation base date, the simple average closing price of KITA KOUDENSHA of SSE over the last six-months
period from July 6, 2023 to the calculation base date, the last three-months period from October 6, 2023 to thecalculation base date, the last one-month period from December 6, 2023 to the calculation base date, and theclosing price as of the base date were adopted.
Under the DCF method, the corporate value and share value are assessed by discounting the future cash flows
based on the business plan for the fiscal years ending March 31, 2024 through March 31, 2027, prepared by
KITA KOUDENSHA, to the present value at a certain discount rate. The discount rate ranges from 5.89 % to6.89%. The perpetual growth rate method is used to calculate the going concern value, and the perpetual growthrate is 0%.
In calculating the above share exchange ratio, AGS used materials and information that was provided fromthe Companies and information available to the public principally on an as is basis on the assumption that theentire materials and information used for the analysis and examination are accurate and complete, and AGS has
not independently verified, and assume no obligation to do so, the accuracy or the completeness of suchmaterials and information. AGS assumed, among other things, that there are no facts undisclosed to AGS that
could have a material impact on the calculation of the share exchange ratio. AGS has not undertaken an
independent evaluation, appraisal or assessment of any of the assets or liabilities (including, but not limited to,financial derivative instruments, off-balance-sheet assets and liabilities, and other contingent liabilities) of
Mitsubishi Electric and KITA KOUDENSHA and their subsidiaries and affiliated companies, including
analysis and evaluation of the individual assets and liabilities, nor did it make any request to a third party for an
evaluation, appraisal or assessment. AGS assumed that the financial forecasts and other forward-looking
information provided by the Companies have been reasonably reviewed, considered or prepared based on thebest currently available forecasts and judgments by the management of KITA KOUDENSHA, and with theconsent of KITA KOUDENSHA, AGS has relied on such information without independent verification.
Calculations by AGS are based on financial, economic, market and other conditions as of January 5, 2024.
The calculation results of the share exchange ratio submitted by AGS do not express an opinion on thefairness of the share exchange ratio in the Share Exchange.
The business plan of KITA KOUDENSHA, which AGS used as the premise for the calculation using the
DCF method, includes a fiscal year in which a significant increase or decrease in profit is expected. Specifically,
increase in profit is expected in the fiscal year ending March 31, 2024 owing to the facts that the delivery to thepromotor of the Takayama Project has been completed, and the cost of revenue due to the significant increasein civil engineering costs for the Takayama Project that was recorded in the fiscal years ended March 31, 2022
and 2023 respectively will not be recorded. In addition, the synergy effects expected to be realized by the
implementation of the Share Exchange are not reflected in the financial forecasts used as the basis for the DCF
method valuation, because, excluding the reduction in costs to maintain listing, it is difficult to estimate
specifically the impact on earnings at this time. However, as the financial forecasts reflect the impact of the
10

financial support expected to be realized from the implementation of the Share Exchange, assuming thecontinuation of KITA KOUDENSHA’s business, it is based on the assumption that the Share Exchange will be
implemented. The financial forecasts that do not assume the implication of the Share Exchange anticipate
difficulties in continuing the business during the planned term, so they are not used as the basis for the DCF
method valuation.
In addition, the business plan of KITAKOUDENSHA, which AGS used as the basis for the calculation using
the DCF method, has factored in the tax burden reduction effect from the reduction of capital and capital reservewith an effective date of March 29, 2024, which is described in 8. “Other Matters” below.
For Mitsubishi Electric, since it is listed on a financial instruments exchange and there exists a market shareprice, Plutus adopted the market share price method for the calculation, whereas for KITA KOUDENSHA,
since it is listed on a financial instruments exchange and there exists a market share price, the market share pricemethod was adopted, as well as the DCF method in order to reflect the status of future business activities in theevaluation.
The calculation range of the share exchange ratio of KITA KOUDENSHA Stock under the respective
valuation methods when the share value per share of Mitsubishi Electric Stock is set at one is as follows.
Adopted method
Mitsubishi Electric
KITA KOUDENSHA
Market share price method
Market share pricemethodDCF method

Calculation range of the share exchange ratio
0.644 to 0.682
0.000 to 0.369

Under the market share price method, for Mitsubishi Electric, using January 5, 2024 as the calculation basedate, the simple average closing price of Mitsubishi Electric Stock on the Prime Market of TSE over the lastsix-months period from July 6, 2023 to the calculation base date, the last three-months period from October 6,2023 to the calculation base date, the last one-month period from December 6, 2023 to the calculation base date,
and the closing price as of the base date were adopted. For KITA KOUDENSHA, using January 5, 2024 as thecalculation base date, the simple average closing price of KITA KOUDENSHA of SSE over the last six-months
period from July 6, 2023 to the calculation base date, the last three-months period from October 6, 2023 to thecalculation base date, the last one-month period from December 6, 2023 to the calculation base date, and theclosing price as of the base date were adopted.
Under the DCF method, the corporate value and share value are assessed by discounting the future cash flows
based on the business plan for the fiscal years ending March 31, 2024 through March 31, 2027, prepared by
KITA KOUDENSHA, to the present value at a certain discount rate. The discount rate ranges from 6.033% to7.704%. The perpetual growth rate method is used to calculate the going concern value, and the perpetual
growth rate is 0%.
The business plan of KITA KOUDENSHA, which Plutus used as the premise for the calculation using the
DCF method, includes a fiscal year in which a significant increase or decrease in profit is expected. Specifically,
increase in profit is expected in the fiscal year ending March 31, 2024 owing to the facts that the delivery to thepromotor of the Takayama Project has been completed, and the cost of revenue due to the significant increasein civil engineering costs for the Takayama Project that was recorded in the fiscal years ending March 31, 2022
and 2023 respectively will not be recorded. In addition, the synergy effects expected to be realized by the
implementation of the Share Exchange are not reflected in the financial forecasts used as the basis for the DCF
method valuation, because, excluding the reduction in costs to maintain listing, it is difficult to estimate
specifically the impact on earnings at this time. However, as the financial forecasts reflect the impact of thefinancial support expected to be realized from the implementation of the Share Exchange, assuming thecontinuation of KITA KOUDENSHA’s business, it is based on the assumption that the Share Exchange will be
implemented. The financial forecasts that do not assume the implication of the Share Exchange anticipate
difficulties in continuing the business during the planned term, so they are not used as the basis for the DCF
11method valuation.
In addition, the business plan of KITA KOUDENSHA, which Plutus used as the basis for the calculation
using the DCF method, has factored in the tax burden reduction effect from the reduction of capital and capitalreserve with an effective date of March 29, 2024, which is described in 8. “Other Matters” below.
KITA KOUDENSHA obtained the Fairness Opinion from Plutus on January 5, 2024. The Fairness Opinion
expresses the view that the Share Exchange ratio agreed between both parties is fair to minority shareholders of
KITA KOUDENSHA from a financial point of view in light of the business plan prepared by KITA
KOUDENSHAand the result, etc. of share exchange ratio calculations based on the market share prices of bothparties. The Fairness Opinion was issued after Plutus received disclosure from KITA KOUDENSHA of its
business situation and future business plan, etc., the result of the share exchange ratio calculation after receiving
an explanation of such factors, and examined through a question and answer session on the outline, background,and purpose of the Share Exchange from both parties, and the business environment of both parties, theeconomy, market and financial climate, etc. to the extent considered necessary by Plutus, as well as completionof a review procedure by a review committee independent of the engagement team at Plutus.
(Note 1) In preparing and submitting the Fairness Opinion, and calculating the above share exchange ratio on which
this was based, Plutus assumed and relied on the basic materials that were provided by KITA
KOUDENSHA, information available to the public, and information heard from both companies being
accurate and complete, and there being no matters that may have a material impact on the calculation of theshare exchange ratio that are undisclosed, and has not independently verified, and assumes no obligation to
do so, the accuracy or the completeness of such materials and information outside the above procedures.
Plutus has not undertaken its own evaluation or appraisal of any of the assets or liabilities (including, but
not limited to, off-balance-sheet assets and liabilities, and other contingent liabilities) of Mitsubishi Electric,
KITA KOUDENSHA or Mitsubishi Electric’s affiliated companies, including analysis and evaluation of
the individual assets and liabilities, and has not received submission of any written evaluation or written
appraisal on such matters from Mitsubishi Electric, KITA KOUDENSHA or Mitsubishi Electric’s affiliatedcompanies. Plutus has not evaluated the creditworthiness of Mitsubishi Electric, KITA KOUDENSHA or
Mitsubishi Electric’s affiliated companies under applicable laws in relation to insolvency, payment
suspension , or matters similar to these.
Plutus assumes that the business plan and other materials of KITA KOUDENSHA used as basic materials
have been reasonably prepared based on the best currently available forecasts and judgments by the
management of KITA KOUDENSHA, and Plutus does not guarantee their feasibility, nor represent any
view on the analysis and forecasts based on which they were prepared, or the assumptions that formed thebasis of these.
Plutus assumes that the Share Exchange Agreement was lawfully and validly prepared and executed andapproved at the General Meeting of Shareholders of KITA KOUDENSHA, that the Share Exchange will
be lawfully and validly implemented in accordance with the terms of the Share Exchange Agreement, andthat the Share Exchange is completed in accordance with the terms of the Share Exchange Agreement
without waiver, revision or amendment of material conditions and agreed matters in the Share Exchange
Agreement. Plutus also assumes that the Share Exchange is lawfully and validly implemented, that the tax
effect of the Share Exchange does not differ to the expectations of the parties, and that all consents, approvals
and authorizations from the government, regulatory authorities and others necessary for the implementationof the Share Exchange have been obtained without any loss of benefits expected to be gained from the Share
Exchange, and assumes no obligation to independently examine these. Plutus has not been requested by
KITA KOUDENSHA to examine the decision-making of KITA KOUDENSHA in relation to the12implementation of the Share Exchange, or to examine the Share Exchange in comparison with otherstrategic choices, and has not done so. Plutus is not an accounting, tax, or legal expert, and has notindependently analyzed or examined the legality or validity of any matter relating to the Share Exchange,or the adequacy of accounting or tax treatment, and assumes no obligation to do so. Plutus has assumed thatthe envisaged tax effect for the Share Exchange as presented by KITA KOUDENSHA will be realized.
The Fairness Opinion states the views of Plutus as of the preparation date as to whether or not the Share
Exchange Ratio agreed between the parties is fair to minority shareholders of KITA KOUDENSHA froma financial point of view based on financial and capital markets, economic conditions, and othercircumstances as of the preparation date, as well as information shared with or obtained by Plutus up to the
preparation date, and Plutus has no obligation to revise, amend, or supplement the Fairness Opinion in theevent such basis changes due to subsequent developments. Plutus does not speculate or suggest a view onmatters other than matters explicitly mentioned in the Fairness Opinion or subsequent to the submission dateof the Fairness Opinion. The Fairness Opinion only expresses an opinion on the fairness of the Share
Exchange Ratio for minority shareholders of KITA KOUDENSHA from a financial point of view, andexpresses no opinion on the owners, creditors, or other related parties for securities issued by KITA
KOUDENSHA, and does not recommend any action in relation to the Share Exchange to shareholders of
KITA KOUDENSHA.
The Fairness Opinion was submitted by Plutus for the purpose of being used as basic materials for the
Board of Directors and the Special Committee of KITA KOUDENSHA to make a decision on the Share
Exchange Ratio, and cannot be relied on by anyone else.

