The transactions pursuant to the joint share transfer described in this press release involve securities of a Japanese company. The joint
share transfer 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 theissuer 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 aJapanese company or its officers or directors in a Japanese court for violations of the U.S. securities laws. It may be difficult to compel aJapanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchasesecurities otherwise than under the joint share transfer, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between thistranslated document and the Japanese original, the original shall prevail. NPR and Riken assume no responsibility for this translation orfor direct, indirect or any other forms of damages arising from the translation.

July 27, 2022
Company:

Nippon Piston Ring Co., Ltd.

Representative: President and Representative Director
Teruo Takahashi(Code: 6461 TSE Prime Market)
Contact:

Operating Officer, General Manager
Corporate Planning Department
Eiichi Chiyo(TEL. 048-856-5014)

Company:

Riken Corporation

Representative: President, CEO & COO
Yasunori Maekawa(Code: 6462 TSE Prime Market)
Contact:

General Manager, Corporate Planning Div.,
Corporate Management Head OfficeTenya Mitsuboshi(TEL. 03-3230-3911)

Conclusion of a Memorandum of Understanding concerning Consolidation
through the establishment of a joint holding company (stock transfer)
between Nippon Piston Ring Co., Ltd. and Riken Corporation
Nippon Piston Ring Co., Ltd. (NPR) and Riken Corporation (Riken) have reached a basic agreement to establish a joint
holding company formed by means of mutual stock transfer and to consolidate the two companies on equal terms (hereinafter
the “Consolidation”). Today we are pleased to inform you that the Boards of Directors of the two companies have resolved
to conclude a Memorandum of Understanding concerning Consolidation and entered into the agreement as follows.

11. Purpose of the Consolidation, etc.
(1) Background of the Consolidation
Since its establishment in 1934, NPR has contributed to the development of motorization worldwide through theprovision of high-performance, high-quality piston rings, valve seat inserts, camshafts, and other parts primarily for use
in internal combustion engines, and manufactured using its own original techniques and technologies.
Riken was established in 1927 in order to commercialize the research of RIKEN (the Institute of Physical andChemical Research), and has contributed to the development of the global automotive industry for over 90 years throughits continued study of surface treatment, processing, and materials technologies for piston rings (the company’s primary
focus) and other parts.
The automotive industry is undergoing a remarkable transformation that is said to occur only once every 100 years,
and the market for engine parts is becoming clearly stricter. However, although environmental issues are attracting
attention around the world, for the time being, the internal combustion engine will remain the primary form of power
train and both companies believe that it is our mission to develop eco-friendly engine parts. At the same time, we believe
it is necessary to think outside of the realm of internal combustion related parts and increase investment in SDGs, ESG,
decarbonization, and other new areas in line with global trends.
As the first step in our development for the future, the two companies have realized that we need to utilize the brands
we have nurtured over the years and harness our integrated governance to promote management resource allocation, tocultivate future core businesses, and more. This will make it possible to achieve major synergy as we accelerate ourefforts to achieve decarbonization, and thereby allow us to evolve into a completely new business entity capable ofachieving sustainable growth and increasing corporate value. Having recognized this shared potential, the twocompanies are convinced that the Consolidation is the best choice for the shareholders, employees, and all otherstakeholders connected to both companies, and today we have concluded an agreement to start the discussions andinvestigations needed to achieve the Consolidation.
(2) Purpose of the Consolidation and expected synergistic effects
The Consolidation will allow the two companies to focus on increasing the profitability of our existing core businessof automobile engine parts by integrating and effectively utilizing the management resources of both companies toachieve the desired synergistic effects as detailed below. In addition, the two companies will work to accelerate efforts
in the fields of marine vessels, hydrogen, new energy projects, thermal engineering, electromagnetic compatibility
projects, metal powder injection molded parts, medical equipment, axial gap motors, and other fields that will form our
future core businesses and create new value. The goal is to improve corporate value and evolve into a complete newcompany that will lead the world in the manufacture of functional parts and key components that harness the techniques
and technologies developed by both companies.
(i)

