THK Acquire All of the Shares of Rhythm Corporation

THK CO., LTD. announced the company acquired 100% of the shares, etc. of Rhythm Corporation (Headquarters: Hamamatsu City, Shizuoka Prefecture; President and CEO: Mr. Katsuo Kitamura; hereinafter, “Rhythm”) from The Carlyle Group (Headquarters: Washington D.C., USA; hereinafter, “Carlyle”) and other minority equity holders, etc. and make Rhythm a subsidiary of the Company, and announces as follows:

Background of the Acquisition of the Shares, etc.

The Company, the world’s leading manufacturer of LM Guide, is also the world’s leading manufacturer of link balls which are made by utilizing die casting technology and are essential parts for stable driving of automobiles. The Company has leading capability in developing these products among its competitors, and has built a global sales and production network, and has a remarkable reputation from customers of all over the world. In its long-term business objectives targeting FY 2010, the Company has been pursuing to expand its business, centering on global expansion and entry into new fields. In connection with entry into new fields, the Company intends to expand application of its product lines, including link balls, to automotive manufacturers. The Company regards Rhythm as the best partner for further development of these business areas and has come to this resolution through discussions with Carlyle, the major shareholder of Rhythm.

Purpose of the Acquisition of the Shares, etc.

Rhythm is promoting global expansion to realize its goal to become the world’s No.1 joint parts manufacturer, and the Company considers that by sharing its global business resources, efficiency in investment and resources will be improved and the feasibility of achieving this goal will be greatly increased. Furthermore, integrating Rhythm’s cold forging pressure and metal mold technology with the Company’s casting and resin molding technology will enable the development of competitive new products. The purpose of this acquisition is to increase the corporate value of both companies by improving operational efficiency with cooperation between the Company and Rhythm which has a rich history of high achievement as an automotive parts manufacturer, and by expanding new business areas through expansion of new applications and innovations.

3. Future Strategy

The Company will strive to further increase the corporate value of both companies by pursuing maximum synergies with Rhythm while respecting the continuation of the employment of the officers and employees of Rhythm and the Rhythm brand and independence of Rhythm’s management. Specific business plans, etc. will be announced when determined.

4. Overview of the Transferring Subsidiary (Rhythm Corporation)
(1)Corporate Name: Rhythm Corporation
(2)Representative: President and CEO:
Katsuo Kitamura
(3)Location of the 283-3, Gokyu-cho, Hamamatsu, Shizuoka, 430-0831 Japan
Headquarters:
(4)Date of Establishment: December 20, 1961
(5)Main Business: Development, Designing, Manufacturing and Sale of Steering Parts, Suspension Parts, Brake Parts and Engine and Transmission Related Parts, etc.
(6)Fiscal Year: Ends on March 31
(7)Number of Employees: 1,016(on a consolidated basis) (as of March 31, 2007)
(8)Main Office: Headquarters, Gokyu Plant and Inasa Plant
(9)Affiliated Companies: Rhythm Kyushu Co., Ltd., Rhythm L Co., Ltd.,
L Group Companies, Rhythm North America Co., Ltd (RNA-TN, RNA-DT/USA),
Rhythm Guangzhou Corporation (RGC/China)
10)Amount of Capital: Three Billion Ninety Two Million Four Hundred Twenty Thousand Yen

5. Main Seller of the Shares

(1)Seller: The Carlyle Group
(2)Representative: Daniel A.D’Aniello
(3)Headquarters: Washington D.C.
(4)Main Business: Investment
(5)Relationship with the Company: None

6. The Number of Shares, etc. to be Acquired, Purchase Price and Status of Ownership Percentage of Shares, etc. before and after the Acquisition
(1)The Number of Shares, etc. owned before the Acquisition:
0 shares (Ownership Percentage: 0􀋋)
(2)The Number of Shares, etc. to be Acquired:
128,549 Shares (Purchase Price: Approximately 12.6 Billion Yen)
(3)The Number of Shares, etc. owned after the Acquisition:
128,549 shares (Ownership Percentage: 100%)
Note:
1) The Number of Shares, etc. includes potential shares (5,052 shares) arising in connection with share acquisition rights.
2) The Company plans to concurrently acquire shares, etc. (8,749 shares including potential shares arising in connection with share acquisition rights) held by equity holders other than Carlyle.

7. Schedule

April 23, 2007: Resolution of the Meeting of the Board of the Directors and Execution of the Share Purchase Agreement
The share transfer is planned to be executed at the end of May 2007.

8. Future Forecast
The impact on business results in connection with the acquisition will be announced when confirmed.

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