(3) Prospect of Delisting and Reasons Therefor
As a result of the Share Exchange, KITA KOUDENSHA will become a wholly owned subsidiary of Mitsubishi
Electric as of its effective date (scheduled for April 15, 2024). Prior to this, KITA KOUDENSHA Stock arescheduled to be delisted as of April 11, 2024 (the last trading date will be April 10, 2024) following the prescribed
procedures pursuant to the delisting criteria of the SSE. KITA KOUDESNSHA Stock will no longer be tradable on
the SSE after the delisting, but Mitsubishi Electric Stock which will be allotted to the shareholders of KITA
KOUDENSHA on the effective date of the Share Exchange is listed on the Prime Market of the TSE. Thus,
although some shareholders may only receive an allotment of shares less than one unit, shares of one unit or more
will continue to be tradable on the financial instruments exchange and the liquidity of the shares continues to remain
available.
On the other hand, shareholders who will hold shares less than one unit of Mitsubishi Electric as a result of the
Share Exchange will not be able to sell such shares less than one unit on the financial instruments exchange, butsuch shareholders are entitled to use the system requesting purchase of shares less than one unit applicable to
Mitsubishi Electric Stock. It is also possible to use the system requiring additional purchase for shares less than one
unit applicable to Mitsubishi Electric Stock and additionally purchase from Mitsubishi Electric the number of sharesnecessary to constitute one unit together with the number of shares already held by such shareholder. Please refer to
2. (3) (Note 3) “Handling of shares less than one unit” above for an outline of such handling. For details on thehandling of fractional share arising from the Share Exchange, please refer to 2. (3) (Note 4) “Handling of fractional
share” above.
The common shareholders of KITA KOUDENSHA may continue to trade their KITA KOUDENSHA Stockon the SSE as in the past until the last trading day, namely April 10, 2024 (scheduled), or may exercise their legal
rights provided for in the Companies Act and other relevant laws and regulations.
(4) Measures to Ensure Fairness
In light of the facts that Mitsubishi Electric holds 173,600 shares of KITA KOUDENSHA Stock (representing
13

27.53% (rounded to the nearest two decimal places; the same applies hereinafter regarding the calculation ofownership ratio) of the proportion (the “Ownership Ratio”) to the aggregate of 630,655 shares of outstanding shares(excluding treasury shares) as of September 30, 2023) making Mitsubishi Electric the largest and major shareholder
of KITA KOUDENSHA, and there are directors at KITA KOUDENSHA who concurrently serve as officers andemployees of Mitsubishi Electric as well as directors who formerly worked at Mitsubishi Electric, the Companies
determined that it is necessary to ensure the fairness of the Share Exchange, and implemented the following
measures to ensure fairness.
① Valuation reports obtained from independent third-party valuation institutions
Mitsubishi Electric appointed Daiwa Securities, a third-party valuation institution independent from
Mitsubishi Electric and KITA KOUDENSHA, as the valuation institution pertaining to the share exchange ratio
for the Share Exchange, and obtained a valuation report on the share exchange ratio as of January 5, 2024.
Please refer to 3. (2) “Matters Concerning Calculation” above for an overview of the valuation report.
KITA KOUDENSHA appointed AGS and Plutus, a third-party valuation institution independent from
Mitsubishi Electric and KITA KOUDENSHA, as the valuation institution pertaining to the share exchange ratio
for the Share Exchange, and obtained a valuation report on the share exchange ratio from each of AGS and
Plutus as of January 5, 2024. Please refer to 3. (2) “Matters Concerning Calculation” for an overview of thevaluation report.
Further, KITA KOUDENSHA has obtained the Fairness Opinion from Plutus, a third-party valuation
institution that is independent of KITA KOUDENSHA and Mitsubishi Electric.
② Advice from independent law firms
Mitsubishi Electric appointed Mori Hamada & Matsumoto as its legal advisor for the Share Exchange, andreceives legal advice from Mori Hamada & Matsumoto regarding the various procedures of the Share
Exchange and methods and processes of decision-making of the Executive Officers’ Meeting. Mori Hamada& Matsumoto is independent from Mitsubishi Electric and KITA KOUDENSHA, and does not have any
material interest in Mitsubishi Electric or KITA KOUDENSHA.
KITA KOUDENSHA appointed Hibiya-Nakata as its legal advisor for the Share Exchange, and receives
legal advice from Hibiya-Nakata regarding the various procedures of the Share Exchange and methods andprocesses of decision-making by the Board of Directors. Hibiya-Nakata is independent from Mitsubishi Electricand KITA KOUDENSHA, and does not have any material interest in Mitsubishi Electric or KITA
KOUDENSHA.
(5) Measures to Avoid Conflicts of Interest
Since Mitsubishi Electric holds 173,600 shares (Ownership Ratio: 27.53%) of KITA KOUDENSHA Stock andis the largest and major shareholder of KITA KOUDENSHA, and there are directors at KITA KOUDENSHA who
concurrently serve as officers and employees of Mitsubishi Electric as well as directors who formerly worked at
Mitsubishi Electric, KITA KOUDENSHA has implemented the following measures to avoid conflicts of interest.
① Obtainment by KITA KOUDENSHA of a report from special committee with no interest
KITA KOUDENSHA, by the resolution of the Board of Directors’ meeting held on December 13, 2022, in
the aim to use cautiousness in its decision-making regarding the Share Exchange, as well as to eliminate possible
arbitrariness and conflict of interest in its Board of Directors’ decision-making process and ensure fairness
thereof, while confirming that the resolution by its Board of Directors to carry out the Share Exchange is notdisadvantageous to its minority shareholders, established the Special Committee consisting of three members,
namely, Mr. Masayuki Hirobe (attorney at law, Hirobe & Yagi Law Office), who does not have any interest in
Mitsubishi Electric and is KITA KOUDENSHA’s outside director and registered as KITA KOUDENSHA’s
independent officer with the SSE, and Mr. Masaaki Suda (certified public accountant, Suda Certified Public
Accountant Office), who is an outside expert having no interest in Mitsubishi Electric or KITA KOUDENSHA
14

