HITACHI TRAN : Notice Regarding Plan to Commence Tender Offer for Alps Logistics Co., Ltd. (Stock Code 9055)

	May 9, 2024
To whom it may concern:
C o m p a n y n a m e	LDEC, Ltd.
Representative name	Kazuhiro Nishikawa, Representative Director

Notice Regarding Plan to Commence Tender Offer for Alps Logistics Co., Ltd. (Stock Code 9055)

LDEC, Ltd. ("Tender Offeror") gives notice as follows that on May 9, 2024 ("Announcement Date"), Tender Offeror decided to acquire the share certificates etc. of Alps Logistics Co., Ltd. (stock code 9055, Tokyo Stock Exchange ("TSE") Prime Market; "Target") through a tender offer ("Tender Offer") pursuant to the Financial Instruments and Exchange Act (Law No. 25 of 1948, as amended; "FIEA").

Because a certain amount of time will be required for the procedures and requirements under both domestic and foreign (Japan, China, EU, South Korea, and Vietnam) competition law, it is planned that the Tender Offer will commence promptly after such procedures and requirements are completed and other conditions precedent (Note 1) ("Conditions Precedent to Tender Offer") are satisfied (or waived by the Tender Offeror) . As of the Announcement Date, in light of its discussions with local counsel regarding such procedures, Tender Offeror aims to commence the Tender Offer around mid-August 2024, but because it is difficult to predict precisely the time that will be required for procedures etc. especially with foreign competition authorities, we will give notice of the details of the Tender Offer schedule as soon as they are decided. Also, if the expected Tender Offer commencement timing is changed, we will promptly give notice to that effect.

Note 1: [1] That the Special Committee established by Target's Board of Directors in regard to the Tender Offer (defined below in "1. Purpose of Purchase etc.", "(3) Measures for Ensuring the Fairness of the Tender Offer Price, Measures for Avoiding Conflicts of Interest, and Other Measures for Ensuring the Fairness of the Tender Offer", "[2] Establishment of an Independent Special Committee at Target; Procuring a Report from the Special Committee"; hereinafter the same) has issued a report that is affirmative regarding Target's Board of Directors expressing an opinion in favor of the Transaction (defined below in "1. Purpose of Purchase etc.", "(1) Tender Offer Overview"; hereinafter the same) (including a report that is affirmative regarding the Matters for Consultation (defined below in "1. Purpose of Purchase etc.", "(3) Measures for Ensuring the Fairness of the Tender Offer Price, Measures for Avoiding Conflicts of Interest, and Other Measures for Ensuring the Fairness of the Tender Offer", "[2] Establishment of an Independent Special Committee at Target; Procuring a Report from the Special Committee")), and such report has not changed (excluding a case where the changed report is affirmative regarding Target's Board of Directors expressing an opinion in favor of the Transaction and a case of update of information naturally required in conjunction with the passage of the period from the Transaction Master Agreement (defined below in "1. Purpose of Purchase etc.", "(1) Tender Offer Overview"; hereinafter the same) execution date until the Tender Offer commencement date and other minor changes) or withdrawn;

1. that Target's Board of Directors has passed a resolution for a statement of opinion in favor of the Transaction, such statement has been publicly announced in accordance with laws and regulations, and such statement of opinion has not been changed or withdrawn;
2. that no judgment of a juridical or administrative organ has been made restricting or prohibiting any portion of the Transaction, and there is no specific likelihood of any such judgment;
3. that all duties that Alps Alpine Co., Ltd. ("Alps Alpine"; Tender Offeror and Alps Alpine are referred to collectively as "Tender Offer Related Persons"), the largest shareholder of Target, is to perform or comply with by the Tender Offer commencement date (Note 2) pursuant to the Transaction Master Agreement have been performed or complied with in all material respects;
4. that the representations and warranties of Alps Alpine (Note 3) under the Transaction Master
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Agreement are true and correct in all material respects;