Strengthening existing businesses by reallocating management resources, and quickly developing the productsthat will form the core of future businessCompanies in the automotive industry have been forced to improve their technologies and implement
organizational reforms to better respond to new developments in fields such as CASE and MaaS. Both companies
must increase collaborations with research institutions and other external organizations while nurturing thetechnological capabilities needed to set us apart from other companies and secure the resources required to innovate.
Through the Consolidation, the two companies aim to achieve the following.
Strengthen cash flow creation within existing businesses
Both companies will adjust capital investment, promote wide-range product optimization, and improvecentralization and effectiveness of development targets in order to work towards improving business efficiency
and deepening development capabilities. Through these efforts, the companies will be able to meet the expectations2

of customers for high-quality, low-cost products, and thereby improve profitability and increase cash flow.
Future core businesses and the creation of new products
Increasing business efficiency in the above-mentioned areas will make it possible to integrate resources dedicatedto development of products for internal combustion engines, and allow for a bold shift towards future corebusinesses and the creation of new products. The two companies will accelerate investment in effective new
product development, promote reciprocal integration of technologies and corporate bases, and accelerate thedevelopment of new products that offer high added value and cost competitiveness.
(ii) Strengthening the ability to respond to an increasingly decarbonizing society
The move towards the decarbonization of society is a global trend, and both companies must respond to theenvironmental problems faced by the entire world. The two companies will bring to the table products, production
technologies, and resources cultivated through years of development, and by doing so, they will be able tocontribute to the creation of a sustainable society by developing environmental technologies that accelerate productdecarbonization and by actively working to reduce carbon dioxide emissions throughout the entire supply chain.
(iii) Reducing costs through shared use of infrastructure and other resources
The companies aim to improve operational efficiency and cost reductions to secure a competitive advantage by:
improving productivity throughout the entire supply chain, from purchasing and production to sales; reducing
external outflow costs by standardizing internal manufacturing processes in both companies; reducing procurement
costs through joint purchasing; and increasing efficiency by eliminating duplicated systems and indirect operations.
(iv) Reducing manufacturing costs by improving production efficiency through shared product integration, andachieving a timely and appropriate fulfillment of supply responsibilities
By harnessing the technologies and infrastructures of both companies, the two companies will promote theunconventional mutual utilization of factories and optimization of production hubs, with the goal of significantly
improving productivity, expanding the capability of offering high-quality products, and reducing fixed costs.
Additionally, by establishing a sustainable production system, we will be able to fulfill our responsibility to supply
products to our customers in a timely and appropriate manner.
(v) Upgrading interpersonal abilities through the exchange of personnel and technologies
The two companies will harness the strengths of both to provide the opportunity for new ideas to be born in various
areas and positions through the active exchange of knowledge and technologies by officers and employees of bothcompanies. The companies will strive to build a workplace environment that increases employee engagement
more than ever before.
2. Summary of the Consolidation(1) Method of the Consolidation
Assuming that the Consolidation is approved at each company’s General Meeting of Shareholders and the necessary
approval of relevant authorities is received, the two companies plan to engage in a joint share transfer (hereinafter the“Share Transfer”) to establish a joint holding company that will wholly and completely own both companies, with theConsolidation then bringing the two companies together as a single, wholly-owned subsidiary of the joint holding
company.
(2) Schedule for the Consolidation
Board of Directors Meeting Resolution

July 27, 2022 (Today)

Conclusion of basic agreement regarding the Consolidation

July 27, 2022 (Today)

3Conclusion of final contract regarding the Consolidation
Extraordinary General Shareholders’ Meeting

November, 2022 (Scheduled)
January, 2023 (Scheduled)(Resolution to approve the Share Transfer)
Date of delisting from Tokyo Stock Exchange (TSE)March 30, 2023 (Scheduled)