and has knowledge of finance and accounting gained through his experience as certified public accountant, andMr. Hidetaka Nishina (attorney at law, Nakamura, Tsunoda & Matsumoto), who has a wealth of experience andknowledge as an expert cultivated through many years of legal work including corporate legal affairs.
Thereupon, to consider the Share Exchange, KITA KOUDENSHA resolved at the aforementioned Board of
Directors’ meeting to consult the Special Committee on whether: (i) the purpose of the Share Exchange should
be deemed reasonable (therefore the Share Exchange as a whole will lead to contributing to the enhancementof KITA KOUDENSHA’s corporate value); (ii) the fairness of the terms and conditions of the Share Exchange(including the exchange ratio) has been secured; (iii) the procedures of the Share Exchange are fair, andsufficient consideration is given to the interests of the minority shareholders; and (iv) the Share Exchange is notdisadvantages to the minority shareholders ((i) to (iv) are collectively referred to as the “Matters for
Consultation”). Furthermore, in establishing the Special Committee, KITA KOUDENSHA’s Board of
Directors resolved that the Board of Directors which shall consider the appropriateness of the Share Exchange
shall respect the content of the Special Committee’s responses pertaining to the Matters for Consultation to the
maximum extent in light of the purpose of establishing the Special Committee, and in particular, if the Special
Committee decides that the implementation of the Share Exchange is not appropriate, KITA KOUDENSHA’s
Board of Directors shall not carry out the Share Exchange, and in addition, (i) the Special Committee itself may
negotiate with Mitsubishi Electric, and even if KITA KOUDENSHA’s personnel or advisors conduct thenegotiations with Mitsubishi Electric, the Special Committee may receive timely reports on the negotiation
status, express its opinions at important points and give instructions and requests, thereby substantially influence
the negotiation process regarding the terms and conditions of the transaction; (ii) the Special Committee isgranted the right to, as necessary, appoint its own external advisors including financial advisor, third-party
valuation institution, legal advisor (expenses in such cases shall be borne by KITA KOUDENSHA), or
otherwise, nominate or approve (including subsequent approval) the external advisors to be appointed by KITA
KOUDENSHA; and (iii) the Special Committee is granted the right to approve KITA KOUDENSHA toappoint AGS and Hibiya-Nakata, respectively, as external advisors on the Share Exchange which are experts
independent from KITA KOUDENSHA and Mitsubishi Electric. In the aforementioned Board of Directors’
meeting of KITA KOUDENSHA held on December 13, 2022, among KITA KOUDENSHA’s then five
Directors, Mr. Ichiro Miyaki, who held an executive position at Mitsubishi Electric at that time was absent fromsuch Board of Directors’ meeting, and Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita, who are recognized
as having certain relationships with Mitsubishi Electric in the past, such as working as an employee or assuming
an executive position of Mitsubishi Electric, decided not to participate in the deliberation and the resolution ofsuch Board of Directors’ meeting and thus, Mr. Naoki Mabuchi chaired such Board of Directors’ meeting, andtwo Directors, namely Mr. Naoki Mabuchi and Mr. Masayuki Hirobe participated in the deliberation andunanimously resolved as aforementioned. Likewise, as to the three Audit & Supervisory Board members, Mr.
Masaki Hase, who holds an executive position at Mitsubishi Electric, and Mr. Osamu Oketani, who has an
ongoing business relationship with Mitsubishi Electric, was absent from such Board of Directors’ meeting, andMr. Hiroyuki Higuchi, who is recognized as having a certain relationship with Mitsubishi Electric in the past
did not participate in the deliberation of such Board of Directors’ meeting and has not expressed any opinion.
Furthermore, from the viewpoint of securing a quorum of the Board of Directors’ meeting, a total of four
directors, including Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita, both Directors, and Mr. Hiroyuki
Higuchi, Audit & Supervisory Board member, all of whom only held a position as an officer or employee ofMitsubishi Electric in the past and are considered to having a relatively low conflict of interest, participated anddeliberated, and the four Directors unanimously resolved as aforementioned once more. KITA KOUDENSHA
has also received an opinion from the Audit & Supervisory Board that they do not have any objection.
Each member of the Special Committee shall be paid a fixed amount of compensation for their duties,
regardless of the content of their reports.
15

The Special Committee held four meetings between December 19, 2022 and January 13, 2023, 11 meetings
between August 24, 2023 and January 5, 2024 after the suspension due to the discontinuation of theconsideration of the Share Exchange, adding up to 15 meetings (approximately 20 hours in total), and also
carefully considered the Matters for Consultation by using emails, among other tools, to express opinions,exchange information or gather information, or otherwise, held consultations as necessary outside thecommittee. The Special Committee has elected Mr. Hidetaka Nishina as the Chair of the Special Committee
through mutual election among the members. In addition, at the first meeting of the Special Committee, theSpecial Committee approved AGS, which is a financial advisor and a third-party valuation institution appointed
by KITA KOUDENSHA, as KITA KOUDENSHA’s financial advisor and third-party valuation institution, andHibiya-Nakata, which is a legal advisor appointed by KITA KOUDENSHA, as KITA KOUDENSHA’s legal
advisor, after confirming that there are no issues with their independence. Furthermore, the Special Committee
approved KITA KOUDENSHA’s internal review and negotiation system after confirming that their members
are composed of persons other than those who have interests with Mitsubishi Electric, and that there are no
problems from the viewpoint of conflict of interest with Mitsubishi Electric. In addition, the Special Committee
also appointed Plutus, a third-party valuation institution, to obtain the Fairness Opinion that verified the fairnessof the Share Exchange Ratio, and the Special Committee confirmed there was no issue with the independenceof Plutus.
The Special Committee sent a written inquiry to Mitsubishi Electric on the following points, among others:(i) the reason and background for choosing the Share Exchange; (ii) the reason and background for choosing
the specific timing of the Share Exchange; (iii) measures for enhancement and countermeasures related to KITA
KOUDENSHA’s management issues and business problems after the Share Exchange, and the assumptions
therefor in the medium- to long-term; (iv) KITA KOUDENSHA’s governance and management system after
the Share Exchange; (v) pros and cons to the Share Exchange; and (vi) the concept of the methods adopted in
calculating the Share Exchange Ratio in the Share Exchange. The Special Committee received direct
explanations on these matters from Mitsubishi Electric followed by a question and answer session.
In addition, the Special Committee received from KITA KOUDENSHA an explanation on the content andbackground of the preparation of the business forecasts which it prepared, and confirmed the reasonableness ofsuch matters. Subsequently, as described in 3.(2)② under “(2) Matters Concerning Calculation” above, given
the fact that AGS and Plutus calculated the value of KITA KOUDENSHA Shares based on the business
forecasts prepared by KITA KOUDENSHA, the Special Committee received explanation from AGS and
Plutus on the calculation method adopted in calculating the value of KITA KOUDENSHA Shares, the reason
for adopting such calculation method, and the content of calculation based on each calculation method as wellas important assumptions, and after holding a question and answer session as well as deliberations andconsiderations, the Special Committee confirmed the reasonableness on these matters. Furthermore, the Special
Committee received advice from Hibiya-Nakata regarding the measures to ensure fairness of the procedures of
the Share Exchange as well as the measures to avoid conflict of interest including the method and process ofdecision-making by KITA KOUDENSHA’s Board of Directors regarding the Share Exchange, and conducted
a question and answer session on these matters. Additionally, after collecting information on the Share
Exchange based on the submitted materials related to the Share Exchange, the Special Committee carefully
discussed, examined and deliberated the Matters for Consultation taking in concern such informationcollectively. The Special Committee received timely reports on the background and content of the discussions
and negotiations between KITA KOUDENSHA and Mitsubishi Electric regarding the Share Exchange, andeach time provided to KITA KOUDENSHA its views on the acceptance or rejection of the proposed shareexchange ratio by Mitsubishi Electric, and on how to set the ratio and the grounds for this when KITA
KOUDENSHA rejected the proposal from Mitsubishi Electric and instead issued its own proposal for the ratio,
and has been involved in the process of negotiation with Mitsubishi Electric, including giving opinions to KITA
16

KOUDENSHA, from after the 10th Special Committee meeting until receiving a final proposal from
Mitsubishi Electric regarding the Share Exchange Ratio.
Upon the background described above, the Special Committee carefully deliberated and examined the
Matters for Consultation based on such explanations, calculation results, the Fairness Opinion, and othermaterials for consideration, and submitted a report to KITA KOUDENSHA’s Board of Directors as of January
5, 2024(the “Report”), stating that the Share Exchange is deemed not to be disadvantageous to the minority
shareholders of KITA KOUDENSHA. The summary of the opinion of the Special Committee is as follows.
(i) Whether it should be deemed that the purpose of the Share Exchange is reasonable (therefore it isdeemed that the Share Exchange as a whole will lead to contributing to the enhancement of KITA
KOUDENSHA’s corporate value)(A) Current understanding of KITA KOUDENSHA and issues
The greatest issue is that KITA KOUDENSHA has a pressing need to recover a soundfinancial position, as it is insolvent as of the submission date of the Report, and, amongst otherthings, is being asked to provide a guarantee from Mitsubishi Electric to receive loans from banks.
Next, given its current financial position, KITA KOUDENSHA’s shares will be delisted if it
is not solvent by the end of the fiscal year ending March 31, 2024, which is highly likely to havea large adverse effect on KITA KOUDENSHA’s shareholders. Avoiding this situation is anotherpressing need.
Another important issue is improvement of KITA KOUDENSHA’s governance, which has
shown failings in governance functions in operational and business management respects, as
shown by the occurrence of multiple events that have greatly degraded KITA KOUDENSHA’s
financial position, such as the Inappropriate Accounting Treatment for Solar Power Projects, theWithdrawal From the Small Wind Turbine Business (and compensation for this to power
generation companies), and the Takayama Project.
Another issue is whether KITA KOUDENSHA will be able to improve results from only the
Hokkaido market area (redevelopment is expected to end in 2030). Although it has withdrawn
from the solar power business and the small wind turbine business, it needs to continue venturing
into new businesses such as renewable energy. However, given its current financial situation,
there is the difficulty of being unable to invest large sums to participate in new businesses.
This will require long-term personnel investment, given that KITA KOUDENSHA has no
personnel with specialist knowledge (no training scheme, or intention to newly establish a
specialist department) of such new areas (such as the development of renewable energy business).
However, the issue of its impaired financial situation will need to be resolved prior to personnel
investment.
From the above, the following issues can be raised about the future business development of
KITA KOUDENSHA.
(a) Recovery of a sound financial position is the greatest issue.
(b) At the same time there is the urgent issue of avoiding the large adverse effect onshareholders and other stakeholders resulting from delisting and bankruptcy if thecurrent situation persists.
(c) Improvement of the management of its management and business is also important.
(d) On the operations side there is a need to venture into new businesses such as renewableenergy business.
(e) There is a need for new personnel investment to hire personnel with specialist
knowledge in new areas.
Accordingly, although implementing measures (a) through (e) above (including, but not17