1. that confirmation is obtained from Target that no material facts (meaning the facts specified in FIEA, Article 166, Paragraph 2) exist relating to the business etc. of Target that have not been publicly announced (in the meaning of FIEA, Article 166, Paragraph 4);
2. that in regard to all required permits and approvals (Note 4) clearance has been obtained (Note 5);
3. that Tender Offeror has received the Agreement (defined below in "1. Purpose of Purchase etc.", "(6) Matters Relating to Important Agreements Relating to the Tender Offer", "[2] The Agreement"; hereinafter the same) from Target and the Agreement has not been withdrawn prior to the Tender Offer commencement date and is lawfully and validly surviving;
4. that all duties that Target is to perform or comply with by the Tender Offer commencement date (Note 6) pursuant to the Agreement have been performed or complied with in all material respects;
5. that the representations and warranties of Target pursuant to the Agreement (Note 7) are true and correct in all material respects; and
6. that the Capital and Business Tie-Up Agreement (defined below in "1. Purpose of Purchase etc.", "(6) Matters Relating to Important Agreements Relating to the Tender Offer", "[3] The Capital and Business Tie-Up Agreement"; hereinafter the same) is validly surviving.
   For details regarding the Transaction Master Agreement, the Agreement, and the Capital and Business

Tie-Up Agreement, see "1. Purpose of Purchase etc.", "(6) Matters Relating to Important Agreements Relating to the Tender Offer".

Note 2: For the particulars of the duties of Alps Alpine under the Transaction Master Agreement, see below, "1. Purpose of Purchase etc.", "(6) Matters Relating to Important Agreements Relating to the Tender Offer", "[1] Transaction Master Agreement".

Note 3: For the particulars of the representations and warranties of Alps Alpine under the Transaction Master Agreement, see below, "1. Purpose of Purchase etc.", "(6) Matters Relating to Important Agreements Relating to the Tender Offer", "[1] Transaction Master Agreement".

Note 4: This refers to notifications under the competition laws of Japan, China, EU, South Korea, and Vietnam.

Note 5: Taking the advice of local counsel, Tender Offeror will carry out the procedures and requirements required under the competition laws of Japan, China, EU, South Korea, and Vietnam towards obtaining all clearances for the necessary permits and approvals. Tender Offeror plans, from the Announcement Date onwards, to engage in discussions with domestic and foreign competition authorities so that these procedures and requirements are completed.

Note 6: For the particulars of Target's duties under the Agreement, see below, "1. Purpose of Purchase etc.", "(6) Matters Relating to Important Agreements Relating to the Tender Offer", "[2] The Agreement".

Note 7: For the particulars of the representations and warranties of Target under the Agreement, see below, "1. Purpose of Purchase etc.", "(6) Matters Relating to Important Agreements Relating to the Tender Offer", "[2] The Agreement".

1. Purpose of Purchase etc.

1. Tender Offer Overview

Tender Offeror is a kabushiki kaisha established on April 30, 2024, having as its primary business the acquisition and possession of the share certificates etc. of Target and, following the completion of the Tender Offer, the management of Target's business activities; as of the Announcement Date, LOGISTEED, Ltd. ("LOGISTEED") owns all of its issued shares. Further, as of the Announcement Date, all of the issued shares of LOGISTEED are owned by LOGISTEED Holdings, Ltd. ("LOGISTEED Holdings"), a kabushiki kaisha in which HTSK Investment L.P. ("KKR Fund"), a limited partnership established on April 25, 2022 based on the laws of the province of Ontario, Canada, that is indirectly owned and operated by Kohlberg Kravis Roberts & Co. L.P., an investment advisory firm established under the laws of the state of Delaware, USA (including its affiliated companies and related funds, "KKR") and Hitachi, Ltd. ("Hitachi") hold 90% and 10% of the voting rights, respectively. As of the Announcement

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Date, none of Tender Offeror, LOGISTEED, LOGISTEED Holdings or KKR Fund hold any ordinary shares of Target ("Target Shares").