Effective date of the Share Transfer

April 3, 2023 (Scheduled)(Note) The above schedule is tentative and may change due to various reasons during the Consolidation process, but
only after consultation and agreement by both companies. In addition, an announcement will be promptly made if
over the course of moving forward with the procedures and discussions pertaining to the Consolidation there arise
reasons to delay the Consolidation process, e.g. during notifications to relevant authorities such as the Japan Fair
Trade Commission, or if there arise any other difficulties that could require changes to how the Consolidation takes
place or cancellation of the Consolidation itself.
(3) Matters concerning the listing of the joint holding company
An application for initial listing (technical listing) on the TSE Prime Market is planned in order to offer shares in the
newly-established joint holding company. That listing is scheduled to take place on April 3, 2023, the date of registration
for the establishment of the joint holding company.
In addition, the Share Transfer will result in the two companies becoming a single wholly-owned subsidiary of thejoint holding company, and therefore the companies are scheduled to be delisted on March 30, 2023, due to the listingof the joint holding company. However, if the listing of shares in the joint holding company is approved, shareholdersof both companies will continue to be able to trade the shares of the joint holding company (delivered at the time of the
Share Transfer) on the TSE.
NPR’s common shares are currently listed on the Prime Market of the Tokyo Stock Exchange, but NPR does notmeet the criteria for “market capitalization of tradable shares” of the criteria for maintaining listing on the Prime Market,
and therefore, on November 29, 2021, it submitted a “Plan for Compliance with the Criteria for Maintaining Listing in
the New Market Classification” (hereinafter “the Plan”) to the Tokyo Stock Exchange, which was approved by the
Tokyo Stock Exchange as a transitional measure. The “total market capitalization of tradable shares” of the joint holding
company scheduled for initial listing is assumed to meet the above criteria at this time, and accordingly, the Company
will reserve this plan subject to approval by the Tokyo Stock Exchange of the above application for a technical listing,while continuing its efforts to enhance its corporate value in accordance with the intent of the plan.
(4) Stock transfer ratio
The stock transfer ratio will be determined by the time the final contract for the Consolidation is concluded inaccordance with the results of the scheduled due diligence, share transfer ratio calculation conducted by third-party
institutions, etc.
(5) Consolidation Preparation Committee
The two companies will establish a Consolidation Preparation Committee which will focus on discussions related to
the Consolidation to facilitate the smooth conclusion of the Consolidation.
(6) Future integration of the two companies after becoming a single wholly-owned subsidiary of the joint holding company
through the Share Transfer
Operations at the two companies will continue after they become a wholly-owned subsidiary of the joint holding
company, with rational organizational restructuring to be undertaken within 3 years of the establishment of the joint
holding company, and discussions regarding those efforts to be conducted by the Consolidation Preparation Committee.
However, the timing and details of any such organizational restructuring are subject to change due to future changes in4the business environment.
3. Overview of the joint holding company(1) Trade name
NPR-RIKEN CORPORATION(2) Organization structure and officers(i) Structure
The company will be governed through an audit and supervisory committee structure.
(ii) Representative directors
There will be two Representative Directors: one holding the position of CEO and the other COO. The Presidentof Riken will assume the position of CEO, and the President of NPR will assume the position of COO.
(iii) Other directors
The composition of the remaining seats on the Board of Directors will be organized as follows. There will be 13
directors, including representative and outside directors. At least one-third of those are planned to be outside
directors, with the appropriate overall composition determined through the use of skill matrices and other corporate
governance measures to ensure increased corporate value.
Managing directors (4)Two directors from each company will be appointed.

Audit and supervisory

One director from the audit and supervisory committee at each company will becommittee members (2)appointed.

Outside directors (5)The independence of outside directors at each company and their understandingof current operations are considered important. When the company isestablished, Riken will recommend three candidates for the position of outside
director, and NPR will recommend two candidates. Of those, two candidates
from Riken and one candidate from NPR will be appointed to serve on the audit
and supervisory committee.

4. Overview of the companies involved in the Share Transfer (information valid as of March 31, 2022)
(1)
(2)
(3)

Trade name
Address

Nippon Piston Ring Co., Ltd.
5-12-10, Honmachi-Higashi, Chuoku, Saitama City, Saitama
Teruo Takahashi

representative

President and Representative Director
Manufacture and sale of automobile-

Description of business

8-1, Sanbancho, Chiyoda-ku, Tokyo
Yasunori Maekawa

Name and title of(4)

Riken Corporation

related parts, marine engine parts andother products

President/CEO/COO

Manufacture and sale of automobile
parts, other industrial parts, etc.