limited to, M&A) that contributes to the business and issues of KITA KOUDENSHA requiresconsideration of the individual risks and accompanying demerits of such measures, it is believed
that, at least in general terms, they will improve the corporate value of KITA KOUDENSHA.
(B) Corporate value enhancement effect of the Share Exchange
The corporate value enhancement measures planned by Mitsubishi Electric and their effectenvisaged by Mitsubishi Electric after the implementation of the Share Exchange are describedin (a) through (d) below.
(a) Reduction of interest payments by using Mitsubishi Electric intra group financing
KITA KOUDENSHA’s interest payment burden can be reduced by replacing
borrowing with Mitsubishi Electric intra group financing.
(b) Avoidance of insolvency
The term of debt guarantees provided by Mitsubishi Electric for bank borrowing by
KITA KOUDENSHA will end on April 30, 2024, and it will be difficult for KITA
KOUDENSHA to refinance its current debt given its current financial situation.
Mitsubishi Electric believes it is highly likely that KITA KOUDENSHA will struggle torefinance and will be insolvent without the support of Mitsubishi Electric. The Share
Exchange attempts to avoid damage to KITA KOUDENSHA’s business and corporate
value, as well as avoid a large negative effect on KITA KOUDENSHA’s stakeholders,
by delivering Mitsubishi Electric shares to KITA KOUDENSHA’s shareholders andproviding the financial support in (a) above.
(c) Contribution to governance strengthening
If KITA KOUDENSHA becomes a wholly-owned subsidiary of Mitsubishi Electric
through the implementation of the Share Exchange, this will make it possible for it tostrengthen its compliance structure through the provision of Mitsubishi Electric Group’s
compliance expertise, and utilization of Mitsubishi Electric Group’s audit resources, etc.
(d) Reduction of listing maintenance costs
The Share Exchange will reduce the service and cost burden (including audit
company costs) for maintaining the share listing of KITA KOUDENSHA, and allow for
effective use of management resources.
KITA KOUDENSHA also believes that the explanations of Mitsubishi Electric on corporate
value enhancement measures and the envisaged effects of the Share Exchange described in (a)through (d) above are feasible and effective corporate value enhancement measures in light of
KITA KOUDENSHA’s current issues.
(a) Reduction of interest payments by using Mitsubishi Electric intra group financing
Joining the Mitsubishi Electric Group umbrella will allow it to access low-interest
intra-group financing, which will stabilize its financing.
(b) Avoidance of bankruptcy
It will be difficult for KITA KOUDENSHA to resolve its insolvency by March 31,
2024 on its own, and it is expected to be in conflict with delisting standards of the SSE.
Being insolvent, it is unlikely that KITA KOUDENSHA will be able to secure sufficientfinancing from the capital market or sufficient support from the Mitsubishi ElectricGroup. Being unable to secure financing will endanger its business operations, leading
to the inevitable loss of clients and employee turnover. Avoiding this situation throughthe Share Exchange is essential to improve the business.
(c) Contribution to governance strengthening
Making progress on urgent financing stabilization and management improvement
18

will require support from the Mitsubishi Electric Group as well as advancing personnel
exchange. However, but as the benefits of management improvements may low out tothe general shareholders, it will be difficult to gain sufficient support from the Mitsubishi
Electric Group while maintaining KITA KOUDENSHA’s existing shareholder relations.
Conversely, the Share Exchange will enable personnel support to strengthen governance.
(d) Reduction of listing maintenance costs
Audit remuneration, etc. costs tens of millions of yen annually, which is not a lightburden with KITA KOUDENSHA currently being insolvent.
KITA KOUDENSHA also envisages the effects in (e) and (f) below in addition to
those in (a) through (d).
(e) Strengthening of creditworthiness with clients, etc. by joining the Mitsubishi ElectricGroup umbrella(f) With its financial situation impaired, KITA KOUDENSHA is unable to invest in areasthat require a long-term business perspective such as investing in personnel andventuring into new business as it must prioritize short-term benefits in consideration ofminority shareholders. The changing of its shareholder composition through the Share
Exchange will make long-term investments possible.
The Special Committee also believes that the measures to enhance corporate value in (a)through (f) will contribute to the situations in (A) above (namely, (a) soundness of financial
situation, (b) avoidance of large adverse effect on stakeholders, (c) improved management ofmanagement and business, (d) venture into new business, and (e) personnel investment) given
as major points to enhance the corporate value of KITA KOUDENSHA in the future. It sees nosignificant demerit to KITA KOUDENSHA from the Share Exchange.
(C) Comparison with the scenario where the Share Exchange is not implemented
Mitsubishi Electric has expressed its intention not to support KITAKOUDENSHAas sponsor
if the Share Exchange is not implemented due it being rejected at the General Meeting of
Shareholders or any other reason.
It will be difficult for KITA KOUDENSHA to resolve its insolvency by March 31, 2024 on
its own, and if the Share Exchange is not implemented, it will be unable to secure financing
which will endanger its business operations, and in turn lead to bankruptcy.
In preparation for the Share Exchange not being implemented, KITA KOUDENSHA carriedout the Market Check, but it revealed that no party would offer financing or other support to
KITA KOUDENSHA.
Based on objective circumstances such as the financial situation of KITA KOUDENSHA andthe result of the Market Check, as well as the intentions of Mitsubishi Electric and KITA
KOUDENSHA, it is reasonably envisaged that KITA KOUDENSHA will go bankrupt (andwill have to file for legal reorganization proceedings or voluntary reorganization proceedings).
(D) Summary
The corporate value enhancement measures for KITA KOUDENSHA planned by Mitsubishi
Electric after the Share Exchange are not at odds with the understanding of KITA
KOUDENSHA, and there is no inconsistency between the awareness of Mitsubishi Electric and
KITA KOUDENSHA in relation to the prospects of achieving such corporate valueenhancement, etc. No significant demerit for the corporate value of KITA KOUDENSHA canbe found for the implementation of the Share Exchange, and the Share Exchange is the solemeans for the business continuation of KITA KOUDENSHA, and no other realistically possiblemeans have been found for KITA KOUDENSHA. From these factors, even if the Share
19

Exchange does result in delisting, the merits from the transaction outweigh this demerit for KITA
KOUDENSHA.
Based on the above consideration, the objective of the Share Exchange is found to bereasonable and the Share Exchange will, overall, contribute to the enhancement of the corporate
value of KITA KOUDENSHA.
(ii) Securing minority shareholder interests through fair procedures
In relation to matter for consultation “Whether the fairness of the terms and conditions of the Share
Exchange (including the exchange ratio) has been secured,” examine whether or not the interests ofminority shareholders have been secured through fair procedures through confirmation of the status of
the adoption and operation of measures to ensure fairness set out in the Fair M&A guidelines issued by
the Ministry of Economy, Trade and Industry on June 28, 2019 (the “M&A Guidelines”).
(A) Establishment of Special Committee
The Special Committee is a committee comprising a total of three members: one independent
outside director of KITA KOUDENSHA and two independent experts.
When examining matters for consultations, the Special Committee is to fulfil the role set out
for it in the M&A Guidelines of ① examining and deciding whether to conduct the M&A fromthe perspective of whether it improves the corporate value of the target company, and ② fromthe perspective of the interests of minority shareholders, (i) examining and deciding on theadequacy of transaction terms and (ii) the fairness of procedures.
Additionally, (a) the Special Committee was established at the very initial stage of thetransaction after Mitsubishi Electric verbally proposed the Share Exchange to KITA
KOUDENSHA on November 11, 2022, (b) the independence of all members of the Special
Committee from Mitsubishi Electric and from the outcome of the Share Exchange has been
secured, no member has agreed to receive a contingency fee if the Share Exchange is completed,and one member is an outside director considered most eligible as a committee member in the
M&A Guidelines, (c) KITA KOUDENSHA has granted the Special Committee authority for it
to substantially influence the negotiation process for transaction terms, (d) based on (c) above, if
it consults with Mitsubishi Electric on the Share Exchange Ratio, KITA KOUDENSHA isrequired to seek the confirmation of the Special Committee prior to or promptly after, which
ensures that the Special Committee receives timely reports on negotiations, is able to give its
opinion at important stages, and can give instructions and make requests to be able tosubstantively influence the negotiation process for transaction terms, (e) the Board of Directorsof KITA KOUDENSHA has decided not to approve the Share Exchange if the Special
Committee decides the terms of the Share Exchange are not suitable, (f) the Board of Directorsof KITA KOUDENSHA has granted the Special Committee the authority to appoint its own
external advisors, etc. as necessary, and the authority to nominate or approve (including
subsequent approval) the external advisors to be appointed by KITA KOUDENSHA, (g) and as
a result of (f) above, the Special Committee decided it was essential to obtain a fairness opinion
to verify the fairness of the Share Exchange Ratio, hired Plutus as a third-party independentvaluation institution, and obtained the share exchange ratio valuation report and the Fairness
Opinion, (h) the Special Committee members provide expertise on the business characteristics
of KITA KOUDENSHA, expertise on the company value appraisal, and legal expertise, andhave sufficient capabilities to examine the Matters for Consultation, and (i) the Special
Committee, on behalf of minority shareholders, obtained disclosure documents planned for the
Share Exchange and material information on anticipated synergies, conducted detailed
confirmation of the Share Exchange through interviews with relevant parties, and carried out its
20examination and made decisions based on these. Further, the Board of Directors of KITA
KOUDENSHA has decided that, for additional resolutions when it passes a resolution to consult
the Special Committee, it will pay the utmost respect to the views of the Special Committee
when it passes a resolution on the Share Exchange.
From the above establishment and operation of the Special Committee, it is found that theSpecial Committee is validly functioning as a measure to secure fairness.
(B) Decision-making process of KITA KOUDENSHA
Among the Directors of KITA KOUDENSHA, Mr. Kensuke Miyaji holds an executive
position at Mitsubishi Electric, and Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita are from
Mitsubishi Electric. Thus, from the standpoint of avoiding any doubt of conflicts of interest, theagenda regarding the Share Exchange that was brought before the Board of Directors’ meetingof KITA KOUDENSHA, was deliberated upon by two directors of KITA KOUDENSHA,
namely, Mr. Naoki Mabuchi and Mr. Masayuki Hirobe, and was unanimously approved.
Thereafter, from the viewpoint of securing a quorum of the Board of Directors’ meeting, of thefive directors, a total of four directors, including Mr. Tatsuo Takahashi and Mr. Yoshiyasu
Matsushita, both of whom only held a position as an officer or employee of Mitsubishi Electricin the past and are considered to have a relatively low conflict of interest, participated anddeliberated in the aforementioned Board of Directors’ meeting, and the four directors
unanimously resolved as aforementioned once more.
Furthermore, among the auditors of KITA KOUDENSHA, from the standpoint of avoiding
any doubt of conflict of interest, Mr. Masaki Hase, who holds an executive position at Mitsubishi
Electric, Mr. Osamu Oketani, who is considered as having an ongoing business relationship with
Mitsubishi Electric, and Mr. Hiroyuki Higuchi, who only had a certain relationship with
Mitsubishi Electric in the past, did not participate in the deliberation and the resolution of theBoard of Directors. Auditor Mr. Hiroyuki Higuchi, who only held a certain relationship with
Mitsubishi Electric in the past and is considered to have a relatively low conflict of interest,
participated in the deliberation conducted by the aforementioned four Directors, and expressed
an opinion that he has no objection.
Given that the M&A Guidelines state that it is sufficient if arrangements are made that officersof Mitsubishi Electric with concurrent roles be excluded provided that an independent special
committee has been established and is validly functioning, the above decision-making processof KITA KOUDENSHA is reasonable and there are no aspects that are unfair in the arrangementof interests.
Further, the Board of Directors of KITA KOUDENSHA is ultimately expected tounanimously pass a resolution. For a Board of Director’ resolution to approve or reject this M&A,
the unanimous approval of all directors and the unanimous opinion of all auditors that they haveno objection is considered one of the circumstances that demonstrates that measures to secure
fairness are validly functioning for such M&A.
From the above, in light of the M&A Guidelines, there are no issues over the fairness of thedecision-making process of KITA KOUDENSHA.
(C) Obtaining expert advice, etc. from external experts
The Special Committee interviewed and otherwise inquired of Hibiya Nakata, AGS and
Plutus regarding their transactional ties with KITA KOUDENSHA and Mitsubishi Electric, andconfirmed that there were no issues with their independence.
KITA KOUDENSHA received advice on decision-making from attorneys at its legal advisor
Hibiya Nakata, and expects to continuously receive independent expert advice from attorneys.
21