LOGISTEED's predecessor, Hitachi Transport System, Ltd. ("HTS"), was established in February 1950 as Hitachi's logistics subsidiary in charge of transport operations and was entrusted with all of Hitachi's in-plant transport and shipping operations and the transport of ultra-heavy cargo in Japan and overseas, expanding its business along the way. In January 1989 it was listed on the TSE's second section, in September 1990 it was moved to the TSE's first section, and then, following the TSE reorganization, it was moved to the TSE Prime Market in April 2022. Then, through the tender offer by HTSK Co., Ltd., a wholly-owned subsidiary of HTSK Holdings Co., Ltd. (the current LOGISTEED Holdings) (Note 1), all outstanding shares of which were owned by KKR Fund, for the ordinary shares of HTS and the subsequent related procedures, HTS was delisted in February 2023 and on April 1, 2023, its trade name was changed to LOGISTEED, Ltd. Subsequently, on March 1, 2024, HTS implemented an absorption-type company split, with HTS as the splitting company and its parent company LOGISTEED Group, Ltd. (the former HTSK Co., Ltd.) as the succeeding company, under which all of its businesses were the subject of succession; LOGISTEED Group, Ltd. then changed its trade name to LOGISTEED, Ltd. and has continued these businesses.

Under the corporate philosophy of "delivering high-quality services that will help make the world a better place for people and nature for generations to come", LOGISTEED has a corporate vision of being the solutions provider in the increasingly sophisticated, diverse, and wide-ranging global supply chain that is most widely selected by customers, shareholders, employees, and all other stakeholders, and through assorted "collaborative innovations", will engage in the resolution of issues and the creation of "value", with the goal of achieving sustainable growth.

In addition, LOGISTEED and its 81 consolidated subsidiaries and 13 equity-method affiliates (as of March 31, 2024) constituting the LOGISTEED Group ("LOGISTEED Group"), under the brand slogan of "Taking on the Future" and the business concept of LOGISTEED (Note 2) and using the elements of success of the "LOGISTEED way", namely, "the pursuit of safety, quality and productivity", will create not only economic value, but social value and environmental value as well. Looking towards the medium-to-long term future vision of "LOGISTEED 2030", LOGISTEED will aim to become "the most preferred global supply chain solutions provider".

Note 1: As mentioned above, as of the Announcement Date, HTSK Holdings Co., Ltd. (the current LOGISTEED Holdings) is a kabushiki kaisha in which KKR Fund and Hitachi own 90% and 10% of the voting rights, respectively.

Note 2: The name "LOGISTEED" is a portmanteau of "Logistics" and "Exceed", "Proceed", "Succeed" and "Speed", and contains the meaning of going beyond logistics to lead businesses to new territories.

Tender Offeror has now decided, subject to satisfaction (or waiver by Tender Offeror) of the Conditions Precedent to Tender Offer, to implement the Tender Offer for all Target Shares (excluding Non-Tendered Shares etc. (defined below; hereinafter the same) and treasury shares held by Target; "Shares Subject to Tender Offer") and Share Options ("Share Options" and the names of each Share Option series are defined in "2. Overview of Purchase etc.", "(3) Purchase etc. Price", "[2] Share Options"; hereinafter the same) as part of the series of transactions ("Transaction") for the purpose of making Tender Offeror the sole shareholder of Target and delisting Target Shares from the TSE Prime Market.

The Transaction is constituted by [1] the Tender Offer by Tender Offeror; [2] If the Tender Offer is successful, the Absorption-type Demerger (defined below), which Alps Alpine's wholly owned subsidiary Alpine Electronics Inc. ("Alpine") will carry out by the effective date of the Share Consolidation (defined below in "(4) Post-Tender Offer Reorganization Policy (Matters Relating to So-CalledTwo-Step Acquisition)"; hereinafter the same; [3] if the Tender Offeror is unable to acquire all the Shares Subject to Tender Offer through the Tender Offer, the Share Consolidation procedures that Target will carry out in order to make Tender Offeror and Alps Alpine the sole shareholders of Target ("Squeeze-out Procedures"); [4] the (i) provision of capital by Tender Offeror to Target (it is planned that the provision of capital will be made by a private placement of shares having Tender Offeror as the