(5)

Capital9,839 million yen

8,573 million yen(6)

Established

December 20, 1934

December 1, 1949

(7)

Number of shares issued

8,374,157

10,648,466(8)Fiscal term ends

March 31

March 31

(9)

Number of employees

608

1,234

(3,027)(4,332)(including affiliatedcompanies)

5

(10)

Main customer(11)

Main banks(12)

Major shareholders andequity share

Toyota Motor Corporation

Honda Motor Co., Ltd.

Shinsei Bank, Limited

Mizuho Bank, Ltd.

MUFG Bank, Ltd.

MUFG Bank, Ltd.

Sumitomo Mitsui Banking

Daishi Hokuetsu Bank, Ltd.

Corporation

The Musashino Bank, Ltd.

Saitama Resona Bank, Limited

Sumitomo Mitsui Banking Corporation

Development Bank of Japan Inc.

Sumitomo Mitsui Trust Bank, Limited- The Master Trust Bank of Japan, Ltd.

- The Master Trust Bank of Japan, Ltd.

(Trust Account) 11.25%(Trust Account) 11.63%- Custody Bank of Japan, Ltd. (Trust- Mizuho Bank, Ltd. 4.86%

Account) 4.15%- Custody Bank of Japan, Ltd. (Trust- The Nomura Trust and Banking Co.,

Account) 4.54%

Ltd. (Nippon Piston Ring Employee- Nippon Life Insurance Company

Shareholding Association Trust

4.29%

Account) 3.39%- Daishi Hokuetsu Bank, Ltd. 3.20%- Tokio Marine & Nichido Fire

- Sumitomo Mitsui Trust Bank, Limited

Insurance Co., Ltd. 3.34%

2.62%- Asahi Mutual Life Insurance- MUFG Bank, Ltd. 2.55%

Company 3.24%- Riken Kashiwazaki Shareholding- Nippon Piston Ring Employee

Association 2.22%

Shareholding Association 3.13%- Sompo Japan Insurance Inc. 1.90%- Nippon Piston Ring Business- DFA International Small Cap Value

Partners Shareholding Association

Portfolio 1.82%

2.10%- Shinsei Bank, Limited 2.06%- Interactive Brokers LLC 2.06%- Mitsubishi UFJ Trust and Banking
Corporation 1.85%(13)

Relationship between thecompanies
Capital ties

Not applicable

Personal relationships

Not applicable
NPR has sold products to Riken and Riken has sold products to NPR. In all cases,

Business relationshipthe objective was to ensure smooth delivery of products to final customers, and allsuch sales were carried out at the request of said final customers.

Applicability to relatedparties(14)

Not applicable

Business performance and financial status for previous 3 years. (Units: 1 million yen unless otherwise
specified.)

NPR
Year
Fiscal year

ended
March
2020

Riken

Year ended

Year ended

Year ended

Year ended

Year ended

March

March

March

March

March

2021

2022

2020

2021

2022

Consolidated net assets

31,28930,26735,00675,90580,14287,082

Consolidated total assets

63,60861,80967,375

107,920

110,544

115,7073,686.97

3,740.29

4,287.90

7,059.13

7,507.92

8,109.98

Consolidated net assets per share

6

(yen)
Consolidated sales

54,88145,27650,78384,53069,72078,372

Consolidated operating profit

1,829

(165)

2,627

5,234

2,728

5,122

Consolidated ordinary profit

1,776

355

3,058

5,964

4,323

6,529

490

(813)

1,928

3,517

1,880

4,329

59.96

(102.56)

250.40355.26

189.05433.47

75.00

20.00

70.00

140.0090.00

120.00Net fiscal year income belonging
to shareholders of parent company
Consolidated net profit per share(yen)
Dividend per share (yen)7