The Board of Directors of KITA KOUDENSHA obtained the share exchange ratio valuation
report from an independent third-party valuation institution AGS to ensure the fairness of the
Share Exchange Ratio. As explained below, care was taken to ensure that an arbitrary ratio was
not calculated in the share exchange ratio valuation report, and there are no circumstances thatcast doubt over the fairness of the calculation either. The share exchange ratio valuation report isrecognized as a share exchange ratio valuation report from an independent third-party valuation
institution.
In addition, the Special Committee obtained the share exchange ratio valuation report and the
Fairness Report from an independent third-party valuation institution Plutus to ensure the fairnessof the Share Exchange Ratio. A fairness report differs from a share exchange ratio valuation
report in the sense that the third-party valuation institution is the opinion-forming entity and thesubject of the opinion is the fairness of specific terms agreed between the parties for generalshareholders of a target company, and as it can be direct and highly important reference
information, is considered to have an effective function during the transaction terms formation
process when dealing with the issues of structural conflicts of interest and imbalances in
information.
In addition, under the M&A Guidelines, obtaining a fairness opinion from a third-party
valuation institution with elements such as (a) independence and neutrality, (b) a careful issuanceprocess, (c) high-level expertise and a proven track record, and (d) a good reputation, is positively
evaluated as a measure for securing fairness. The Special Committee confirmed (a) and (b)through an interview with Plutus, and it is objectively clear that Plutus satisfies (c) and (d).
Therefore, the Special Committee can positively evaluate the Fairness Opinion as a measure forsecuring fairness.
(D) Market check
KITA KOUDENSHA carried out a proactive market check by requesting eight prominent
revitalization-type investment funds to consider investing in KITA KOUDENSHA, but none of
the funds offered funds or other support to KITA KOUDENSHA.
In the M&A Guidelines too, if a buyer is not a controlling shareholder, a proactive market
check is often considered to function more effectively than an indirect market check, and if
implemented, this is more positively evaluated as a measure for securing fairness.
In this case, based on the above, the Special Committee is assessed as having been able toconfirm that there was no potential candidate willing to enter into a transaction comparable with
the Share Exchange by carrying out a proactive market check.
(E) Enhancing information provision to minority shareholders and ensuring process transparency
The M&A Guidelines emphasize the informed judgement of minority shareholders, and to
this end, it is recommended that material for determining the fairness, etc. of transaction terms
and conditions for minority shareholders be provided. Specifically, information expected to be
subject to enhanced disclosure include ① information on the special committee, ② informationon the share exchange valuation report, and ③ other information.
First, for the special committee, the M&A Guidelines advise on disclosure of (a) informationon the eligibility of committee members such as independence and expertise, etc., (b)information on the content of the authority granted to the special committee, (c) information on
the background to examination by the special committee and involvement in the negotiation
process, (d) the basis and grounds for decisions of the special committee, the content of reports,
etc., and (e) committee member remuneration structure. Looking at the present case, the jointpress release for the Share Exchange by KITA KOUDENSHA and Mitsubishi Electric (the22“Press Release”) is planned to include all of (a) through (e).
Next, for the share exchange ratio evaluation report, the M&A Guidelines provide as
examples of disclosure, especially for DCF analysis, (i) free cash flow forecasts of KITA
KOUDENSHA that are the basis of its calculations, and whether they assume theimplementation of such M&A, (ii) background to the preparation of financial forecasts that form
the basis of the calculations, (iii) types of discount rates and calculation bases, and (iv) the
approach to the free cash flow forecast period and approach to going concern value such as theenvisaged growth rate after the forecast period , etc.(these are examples, and there is no obligation
imposed to state them all).
The Press Release is planned to state (the fact that the Special Committee has confirmed
reasonableness, and that in the business plan, the comparison versus previous years includes afiscal year in which a significant increase or decrease in profit is expected, and the details thereof)for (ii), the discount ratio for (iii), and the going concern calculation method (that a perpetual
growth rate method was used, and the perpetual growth rate) for (iv). Finally, enhanced
information is also expected to be included in other information in the Press Release.
(F) Elimination of coercion
Shareholders of KITA KOUDENSHA that oppose the Share Exchange or the Share
Exchange Ratio have the right to request purchase of their shares (and the right to file for pricedetermination pursuant to such right) under the Companies Act.
Accordingly, it is acknowledged that measures have been taken to eliminate coercion for the
Share Exchange.
(G) Summary
For the present case, the Special Committee has been established and the Special Committee
has thoroughly exercised the authority granted to it and carried out a detailed examination froman independent viewpoint; the decision-making process of KITA KOUDENSHA has carefully
considered conflicts of interest in light of the guidance in the M&A Guidelines; KITA
KOUDENSHA has obtained the expert advice of a legal advisor; share exchange ratio valuation
reports were obtained from multiple third-party valuation institutions, with KITA
KOUDENSHA obtaining theirs from AGS and the Special Committee obtaining theirs from
Plutus (in particular, a fairness opinion was also obtained from Plutus); a proactive market check,a rarely adopted measure in Japan, was carried out; the Press Release will contain enhanced
information provision for minority shareholders; and also the scheme is found to be not coercive.
Measures to secure fairness have also been carried out in practice, to the letter, through theactivities of the Special Committee.
As shown above, for the Share Exchange, a policy with sufficient measures to ensure fairness
has been adhered to as can be seen from ensuring that the transaction terms formation process
was undertaken in circumstances equivalent to a transaction between independent parties, andensuring minority shareholders have the opportunity to make an appropriate decision based on
sufficient information (M&A Guidelines 2.4). Therefore, it is found that the procedure for the
Share Exchange is fair and that sufficient consideration has been given to the interests of minority
shareholders.
(iii) Adequacy of terms and conditions(A) Examination approach
The adequacy of terms and conditions will be examined in relation to the matter for
consultation “whether the procedures of the Share Exchange are fair, and sufficient consideration
is given to the interests of the minority shareholders”.
23The fairness (adequacy) of terms and conditions for the Share Exchange will be examined inlight of the M&A Guidelines with respect to (a) ensuring that reasonable efforts were made in
the transaction terms and conditions consultation and discussion process with Mitsubishi Electric
to conduct the M&A with as favorable as possible transaction terms and conditions for minority
shareholders while also increasing corporate value, (b) confirming the reasonableness of detailsof share value calculations that are a material basis to determine the adequacy of transaction
conditions, and the financial forecasts and the preconditions, etc. this was based on, and (c) the
adequacy of the purchase method and purchase consideration type, etc., not just the purchaseprice level.
(B) Negotiation process
In the present case, it has been confirmed through the examination of matter for consultation“whether the fairness of the terms and conditions of the Share Exchange (including the exchange
ratio) has been secured” that fairness of procedures serving as elements to infer that “ensuringthat reasonable efforts were made to conduct the M&A with as favorable as possible transaction
terms and conditions for minority shareholders” has been satisfied.
In particular, in the negotiations for the Share Exchange Ratio, the Special Committee
proactively contributed to the negotiations for the Share Exchange Ratio based on the authority
granted to it. Specifically, this was undertaken by the process of KITA KOUDENSHA replying
to Mitsubishi Electric based on the Special Committee’s views on rejection or acceptance of the
Share Exchange Ratio proposal from Mitsubishi Electric and its statement of opinions on
counterproposals. As a result of the Special Committee rejecting the Share Exchange Ratio
proposal from Mitsubishi Electric and the proposed ratio being improved multiple times throughthis process, the Special Committee ultimately agreed to the Share Exchange Ratio of 1:0.260,
which was an increase of at least 80% for minority shareholders over the ratio of 1:0.142 thatwas initially proposed by Mitsubishi Electric, and the Share Exchange Ratio was finalized as aresult.
From the above, it can be evaluated that in the consultation and negotiation process fortransaction terms and conditions with Mitsubishi Electric, it was ensured that reasonable efforts
were made to conduct the M&A with as favorable as possible transaction terms and conditions
for minority shareholders while also increasing corporate value.
(C) Relationship between share value calculation and the Share Exchange Ratio(a) Business plan
In the present case, the business plan prepared by KITA KOUDENSHA for the
purpose of being used as the premise for the share exchange ratio valuation reports
obtained from AGS and Plutus, and the Fairness Opinion from Plutus (the “BusinessPlan”) does not reflect the synergy effects expected to be realized by the implementationof the Share Exchange because it is difficult to estimate specifically the impact onearnings at this time.
Generally in M&A transactions, it is difficult for the side being acquired toquantitatively estimate the synergies to be realized from the M&A transaction, and inmany M&A transactions, the KITA KOUDENSHA business plan that forms the basis
for the share value calculation of the side being acquired would not assume the M&Atransaction would be realized and would be used on a so-called stand-alone-basis. On
this basis, it is not unreasonable in the present case that a stand-alone-basis business planis used as the basis of calculations. Even so, the Business Plan has factored in the tax
burden reduction effect from the reduction of capital and capital reserve with an effective
24

