Paloma Rheem Holdings Co., Ltd. (Paloma Rheem), the Japan-headquartered leading air conditioning and water heating (Air and Water) company, has announced it intends to make a tender offer (the "Tender Offer") to acquire all outstanding common shares of Fujitsu General Limited (TSE: 6755, "Fujitsu General"), a Japanese company specializing in air conditioning solutions for residential, commercial, and industrial uses and related IT systems and devices, with the intention to make Fujitsu General a wholly-owned subsidiary.

The Paloma Rheem Group has key subsidiaries including Paloma Co, Ltd. (“Paloma”), a leading manufacturer in Japan’s gas water heater and gas stove market, and Rheem Manufacturing Company (“Rheem”), which operates in the water heating and air conditioning sectors across North America, South America, Europe, and Australasia.

In 2016, Fujitsu General and Rheem established a collaborative partnership focused on mutual product supply and joint development in the North American air conditioning market and the two companies have been working closely ever since.

Together with Fujitsu General, the Paloma Rheem Group will be able to further enhance the combined growth potential by leveraging the complementary strengths of each company. The combined companies will be able to expand competitive solutions in the air conditioning sector across global markets, while also enhancing customer responsiveness through an integrated sales and service network. Paloma Rheem envisions the collaboration as a step toward reinforcing its leadership in the global air conditioning industry, advancing the integration of air conditioning and water heating technologies, and driving further innovation to support global decarbonization efforts.

In connection with the Tender Offer, Paloma Rheem has entered into a Master Transaction Agreement with Fujitsu Limited (“Fujitsu”), the largest shareholder of Fujitsu General. Pursuant to this agreement, Fujitsu agreed that it will not tender its 44.02% holding of Fujitsu General's common shares to the Tender Offer, but will instead sell them to Fujitsu General in response to a share repurchase (“Share Repurchase”), which will be conducted by it after the Tender Offer and the subsequent squeeze-out procedures have been completed. Consequently, Fujitsu General will become a wholly owned subsidiary of Paloma Rheem.

The Tender Offer price of JPY2,808 per share (“Tender Offer Price”) and the Share Repurchase price of JPY1,995 per share (“Repurchase Price”) have been determined based on negotiations between Paloma Rheem, Fujitsu General and Fujitsu. The Tender Offer Price and the Repurchase Price are calculated so that (i) the amount calculated as the after-tax earnings of Fujitsu if the Share Repurchase were to be conducted at the Repurchase Price is equivalent to (ii) the amount of earnings that Fujitsu would receive if it were to tender its shares in the Tender Offer at the Tender Offer Price.

The proposed tender offer price represents::

• A premium of 20.67% to Fujitsu General’s closing stock price on December 30, 2024
• A premium of 27.29% to Fujitsu General’s one-month average closing price on December 30, 2024
• A premium of 35.33% to Fujitsu General’s three-month average closing price on December 30, 2024
• A premium of 39.15% to Fujitsu General’s six-month average closing price on December 30, 2024

Fujitsu General’s Board of Directors has unanimously endorsed the Tender Offer and recommended that its shareholders tender their shares. Subject to the fulfillment of necessary conditions, including regulatory approvals from domestic and international competition authorities, the Tender Offer is expected to commence in July, 2025. For further details, please refer to the disclosure document titled " Announcement Regarding Planned Commencement of Tender Offer for the Shares of Fujitsu General Limited (Securities Code: 6755)."

Paloma Rheem's Representative Director and President, Hiroaki Kobayashi commented, "we are very pleased to announce that Paloma Rheem and Fujitsu General have agreed to collaborate fully together while respecting Fujitsu General's independence. With Fujitsu General, the Paloma Rheem Group will accelerate innovation towards realizing a decarbonized society in both the Air & Water businesses and strive even further to meet a broader range of customer needs."

For this transaction, Paloma Rheem has engaged BofA Securities Japan Co., Ltd. as its financial advisor and Mori Hamada & Matsumoto LPC as its legal advisor.