Aspiring to Become an Industry-Leading Component and Solution Provider in Power Distribution and Industrial Control Equipment

Fuji Electric Holdings Co., Ltd., the parent company of Fuji Electric FA Components & Systems, headquartered in Shinagawa-ku, Tokyo and headed by President Haruo Ito, announced that it signed a shareholder agreement today with Schneider Electric Industries SAS, (“Schneider Electric”), headquartered in Rueil-Malmaison, France and headed by CEO Jean-Pascal Tricoire, regarding the establishment of a joint venture in the field of power distribution and industrial control equipment.

The joint venture will be established on October 1, 2008 under the name of Fuji Electric FA Components & Systems Co., Ltd., with its headquarters in Chuo-ku, Tokyo, headed by President Naoto Higo (“New FCS”). The current Fuji Electric FA Components & Systems Co., Ltd., headquartered in Chuo-ku, Tokyo and headed by President Naoto Higo (“FCS”), and Schneider Electric Japan Ltd., a Japanese affiliate of Schneider Electric, headquartered in Taito-ku, Tokyo and headed by CEO Pierre Leveque, (“SEJ”), will integrate most of their business operations to form the new company as a consolidated subsidiary within the Fuji Electric Group. Fuji Electric Group will have approx. a 63% stake in the joint venture and Schneider Electric Japan Holdings Ltd., SEJ’s holding company, headquartered in Taito-ku, Tokyo and headed by CEO Pierre Leveque, will have approx. a 37% stake.

The goal of New FCS is to become an industry-leading component and solution provider in power distribution and industrial control equipment. To this end, New FCS will expand business through a shared strategy between FCS and Schneider Electric, and jointly supplying and developing products. It will also utilize the both companies’ existing global networks and combine high quality products and services with advanced consulting capability.

New FCS will target an increase in net sales to ¥100.0 billion by fiscal 2012 from the initial level of ¥70.0 billion.

I. Background of the Joint Venture

FCS’s core business is power distribution and industrial control equipment. It has established a position as a leading company in the Japanese market and also earned a strong reputation in other Asian markets.

Schneider Electric, SEJ’s parent company, is one of the world leading corporate groups that provides the power distribution and industrial control equipment in compliance with major international standards. Specifically, it has a strong presence in Europe, Asia and North America.

The worldwide market for power distribution and industrial control equipment is becoming increasingly competitive due to the development and increased recognition of IEC standards in Europe and intensifying price competition brought about by the rise of emerging markets, among other factors. At the same time, the sector is under pressure to respond to new challenges that include environmental compliance, greater energy efficiency and tighter safety requirements.

Against this backdrop, FCS and Schneider Electric have developed a collaborative relationship through mutually supplying products since November 2003 and establishing a joint venture for breaker manufacturing in China in March 2004. The needs of FCS who desired to expand market share in Asia as its medium-term goal, matched those of the Schneider Electric who was seeking to increase its presence in the Japanese market. As such, both companies reached an agreement in March 2008 regarding establishment of a joint venture in the area of power distribution and industrial control equipment. Based on this agreement, FCS and SEJ will merge their relevant operations and establish the new joint venture on October 1, 2008.

II. Goal of the Joint Venture

New FCS will strengthen its component supply capability by combining FCS’s power distribution and industrial control equipment with Schneider Electric’s high-value-added products, including safety and energy efficient devices, and leveraging the expertise of both companies in new product development.

With the extended product lineup, New FCS will also expand solution business by appropriately responding to customer needs through a collective pool of consulting experience that both companies have acquired in their operating markets in Japan, the United States and Europe.
It will also seek to become an industry-leading component and solution provider that is capable of providing value-added solutions backed by a global product lineup.

Courtesy of Fuji Electric