date of March 29, 2024, which is described in 8. “Other Matters” below, has considered
the reduction in borrowing interest rates assuming financing support is received from
Mitsubishi Electric, and includes, to the extent possible, some of the effects expected tobe realized through the Share Exchange.
Therefore, the Business Plan contains more of a synergies base than a simple standalone-basis business plan, taking into consideration the interest of minority shareholders
to the extent possible.
There appears to be no arbitrariness in the formulation of the Business Plan, and thecontents of the Business Plan appears to contain no contradictions or unnatural contents
in relation to past KITA KOUDENSHA group performance.
From the above, as examining the formulation process, formulation method, andformulation contents of the Business Plan shows no arbitrary pressure from Mitsubishi
Electric, the contents of the Business Plan is reasonable.
(b) Method of calculation
An interview was held with AGS on the method of calculation, and it was confirmedthat the selection of the calculation methods by both companies was reasonable.
Valuation methods have various advantages and disadvantages, and they mutuallycomplement each other to cover disadvantages. For example, as to whether using only
the market share price method for a listed company will provide an objective sharevaluation, the preferential use of only the market share price method in all circumstances
may not always be reasonable, and it is beneficial to analyze form various aspects theuse of a calculation method other than the market share price method. Therefore, it isreasonable to use the DCF method adopted by AGS to value the share price of a listedcompany.
The M&A Guidelines also states that the special committee should examinetransaction terms and conditions taking into account the characteristics of calculation
methods used to value share price (M&A Guidelines 3.3.2.1), and based on thiscomment, calculation results are more reliable when multiple calculation methods areused to value share price as in the present case rather than a single calculation method.
Examining the AGS calculation in light of the above, using the market share pricemethod for a certain point in time cannot eliminate idiosyncrasies in the value formation
process, while using the market share price average over a long term cannot accurately
express a share value that takes into consideration the current profit level, etc.; therefore,
AGS has set the calculation base date as January 5, 2024, the day prior to theannouncement of the Transaction, and used the closing share price for the calculationbase date, and the simple average of the last one-month's closing share prices, the simple
average of last three-month’s closing share prices, and the simple average of last sixmonth’s closing share price for periods prior to the calculation base date. As the market
share price method reflects the objective share value of a company, it should be valued
based on the market share price as close as possible to the base date, but as the share priceconstantly changes due to speculation and other factors, it is considered beneficial toincrease the accuracy of the valuation by calculating the average share price over acontinuous set period. For this reason, it is reasonable to carry out a valuation using themarket share price over a set period.
For the DCF method, according to AGS, it calculated the FCF based on the Business
Plan, and then calculated the business value by applying a set discount rate to the FCF.
25

For the calculation to be reasonable, it is important that the Business Plan on which the
FCF calculation is based was appropriately prepared and, as explained above, the Special
Committee confirmed the reasonableness of the Business Plan.
In addition to this, the Special Committee then received a detailed explanation on theexamination process for the calculation in the DCF method (specifically, the view onnecessary operating funds, discount ratio range, interest-bearing debt, differences
between a case assuming financial support from Mitsubishi Electric and a case notassuming such financial support, and risk-free rate transition, etc.) from AGS, andconfirmed there appeared to be no unreasonable points for either method.
Additionally, as with AGS, an interview on the calculation method was also arranged
with Plutus. Specifically, Plutus and AGS use the same calculation method in the market
share price method, meaning the reasonability of this is recognized on the same grounds
as those given above for AGS. The Special Committee received a detailed explanationfrom Plutus on the examination process for the calculation in the DCF method, andconfirmed that there appeared to be no unreasonable points for either method.
From the above, both methods used by AGS and Plutus to calculate share price arereasonable, the results can be trusted and the Special Committee evaluated them as being
reliable.
(c) Results of share value calculation
According to the share exchange ratio valuation report obtained from Plutus, theresults of each calculation method for the share exchange ratio (Mitsubishi Electricshares: KITA KOUDENSHA shares) are as per the table below.
Calculation method (Mitsubishi
Electric, KITA KOUDENSHA)
Market share price method, market
share price method,
Market share price method, DCF
methodCalculation Base date

Share exchange
ratio

January 5, 2024

1:0.644 to 1:0.682

January 5, 2024 for market share price method
December 22, 2023 for DCF method

1:0.000 to 1:0.369

According to the share exchange ratio valuation report obtained from AGS, the results of eachcalculation method for the share exchange ratio (Mitsubishi Electric shares: KITA
KOUDENSHA shares) are as per the table below.
Calculation method (Mitsubishi Electric, KITA
KOUDENSHA)
Market share price method, market share price method,
Market share price method, DCF method

Calculation Base date

Share exchange ratio

January 5, 2024
January 5, 2024

1:0.644 to 1:0.682
1:0.000 to 1:0.529

Looking at the Share Exchange, the Share Exchange Ratio (i) is less than the lower limit of
the exchange ratio when the market share price method is applied to both Mitsubishi Electric and
KITA KOUDENSHA. By contrast, (ii) the Share Exchange Ratio is higher than the medium
value of the calculation results by Plutus and close to the medium value of the calculation resultsby AGS in relation to the exchange ratio when the market share price method is applied to
Mitsubishi Electric and the DCF method is applied to KITA KOUDENSHA.
(D) Examination of discount
The Share Exchange Ratio is less than the lower limit of the exchange ratio when the market
share price method is applied to both Mitsubishi Electric and KITA KOUDENSHA, and to KITA
KOUDENSHA’s shareholders, is a ratio that constitutes a discount on the market share price. The
level of discount comparing the value derived by multiplying the Share Exchange Ratio by theclosing share price of Mitsubishi Electric on the Tokyo Stock Exchange up to January 5, 2024 (the“Calculation Base Date”) against the closing share price of KITA KOUDENSHA on Calculation
26

Base Date and simple average of closing share price of KITA KOUDENSHA over each period
until Calculation Base Date is as per the table below.
Reference value
Closing price on the Calculation Base Date
Simple average of closing share price for last one-month period prior
to the Calculation Base Date
Simple average of closing share price for last three-month periodprior to the Calculation Base Date
Simple average of closing share price for last six-month period prior
to the Calculation Base Date

