Tokyo, Japan, March 29, 2001 -- Hitachi, Ltd. (TSE: 6501) today announced that, to render its operations more capable of responding rapidly to market changes and to bolster its competitive strength in the marketplace, it had decided to divest its Industrial Machinery Systems Division, the core of the company's industrial machinery business, and merge it with Hitachi Techno Engineering Co., Ltd., which is at the core of the company's after-sales services for industrial machinery, and also plays a central role in the production and sale of production facilities and machinery for the manufacture of electronic equipment. The corporate name of the merged company will become Hitachi Industries Co., Ltd. (provisional name) as of October 1, 2001.
  The new company will be headquartered in Adachi Ward, Tokyo, with its principal production facilities being the Tsuchiura Production Headquarters of the Industrial Machinery Systems Division and the Ryuugasaki work belonging to Hitachi Techno Engineering.
  The provisions of the corporate split system as stipulated in the revisions to Japan's Commercial Code, which go into effect on April 1, 2000, will apply to this merger.

The industrial machinery market is characterized by the need for swift operational behavior and speedy decision making as competition intensifies still further in global markets and customer needs change, with increasing demand for replacement facilities and machinery, as well as for enhanced efficiency. Until now in the Hitachi Group, Hitachi itself has been responsible for the development and production of compressors and fans, pumps, refrigerating machinery and transmissions and Hitachi Techno Engineering for after-sales service and maintenance.
  In response to the above-mentioned changes in the market, with this merger Hitachi will unify its industrial systems business end-to-end, from product development to after-sales service, and aims to speed up decision making, develop products and systems more closely tailored to market needs as well as enhance the efficiency of its operations, both domestically and internationally. The new company will improve the competitiveness of its products, including their price competitiveness, in the global market, and endeavor to bolster its product-related service operations.

The bringing together of Hitachi's accumulated technological and solutions provision capabilities in fields such as fluid machinery and refrigerant systems with the after-sales service know-how of Hitachi Techno Engineering will ensure that the new company can deliver products, systems and solutions that match market needs more. In addition to its traditional industrial machinery business, the new company will move aggressively to develop new service businesses ahead of the competition in such areas as product leasing, utility service and comprehensive facilities and machinery maintenance contracts.
  The new company aims to strengthen Hitachi Techno Engineering's environmental engineering business and electronic equipment manufacturing machinery business, which has until now been engaged in the production of high-density substrate packages and LCD panels. The new company will treat them as strategic businesses and pursue synergies that arise from the merger, through the effective utilization of the management resources of both companies.

The provisions of the corporate split system relating to the absorption of a divested company, which go into effect on April 1, 2001, apply to this merger. Hitachi will transfer the operations of its Industrial Machinery Systems Division to Hitachi Techno Engineering, and, in return, Hitachi Techno Engineering will issue 1.55 million shares of common stock with a par value of 500 yen, each which will be allotted to Hitachi. The number of new stocks to be issued was decided with reference to the results of an assessment carried out by an independent third party so that Hitachi could assess fairly and objectively the value of the business which it was divesting.

Outline of New Company

Company Name:	Hitachi Industries Co., Ltd. (provisional)
Main Business:	1. Manufacture, installation, and maintenance of industrial machinery systems and after-sales service for them 2. Production and sale of electronic equipment manufacturing machinery, other engineering, etc.
Capital:	5 billion yen(100% owned by Hitachi)
President:	Hidenao Mizuta (provisional)
Date of transaction	October 1, 2001
Locations:	Nakagawa 4-13-17, Adachi-ku, Tokyo
Employees:	Approximately 2,100 (est. as of October 2001)
Sales:	90 billion yen(est. for fiscal 2001)