Fujitsu to Transfer Hard Disk Drive Business to Toshiba

Toshiba Corporation (TOKYO:6502) and Fujitsu Limited (TOKYO:6702) announced that they have concluded a definitive agreement on the transfer of Fujitsu’s hard disk drive (HDD) business to Toshiba. The agreement follows a memorandum of understanding (MOU) signed by the companies on February 17, 2009. The companies will now seek to complete the business transfer by the target date of July 1st, 2009.

1. Details of Transfer
Fujitsu’s HDD related business and functions will be transferred to a new company, Toshiba Storage Device Corporation (TSDC). Fujitsu’s HDD manufacturing subsidiaries, Fujitsu Computer Products Corporation of the Philippines (FCPP) and Fujitsu (Thailand) Co., Ltd. (FTC), will become Toshiba Storage Device (Philippines), Inc. (TSDP) and Toshiba Storage Device (Thailand) Co, Ltd.(TSDT). The HDD related business of Yamagata Fujitsu Limited will become Toshiba Storage Device Yamagata Corporation (TSDY). Upon completion of the transfer, these three companies will become wholly owned subsidiaries of TSDC.

After the transfer, Toshiba will handle the sales and marketing of all HDD products, including Fujitsu’s, and entrust all aspects of design, R&D, quality assurance, production technology, and technology support to TSDC. Fujitsu’s sales and marketing offices outside of Japan, with the exception of some offices in certain regions, will be transferred to Toshiba’s overseas business operations. Toshiba will acquire a stake of 80.1 percent in TSDC by the target date of July 1st, 2009 and make it a Toshiba Group subsidiary. Fujitsu will continue to hold a stake of 19.9 percent until the end of December 2010. After that, Fujitsu will transfer its stake to Toshiba, at which point TSDC will become a wholly owned subsidiary of Toshiba.

2. Value of Transfer
The value of the transfer is expected to be approximately 30 billion yen. Toshiba’s 80.1% ownership of TSDC is expected to be valued at approximately 24 billion yen (at the time of the July close), and the remaining 19.9% ownership holding at approximately 6 billion yen (to be held until the end of December 2010). However, these amounts are subject to change upon completion of the transfer. Upon transfer of the HDD business on July 1st, TSDC will assume net debt of approximately 6 billion yen. This figure has been excluded from the indicated 30 billion yen value of the transfer.

3. Number of Employees
The transfer of the HDD business will see approximately 800 employees in Japan and approximately 7,000 employees worldwide transfer to Toshiba Group from Fujitsu Group. Toshiba will reinforce its position as a leading vendor of small form factor HDDs by entering into the enterprise HDD business for server and data storage system applications, where Fujitsu is currently a leader. This move will also allow Toshiba to further enlarge its leading solid state drive (SSD) business by developing SSD products for servers and enterprise storage systems, thus maximizing the synergy with Fujitsu’s enterprise HDD technology. Toshiba aims to strengthen its overall competitiveness and market standing by offering total storage solutions and services that meet a broad range of customer needs.

About Toshiba
Toshiba is a world leader and innovator in pioneering high technology, a diversified manufacturer and marketer of advanced electronic and electrical products spanning information & communications equipment and systems; digital consumer products; electronic devices and components; power systems, including nuclear energy; industrial and social infrastructure systems; and home appliances. Toshiba was founded in 1875, and today operates a global network of more than 740 companies, with 198,000 employees worldwide.

About Fujitsu
Fujitsu is a leading provider of IT-based business solutions for the global marketplace. With approximately 160,000 employees supporting customers in 70 countries, Fujitsu combines a worldwide corps of systems and services experts with highly reliable computing and communications products and advanced microelectronics to deliver added value to customers.