Discount level-59.60 %-59.96 %-59.90 %-59.63 %When examining whether or not to accept a ratio that is a discount on a market share pricebasis from the viewpoint of KITA KOUDENSHA’s shareholders, assuming the efficiency of themarket, the market share price reflects the value in the market, so is indeed one indicator of a fairvalue for KITA KOUDENSHA, and as the Share Exchange cannot be implemented at a
discount, one option would be to ask Mitsubishi Electric to alter its share exchange ratio.
However, despite KITA KOUDENSHA and the Special Committee repeatedly asking
Mitsubishi Electric to improve the share exchange ratio during the Share Exchange negotiation
process, Mitsubishi Electric has refused to offer a more advantageous ratio to KITA
KOUDENSHA than the Share Exchange Ratio, citing the difficulty of explaining such a moveto Mitsubishi Electric’s shareholders, meaning there is no realistic prospect of any change to theratio.
On the other hand, the results of a market check by KITA KOUDENSHA resulted in no
expression of intent on terms more favorable to the minority shareholders than the Share
Exchange. Further, it is difficult for KITA KOUDENSHA to resolve its state of insolvency on its
own within the short period up to March 31, 2024 (the stock delisting determination base date)or April 30, 2024 (the end date of the debt guarantee provided by Mitsubishi Electric) given its
profitability and liabilities amount, and this is recognized by both KITA KOUDENSHA and
Mitsubishi Electric.
Care must be taken when endorsing a share exchange using a ratio far below the market shareprice in light of the present situation of a certain share value applying to shares currently owned
by minority shareholders. Even so, if the Share Exchange using the Share Exchange Ratio is not
accepted, it is highly likely that KITA KOUDENSHA will become bankrupt relatively soonaround April 2024, and it is envisaged that seeking to avoid this will result in shareholders
suffering a reduction in share value from a greater discount ratio. Given this situation, the levelof discount of the Share Exchange Ratio is considered the option amongst those realisticallyavailable that places the least burden on the minority shareholders.
(E) Adequacy of scheme
Examination on the adequacy of the purchase method and type of purchase consideration, etc.
required by the M&A Guidelines (M&A Guidelines 3.2.2). Looking at the purchaseconsideration first, a share exchange was adopted in the present case, and a tender offer was not
adopted.
A share exchange involves Mitsubishi Electric shares being delivered to minority shareholders
of KITA KOUDENSHA and the minority shareholders of KITA KOUDENSHA owning
Mitsubishi Electric shares, and this means KITA KOUDENSHA can provide the minority
shareholders with the benefit of synergies expected from the implementation of the various
measures envisaged in the Share Exchange, the business development and earnings growth of
the Mitsubishi Electric Group from achieving synergies, and the opportunity to benefit from thisthrough receipt of share price rises and dividends for Mitsubishi Electric shares.
27

Further, for shareholders seeking to cash in, although there may be a slight lag in timing, theliquidity of Mitsubishi Electric shares means it will be easy for them to cash in their shares after
the Share Exchange, effectively ensuring that shareholders seeking to cash in will have thisopportunity.
From the above, it cannot be said that consideration in the form of shares of Mitsubishi Electric
through the Share Exchange rather than cash is unreasonable for the minority shareholders of
KITA KOUDENSHA.
(F) Summary
As stated above, the Share Exchange Ratio is an exchange ratio level which is higher than themedium value of the calculation results by Plutus and close to the medium value of thecalculation results by AGS when the market share price method is applied to Mitsubishi Electricand the DCF method is applied to KITA KOUDENSHA, and although the Share Exchange
Ratio is less than the lower limit of the exchange ratio when the market share price method isapplied to both Mitsubishi Electric and KITA KOUDENSHA, comparing the KITA
KOUDENSHA situation with similar cases, the discount ratio is lower than the discount level inother similar cases, and in the Fairness Opinion, Plutus was of the view that the Share Exchange
Ratio was fair from a financial perspective for the minority shareholders of KITA
KOUDENSHA.
From the above, although approving a share exchange at a ratio significantly lower than themarket share price is seemingly disadvantageous to minority shareholders, given the
disadvantage that the minority shareholders may face in the near future, it is considered the option
amongst those realistically available as of the preparation date of the Report that places the leastburden on the minority shareholders.
Approving a share exchange at a ratio significantly lower than the market share price maylead to the comment from minority shareholders that such an action fails to even meet the notion
highlighted in the M&A Guidelines, indicating the “realizable value without conducting M&A,”
which all shareholders, including minority shareholders, should benefit from proportionate totheir shareholdings. However, rejecting the Share Exchange on the grounds that it is a discounted
proposal would mean a decision has been postponed despite the specific expectation that KITA
KOUDENSHA will be delisted and bankrupt in just two months’ time, and does not ultimately
protect the minority shareholders.
As a result, after gathering information to the extent possible (including the Fairness Opinion
independently obtained by the Special Committee), the Share Exchange Ratio was approved asa measure that protects the maximum interest realistically attainable for the minority shareholders.
Based on a comprehensive consideration of the circumstances provided above, the fairness ofterms and conditions of the Share Exchange (including the exchange ratio) are considered tohave been secured.
(iv) Whether the Share Exchange is not disadvantages to the minority shareholders
The matters requested to be discussed in matters for consultation (i) through (iii) are elements toconsider when examining whether the Share Exchange is not disadvantageous to the minority
shareholders.
It has been explained above that there are considered to be no issues with respect to matters for
consultation (i) through (iii).
From the above, the Special Committee reports that the Share Exchange is not considered disadvantageous
to the minority shareholders.
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② Approval of all Directors and Audit & Supervisory Board members, excluding Directors and Audit &Supervisory Board members who have interests
Among the Directors of KITA KOUDENSHA, Mr. Kensuke Miyaji holds an executive position at
Mitsubishi Electric, and Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita are from Mitsubishi Electric. Thus,
from the standpoint of avoiding any doubt of conflict of interest, the agenda regarding the Share Exchange
which was brought before the Board of Directors’ meeting of KITA KOUDENSHA held on January 9, 2024,
was deliberated by two directors of KITA KOUDENSHA, namely, Mr. Naoki Mabuchi and Mr. Masayuki
Hirobe, and was unanimously approved. Thereafter, from the viewpoint of securing a quorum of the Board of
Directors’ meeting, a total of four directors, including Mr. Tatsuo Takahashi and Mr. Yoshiyasu Matsushita, bothof whom only held a position as an officer or employee of Mitsubishi Electric in the past and are considered tohaving a relatively low conflict of interest, participated and deliberated in the aforementioned Board of Directors’
meeting, and the four Directors unanimously resolved as aforementioned once more. Furthermore, among the
Audit & Supervisory Board members of KITA KOUDENSHA, Mr. Masaki Hase, who holds an executive
position at Mitsubishi Electric, and Mr. Osamu Oketani, who is considered as having an ongoing business
relationship with Mitsubishi Electric, did not participate in the deliberation and the resolution conducted by the
aforementioned two Directors, namely Mr. Naoki Mabuchi and Mr. Masayuki Hirobe, and neither did they
participate in the deliberation conducted by the aforementioned four Directors nor have they expressed any
opinion. Mr. Hiroyuki Higuchi, who only held a certain relationship with Mitsubishi Electric in the past and isconsidered to having a relatively low conflict of interest, participated in the deliberation conducted by the
aforementioned four Directors, and expressed an opinion that he has no objection.
4. Outlines of the Parties to the Share Exchange (as of September 30, 2023)
The wholly owning parent company resulting
from the share exchange(1)Company name
Mitsubishi Electric Corporation(2)
Address
2-7-3, Marunouchi, Chiyoda-ku, Tokyo, Japan(3)

Kei Uruma, President & CEO(4)

Name and title of therepresentative
Business overview

(5)
(6)
(7)
(8)
(9)

CapitalDate of establishment
Number of issued sharesFiscal year end
Number of employees

(10)
(11)

Major clients
Major trading banks

175,820 million yen
January 15, 1921
2,147,201,551 shares
March 31(Consolidated) 145,655 persons(as of March 31, 2023)
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Mitsubishi UFJ Trust and Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
The Norinchukin BankThe Joyo Bank, Ltd.
The Bank of Yokohama, Ltd.
The Hyakujushi Bank, Ltd.
The Juhachi-Shinwa BankThe Gunma Bank, Ltd.
The Hachijuni Bank, Ltd.
The Shizuoka Bank, Ltd.
The Hyakugo Bank, Ltd.

Development, manufacturing and sales of
products and services related to infrastructure,industry and mobility, life and business platform

29

The wholly owned subsidiary resulting
from the share exchange
KITA KOUDENSHA Corporation
23-2-10, Kita 11-jō Nishi, Chuo-ku,
Sapporo, Hokkaido, Japan
Tatsuo Takahashi, President andRepresentative Director
Indoor wiring work, electric power-related
work, FA residential environment
equipment and appliances and industrial
equipment and appliances
841 million yen
January 29, 1951
650,000 shares
March 31221 persons(as of March 31, 2023)
North Pacific Bank, Ltd.
MUFG Bank, Ltd.
The Hokkaido Bank, Ltd.
The Hokuriku Bank, Ltd.
Mizuho Bank, Ltd.
Mitsubishi UFJ Trust and Banking
Corporation

(12)

(13)

(14)

