Acquisition

Acquisition 

    LONDON-(BUSINESS WIRE)-June 3, 2002-

     Hitachi and IBM Reach Definitive Agreement On Hard Disk Drive
                              Operations

Hitachi, Ltd. (NYSE: HIT, TSE: 6501) and IBM today announced that they
have reached a definitive agreement to transfer their hard disk drive
(HDD) operations to a new standalone company under majority Hitachi
ownership. These plans were originally announced in April as part of a
larger storage relationship between the two companies.

Hitachi has agreed to purchase the majority of IBM's HDD- related
assets for $2.05 billion, which includes the transfer of IBM's
HDD-related intellectual property portfolio to the new organization.
Hitachi will initially own 70 percent of this new company and will
make a series of fixed payments to IBM before assuming full ownership
after three years.

The new company will be based in San Jose, Calif., and managed by an
independent team comprising executives from Hitachi and IBM's existing
HDD operations. The chief executive officer will be Dr. Jun Naruse,
Corporate Managing Director of Hitachi, Ltd., formerly CEO of Hitachi
Data Systems, and the chief operating officer will be Dr. Douglas
Grose, currently general manager of IBM's Storage Technology Division.
Hitachi will select the new company's board of directors, and IBM will
not be involved in its operations.

The new organization will bring together approximately 24,000
employees, about 18,000 from IBM and 6,000 from Hitachi, with major
manufacturing operations at 11 locations around the world. Certain IBM
HDD operations are not included in the deal.

Hitachi estimates the new company may deliver approximately $5 billion
in sales in fiscal year 2003, and will target annual sales of $7
billion by fiscal year 2006. IBM and Hitachi have each agreed to
multi-year HDD supply commitments from the new company.

Pending the completion of applicable regulatory processes, the deal is
expected to close before year-end.

"The purchase of IBM's HDD business brings us the valuable business
assets required for long-term success in this highly competitive
market," said Masaaki Hayashi, senior vice president and director,
Hitachi, Ltd. "By combining HDD research, development, manufacturing,
marketing and sales into an independently operating company, we are
creating a new industry leader fully focused on the $20 billion
disk-drive market. This new company is uniquely positioned for success
by its broad customer portfolio, its unparalleled technological
capabilities and its strong position in key growth markets, including
storage- intensive consumer electronics."

"Customers will benefit from the increased efficiencies of the new
company and its ability to quickly bring advanced technologies and
products to market," said John E. Kelly III, senior vice president and
general manager of IBM's Technology Group. "The singular focus on the
HDD business will provide employees with the dedicated resources
necessary to fully apply their industry-leading expertise to
developing new HDD technologies and market opportunities."

In addition, IBM and Hitachi are proceeding with separate negotiations
related to a planned multi-year alliance to research and develop new
open standards-based technologies specific to next-generation storage
networks, systems and solutions. The companies have created a process
to review joint projects designed to improve interoperability, reduce
complexity and improve cost of ownership for storage systems
customers. Additional information on this alliance will be announced
when negotiations are finalized.

Cautionary Statement

Statements in this document contain forward-looking information which
reflect Hitachi's current views with respect to certain future events
and financial performance. Actual results may differ materially from
this forecast. Further, this forward- looking information is based
upon assumptions of future events which may not prove to be accurate.
Factors that could cause actual results to differ materially from the
forecast include, but are not limited to: rapid technological change;
uncertainty as to the new company's ability to continue to develop
products and to market products that incorporate new technology on a
timely and cost-effective basis and achieve market acceptance;
fluctuations in product demand and industry capacity; increasing
commoditization of information technology products, and intensifying
price competition in the market for such products; fluctuations in
rates of exchange for the U.S. dollar and other currencies in which
the new company makes significant sales or in which the new company's
assets and liabilities are denominated; uncertainty as to the new
company's access to liquidity or long- term financing, particularly in
the context of restrictions on availability of credit prevailing in
U.S.; uncertainty as to the new company's ability to implement
measures to reduce the potential negative impact of fluctuations in
product demand and/or exchange rates; general economic conditions and
the regulatory and trade environment of the new company's major
markets, continued stagnation or deterioration of the Japanese or
other East Asian economies, or direct or indirect restriction by other
nations of imports; uncertainty as to the new company's access to, or
protection for, certain intellectual property rights; the new
company's dependence on alliances with other corporations in designing
or developing certain products; and the market prices of equity
securities in Japan, declines in which may result in write-downs of
equity securities Hitachi holds.

   Short Name: Acquisition
   Category Code: ACQ
   Sequence Number: 00000232
   Time of Receipt (offset from UTC): 20020604T004123+0100