© Hitachi, Ltd. 2017. All rights reserved.

Hitachi Enters into Agreement to Acquire

Air Compressor Manufacturer Sullair

Making a Full-scale Entry into the North America Compressor Segment

Masakazu Aoki Executive Vice President and Executive Officer

Hitachi, Ltd.

1. Hitachi’s Industrial Business

1

Power/EnergyField

Industry &Distribution/

WaterField

UrbanField

Financial/Government

& Public/Healthcare

Field

Realize customer’s growth

・Industrial Products BU・Hitachi Industrial Equipment Systems

Add value by products

Front

ProductsIndustrial Products

Business

Expand industrial business by collaboration of Front and Product

Service & Platform BUPlatform

© Hitachi, Ltd. 2017. All rights reserved.

2. Hitachi’s Industrial Products

ＯＴControl・Operate

Provide innovation to customers and society by OT × IT × Product & System

Product & SystemHardware・Materials・ＥＰＣ・ＳＩ

ＩＴVisualize・Analyze・Predict

OT: Operational Technology 2

Motor

Transformer

InverterＵＰＳ・ＰＣＳ

Marking & Coding

CentrifugalCompressor

Pump

Industrial Products

M2M Device

60.00Hz

60.00Hz

60.00Hz

OUTPUT FQ

OUTPUT FQ

OUTPUT FQ

◀ ▶

Local Command source Remote

60.00Hz 〇10：08

◀

Controller

Air Compressor

© Hitachi, Ltd. 2017. All rights reserved. 3

Stationary

PortableMainly used Construction・Mining・O&G industries

Air compressor is a utility that is essential to the industry regarding power sources for pneumatic drive machinery

3. Overview of Air Compressor

1. Oil flooded: uses oil to cool the inside of the compressor[Used in various industries]

2. Oil free: high-tech product that does not use cooling oil [Essential specification in industries requiring a level of air cleanliness (e.g., Food, Beverage, Pharmaceuticals)]

Used in various manufacturing and inspection devices

in the manufacturing line

Electrical component packaging

Auto assembly

Machine tools

Bottling filling

machines

Chemical plant

© Hitachi, Ltd. 2017. All rights reserved.

4. Purpose and Target

4

Target of Acquisition

Purpose of Acquisition

Full scale entry into highly desirable North American compressor segment

Acquiring Sullair’s customer and distributor networks and expand product line-up

Global expansion of industrial digital solution business utilizing above networks

Affiliates of Carlyle

Affiliates of BC Partners

Accudyne Industries(Holding Co.)

Sullair / Air Compressor Business

Milton Roy / Precision Pumps

Sundyne / Process Pumps and Gas Compressors

Approx.49%

Scope of Target

Total Acquisition Price：135.7B Yen (1.245B $)※

Acquire Accudyne’s subsidiaries and certain related assets that is related to

air compressor business under “Sullair” brand

Approx.49%

※Subject to customary adjustment

© Hitachi, Ltd. 2017. All rights reserved.

5. Outline of Sullair

5

Item Details

Establishment 1965 Headquarters Chicago/US

Representative President John (Jack) Carlson No. of Employees Approx. 890

Business activities Manufacture/sale/service of stationary and portable air compressors

Manufacturing site Michigan city, US / Shenzhen, Suzhou, China

No. of distributors Approx. 200 companies in North America, approx. 50 companies in China

Revenue FY2016 (Actual) 43.2 billion yen FY2017 (Forecast) 45.8 billion yen

Adjusted EBITDA FY2016 (Actual) 7.0 billion yen FY2017 (Forecast) 8.9 billion yen

General Industry

Energy & Mining

Construction

Infrastructure

Chemical

Other

Sales by Region Sales by ProductsSales by Customer

North AmericaChina

Australia

Central South

America

EMEA Other

After Service

Stationary

Portable

OEM

Others

Need to decide FX rate (currently 109yen)

© Hitachi, Ltd. 2017. All rights reserved.

6. Complementary Relationship with Sullair

6

Capture various customers by utilizing both Sullair’s and Hitachi’s strengths

Sullair’s strengths Hitachi’s strengths

Region North America, China Japan, Asia

Industry Construction, Mining, O&G Electronics, Auto, Food, Life Science

ProductLarge-scale stationary and potable air

compressor

Oil-free air compressor,

and Inverter air compressor

■ Region/Industry/Product

Product SullairSales

Ratio

(FY15)

Stationary

Compressor 36%

Portable

Compressor20%

After Market

& Other44%

Product HitachiSales

Ratio

(FY15)

Stationary

Compressor 59%

Portable

Compressor - 0%

After Market

& Other41%

Sullair Product Hitachi Product

© Hitachi, Ltd. 2017. All rights reserved.

7. Sullair’s Strong Sales Network in North America

7

Acquire Sullair’s Distribution Network and Customer Base

Distribution Network of Sullair in North America

Sullair・Distributor：Approx. 200・End User： Approx. 4,000

Hitachi・Distributor：Approx. 50・End User： Approx. 200

© Hitachi, Ltd. 2017. All rights reserved.

8. Utilization of Sullair’s Customer Base

8

Air compressors

Life

ScienceFood &

Beverage

Electric

ComponentAuto

Constructi

on/MiningO&G Retail

Providing Hitachi’s connected products for Digital Industrial Solutions

Marking & Coding Products

Enhance Hitachi’s products lineup, Distributing products

Promoting Digital Solutions from downstream products

Digital Industrial Solutions

IoT Platform 「Lumada」

Sullair’s customer in North America：4,000

© Hitachi, Ltd. 2017. All rights reserved.

Continuous ink jet printer

CO2 Laser Marker

Packaging Film

PET

【Samples】

CanEgg

Vision System

9. Promotion for Marking & Coding Equipment

9

Provide Marking & Coding equipment to Sullair’s customers, especially global key accounts in Food & Beverage industry etc.

Expand Solution Business : Coding, Traceability, etc.

© Hitachi, Ltd. 2017. All rights reserved.

Real Time Operation Monitoring via

・Flood Pressure Sensor

・Temperature Sensor

・Operation Time

・Predictive diagnosis: Planning Component replacement

・Field Management: Sending Service Staff

Optimization After Service

Cloud Database

■Picture Sensing and Movement Analytics

10

10. Expanding Digital Solutions Business Globally

Propose Digital Solutions to Sullair’s customer base

■Solution Example

Improve Product Quality Assurance Rate

SenseThinkAct

Picture, etc.Movement・Operational

Analytics

ErrorNotification

■ Remote Monitoring with Big Data analysis

Omnidirectionalcamera

PTZcamera(Internal)

Fixed speed/ High speed camera

Distance camera

Manager

PartsSupplier

Worker

© Hitachi, Ltd. 2017. All rights reserved. 11

11. Conclusion

・Acquire Sullair’s Distribution Network and Customer Base

・Accelerate North American Business

・Enlarge Air Compressor Business

(Sales target: beyond JPY100Billion)

・Expand to Marking & Coding Business

・Provide Digital Industrial Solution Business Globally

Expansion

of Hitachi’s

industrial

business