Major shareholders andshareholding percentage

The Master Trust Bank of Japan, Ltd. (account in Mitsubishi Electric Corporation 27.53%
trust)
15.22%KITA KOUDENSHA Employees
SSBTC CLIENT OMNIBUS ACCOUNT
Shareholding Union
4.34%(Standing proxy: The Hongkong and Shanghai
North Pacific Bank, Ltd.
2.30%
Banking Corporation Limited Tokyo Branch)
The Hokkaido Bank, Ltd.
1.90%
5.23%
Kabushiki Kaisha Tsukisamu Seisakusho
Custody Bank of Japan, Ltd. (account in trust)
1.82%
4.74%
Toutec Co., Ltd.
1.43%
Meiji Yasuda Life Insurance Company
RYOKO ELECTRIC FACILITIES
3.90%
Corporation
1.27%
JP MORGAN CHASE BANK 380055
NOHMI BOSAI LTD.
1.14%
(Standing proxy: Settlement & Clearing Services The Master Trust Bank of Japan, Ltd.
Department, Mizuho Bank, Ltd.) 2.22%(retirement benefit trust (The Kodensha
Mitsubishi Electric Group Employees
Co., Ltd. account))
1.11%
Shareholding Union
2.14%
The Hokuriku Bank, Ltd.
1.05%
STATE STREET BANK AND TRUSTCOMPANY 505223 (Standing proxy:
Settlement & Clearing Services Department,
Mizuho Bank, Ltd.)
2.14%
JP MORGAN CHASE BANK 385632(Standing proxy: Settlement & Clearing Services
Department, Mizuho Bank, Ltd.) 1.81%
STATE STREET BANK WEST CLIENTTREATY 505234 (Standing proxy: Settlement& Clearing Services Department, Mizuho Bank,
Ltd.)
1.74%
Nippon Life Insurance Company 1.73%
Relationship between the parties
Capital relationship
Mitsubishi Electric holds 173,600 shares (Ownership Ratio: 27.53%) of KITA KOUDENSHA
Stock.
Personnel relationship
There are two Directors and one Audit & Supervisory Board member of KITA KOUDENSHA
who formally worked for Mitsubishi Electric. Furthermore, the home duty of one Outside
Director and one Outside Audit & Supervisory Board member of KITA KOUDENSHA is an
employee of Mitsubishi Electric.
Business relationship
Mitsubishi Electric places orders for contract work with the engineering work department of
KITA KOUDENSHA, and KITA KOUDENSHA purchases products from the sales
department of Mitsubishi Electric to sell the Mitsubishi Electric products as an agent or dealer of
Mitsubishi Electric.
In addition, Mitsubishi Electric provides debt guarantees for part of KITA KOUDENSHA’sborrowings from financial institutions.
Applicability of affiliated KITA KOUDENSHA is an equity method affiliate of Mitsubishi Electric, and Mitsubishi
persons
Electric and KITA KOUDENSHA are mutually related parties.
Operating results and financial positions for the last three years
Fiscal year
Mitsubishi Electric (consolidated)
KITA KOUDENSHA
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
ended March
ended
ended March
ended
ended
ended
31, 2021
March 31,
31, 2023
March 31,
March 31,
March 31,
2022
2021
2022
2023
Net assets
2,870,611
3,097,397
3,363,224
3,109
208(2,638)
Total assets
4,797,921
5,107,973
5,582,519
10,412
9,186
7,415
Shareholders’ equity per
1,283.88
1,409.08
1,533.98
4,931.23
330.03(4,184.24)
share (yen)
Revenue
4,191,433
4,476,758
5,003,694
10,042
16,764
13,301
Operating profit
230,195
252,051
262,352(864)(2,741)(2,059)Ordinary profit(816)(2,588)(2,064)－－－
Net profit attributable to193,132
203,482
213,908(3,270)(2,787)(2,880)shareholders
Basic earnings per share
90.03
95.41
101.30 (5,184.59)(4,419.92)(4,568.11)
attributable toshareholders (yen)Dividend per share (yen)
36.00
40.00
40.00
150.00－－30

(Note 1) Figures are as of September 30, 2023, excluding those specifically stated.
(Note 2) Unit is in million yen, excluding those specifically stated.
(Note 3) “Net assets” of Mitsubishi Electric represent the total equity of Mitsubishi Electric on a consolidated basis
calculated in accordance with International Financial Reporting Standards (the “IFRS”).
(Note4) “Shareholders’ equity per share,” “net profit attributable to shareholders” and “basic earnings per share
attributable to shareholders” of Mitsubishi Electric respectively represents “equity attributable to owners ofparent per share,” “profit attributable to owners of parent” and “basic earnings per share attributable toowners of parent” of Mitsubishi Electric on a consolidated basis calculated in accordance with IFRS.
(Note 5) Mitsubishi Electric adopts IFRS. “Ordinary profit” is omitted since there is no corresponding item.
(Note 6) For KITA KOUDENSHA, “shareholders’ equity per share” and “net profit attributable to shareholders”
respectively represents the amounts of “net asset value per share” and “net profit or loss.”

5. Status After the Share Exchange
(1)
(2)
(3)
(4)

Company name
Address
Name and title of the representative
Business overview

(5)
(6)
(7)
(8)

CapitalFiscal year end
Net assets
Total assets

Wholly owning parent company resulting from the share exchange
Mitsubishi Electric Corporation
2-7-3, Marunouchi, Chiyoda-ku, Tokyo, JapanKei Uruma, President & CEO
Development, manufacturing and sales of products and services related toinfrastructure, industry and mobility, life and business platform
175,820 million yen
March 31
Has not been finalized at present.
Has not been finalized at present.

6. Overview of the Accounting Process
The Share Exchange will constitute an acquisition under the accounting standards for business combinations basedon IFRS, and goodwill (or negative goodwill) is expected to be generated in Mitsubishi Electric’s consolidated financial
statements. The anticipated amount of goodwill (or negative goodwill) to be generated is expected to be minor, but has
it has not been determined at present.
7. Future Outlook
As a result of the Share Exchange, KITA KOUDENSHA, an equity method affiliate of Mitsubishi Electric, is
expected to become a consolidated subsidiary of Mitsubishi Electric. The impact of the Share Exchange on the
consolidated financial results of Mitsubishi Electric is expected to be minimal at present. In addition, after the effective
date of the Share Exchange, Mitsubishi Electric will provide financial support to KITA KOUDENSHA through groupfinance, and will consider all options that will contribute to the maintenance and enhancement of the corporate value of
KITA KOUDENSHA and Mitsubishi Electric.
8. Other Matters
KITA KOUDENSHA resolved at the Board of Directors’ meeting held today that it would not pay year-end
dividends for the fiscal year ending March 31, 2024, subject to the Share Exchange becoming effective. Please refer to“Notification of Revision to Dividend Forecast (No Dividend) and Abolition of Benefit Program for Shareholders ”
published by KITA KOUDENSHA today for further details. In addition, KITA KOUDENSHA resolved at the Boardof Directors’ meeting held today to dispose of capital surplus that was transferred from other capital surplus that will
increase due to a decrease in the amount of capital and capital reserve and a decrease in said capital and capital reserve
to retained earnings to compensate for a deficit with an effective date of March 29, 2024. Please refer to “Notificationof Reduction of Capital and Capital Reserve and Disposal of Capital Surplus” published by KITA KOUDENSHA
today for further details.
END
31

(Reference) Consolidated earnings forecast for the current fiscal year and consolidated results for the previous fiscal year
Mitsubishi Electric (consolidated earnings forecast for the current fiscal year refers to those announced on October 31, 2023)(in million yen)
Profit before income Profit attributable to
Revenue
Operating profit
taxes
owners of parent
Earnings forecast for thecurrent fiscal year
5,200,000
330,000
355,000
260,000(fiscal year ending
March 31, 2024)
Results for the previous
fiscal year
5,003,694
262,352
292,179
213,908(fiscal year ended
March 31, 2023)(Note 1) Consolidated earnings forecasts for the full fiscal year have been prepared in accordance with IFRS.
KITA KOUDENSHA (earnings forecast for the current fiscal year refers to those announced on November 10, 2023)(in million yen)
Revenue
Earnings forecast for thecurrent fiscal year
(fiscal year ending
March 31, 2024)
Results for the previous
fiscal year
(fiscal year ended
March 31, 2023)

Operating profit

Ordinary profit

Profit attributable toowners of parent

12,800

360

210

670

13,302(2,059)(2,064)(2,881)32

This press release contains information that constitute “forward-looking statements” regarding the conclusion of the Share
Exchange Agreement for Mitsubishi Electric to make KITA KOUDENSHA a wholly owned subsidiary and the results thereof.
Statements herein other than those relating to past or current facts may constitute such forward-looking statements. These forwardlooking statements are based on the assumptions and judgments of the two companies in light of the information currently available
to them, and involve among other things, known and unknown risks, uncertainties and other factors. Due to such factors, it ispossible that actual results may significantly differ from the projections on earnings, business results, financial positions and thelike of both or either one of the two companies (or the group after the Share Exchange) as expressly or implicitly described in any
forward-looking statements. Furthermore, neither of the two companies is obligated to update and disclose the forward-looking
statements after the date of this press release. Investors are advised to refer to further disclosures to be made by the two companies
in Japan or through the filings with the U.S. Securities and Exchange Commission.
Examples of the risks, uncertainties and other factors described above include, but are not limited to, the following:(1) global economic and social conditions, and trends in regulations, tax systems, and other laws and regulations;(2) exchange rate;(3) stock prices;(4) funding environment;(5) product supply and demand conditions and the procurement environment for parts and materials;(6) establishment and licensing of important patents, and patent-related disputes, etc.;(7) litigations and other legal proceedings;(8) problems related to the quality, flaws, defects, etc. of products and services;(9) laws, regulations and issues related to the global environment (climate-related measures, etc.);(10) laws, regulations and issues related to human rights;(11) rapid technological innovation and the development, manufacture and launch timing of products using new technologies;(12) business restructuring;(13) information security;(14) large-scale disasters such as earthquakes, tsunamis, typhoons, volcanic eruptions, and fires;(15) increasing geopolitical risks and social, economic and political turmoil caused by war, conflict, terrorism, etc.;(16) social, economic, and political turmoil caused by epidemics of infectious diseases;(17) important matters concerning Mitsubishi Electric officers, major shareholders, subsidiaries and affiliated companies, etc.;(18) the Share Exchange unable to be implemented or the method, content, etc. of the Share Exchange being changed due tothe absence of performance of necessary procedures including approval by the general meeting of shareholders pertaining
to the Share Exchange Agreement, or other reasons;(19) significant impact on funding plans due to an increase, etc. in the solar power station construction work costs;(20) the status of the procedures for the examination, etc. of the relevant authorities concerning the Share Exchange, or thenecessary approval, etc. of the relevant authorities unable to be obtained; and(21) difficulties in realizing or infeasibility in the synergies or integration effects within the group after the Share Exchange.

33