Announcement on conclusion of basic agreement on capital and business alliance between Kobe Steel and Miura involving Miura's acquisition of Kobelco Compressors' shares to form a joint venture

Kobe Steel, Ltd. announces that Kobe Steel and Miura Co., Ltd. have resolved to conclude a basic agreement to proceed with detailed discussions for the capital and business alliance concerning the standard compressor business^*) at the respective Board of Directors meetings held today.

Kobe Steel has been conducting the standard compressor business in cooperation with its wholly owned subsidiary Kobelco Compressors Corporation. Kobe Steel’s standard compressor business has a high market share in Japan and the Asian region and has provided a stable supply of high-quality compressors to various industries.

Miura has a high reputation in Japan as a forerunner of energy-saving and eco-friendly boilers. Miura holds the largest market share in the industrial once-through boiler market.

Since 2008, Kobe Steel and Miura have jointly developed steam-driven compressors that use steam as a power source to produce compressed air, and since then the companies have developed steam generators and waste heat recovery compressors. By utilizing the exhaust heat from air compressors in boilers, the companies have significantly reduced the energy consumption required for boiler operation.

The collaboration of Kobe Steel and Miura will enable further energy saving and reductions of CO₂ emissions through supplying utility equipment that combines technologies developed in the fields of steam and air. For example, the running costs can be reduced by 36% and CO₂ emissions by 36% in main products. The companies will also work toward the realization of one-stop services utilizing their sales and after-sales service networks.

To date, Kobe Steel and Miura have been collaborating in business without a capital relationship, but the companies came to the recognition that strengthening the partnership would leverage the synergies as described above and enhance the competitiveness of both companies, which commonly handle the utilities of air and steam, as they make more effective use of each other's resources through the alliance described in Section 2 (Outline of the Capital and Business Alliance) below. Based on this belief, Kobe Steel and Miura have decided today to conclude the basic agreement.

Kobe Steel and Miura believe that the realization of this capital and business alliance will be the beginning for Kobelco Compressors to further grow as the leading standard compressor manufacturer in Asia.

The Kobe Steel Group, also known as the KOBELCO Group, taking advantage of its diverse businesses, aims to provide efficient utilities that reduce CO₂ emissions and meet customer needs in Japan and overseas, mainly for the markets in China and Southeast Asia. It is the mission of the Group to contribute to creating a green society through these technologies toward achieving carbon neutrality by 2050 as declared by the Japanese government. The KOBELCO Group has always strived to and will continue to provide solutions to the needs of society by making the best use of the talents of our employees and our technologies with a view to realizing a world in which people, now and in the future, can fulfill their hopes and dreams while enjoying safe, secure, and prosperous lives.

The Mura Group has been developing businesses in the fields of heat, water treatment and environmental science with steam boilers as the core products, and has been providing solutions and products to improve the efficiency of energy systems throughout the plant through the effective use of heat and water, including the effective use of unused heat. In the future, the Miura Group will continue to create innovative products and systems that will reduce environmental impact in response to global issues related to reduction of greenhouse gas emissions, energy conservation, and other areas. The Miura Group will continue to contribute to creating a society that is environmentally friendly and ways of living that are clean and comfortable through our work in the field of the energy, water, and environment, as stated in its corporate philosophy, with the aim of becoming the best partner not only for customers in Japan but also for customers around the world.

Currently, Kobe Steel undertakes the manufacture of standard compressors while Kobelco Compressors carries out the sale of standard compressors. Kobe Steel has decided to implement an absorption-type company split to succeed the manufacture business of standard compressors to Kobelco Compressors and integrate the standard compressor business into the company. For details of the company split, please refer to the Announcement on Company Split (Simplified Absorption-Type Split) and Succession of Standard Compressor Business to Wholly Owned Subsidiary, announced by Kobe Steel and Miura today.

In this framework, it is assumed that Miura will acquire 49% of the shares of Kobelco Compressors, and Kobelco Compressors will thereby become a joint venture of Kobe Steel and Miura.

Through integrating the standard compressor business into Kobelco Compressors and converting the company into a joint venture, Kobe Steel and Miura aim to work together to implement strategies centered on the standard compressor business and achieve synergies as described in Section 1 (Reason for the Capital and Business Alliance) above.

If there are any matters to be disclosed regarding the impact on the future business results of Kobe Steel and Miura in the course of the discussions on the capital and business alliance and other matters, we will make announcement promptly.