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subscriber or a loan to Target, or both; "Provision of Capital") and (ii) the reduction of the amount of capital and capital reserves of Target based on the Companies Act (Law No. 86 of 2005, as amended; "Companies Act"), Article 447, Paragraph 1 and Article 448, Paragraph 1 ("Capital Reduction etc."; Note 5), with (i) and (ii) being carried out in order to secure the distributable amount necessary to implement the acquisition of Non-Tendered Shares etc. (Note 3) that Alps Alpine holds as of the effective date of the Share Consolidation (number of shares owned: 17,318,800 shares, ownership percentage (Note 4): 48.74%), which Target will implement subject to the Share Consolidation coming into effect ("Share Buyback"; given that it is expected that the provisions for non-inclusion of deemed dividends in taxable profits under the Corporate Tax Act will be applied to Alps Alpine, the Share Buyback will be implemented in order to achieve both maximization of the tender offer price and fairness among shareholders by increasing distributions to Target's minority shareholders and holders of the Share Options ("Share Option Holders") to ensure that the after-tax net amount in the case where Alps Alpine participated in the Tender Offer and the after-tax net amount that would be obtained from complying with the Share Buyback would be equivalent); and [5] the Share Buyback, with the intention that ultimately Tender Offeror will make Target its wholly owned subsidiary. Further, prior to implementation of the Provision of Capital, Alps Alpine plans to obtain 20% of the voting rights ("Reinvestment") in Tender Offeror by a method to be separately agreed upon with the Tender Offeror (Note 6). For details regarding the Share Consolidation, see below, "(4) Post-Tender Offer Reorganization Policy (Matters Relating to Two-Step Acquisition)".

Note 3: "Non-Tendered Shares etc." means, collectively, the Target Shares that Alps Alpine owns as of the Announcement Date (number of shares owned: 16,526,800 shares, ownership percentage: 46.51%; "Non- Tendered Shares (Alps Alpine)") and the Target shares that Alpine owns as of the Announcement Date (number of shares owned: 792,000 shares, ownership percentage: 2.23%; "Non-Tendered Shares (Alpine)") (number of shares collectively owned: (17,318,800 shares, collective ownership percentage: 48.74%).

Note 4: "Ownership percentage" means the percentage (rounded off to the second decimal place) of the number of shares obtained (35,530,472 shares) ("Total Number of Shares on a Fully Diluted Basis") by adding (i) the total number of issued shares of Target as of March 31, 2024, as set forth in the "March 2024 Term Consolidated Earnings Report (based on Japanese GAAP)", which Target issued on the Announcement Date ("Target March 2024 Term Earnings Report") (35,488,600 shares) and (ii) the sum of the 11,800 Target Shares that are the object of the 59 Series 1 Share Options, the 8,200 Target Shares that are the object of the 41 Series 2 Share Options, the 19,800 Target Shares that are the object of the 198 Series 3 Share Options, the 16,900 Target Shares that are the object of the 169 Series 4 Share Options, and the 13,100 Target Shares that are the object of the 131 Series 5 Share Options, all of which have been reported by Target as being exercisable as of the Announcement Date, and subtracting from such sum (35,558,400 shares) (iii) the number of treasury shares that Target holds as of March 31, 2024, as set forth in the Target March 2024 Term Earnings Report (27,928 shares). The same applies below in the calculation of ownership percentages.

Note 5: Target plans to implement the Capital Reduction etc. only if the distributable amount necessary to implement the Share Buyback is not secured. Further, in the event of the Capital Reduction etc., Target plans to transfer all or some of the reduced capital and capital reserves to other capital surplus or other retained earnings.

Note 6: As of the Announcement Date, it is expected that Tender Offeror will assume a 30,702,767,280 yen portion of the payment obligations that Target will owe Alps Alpine for the Share Buyback, resulting in Alps Alpine gaining the right to demand such payment from Tender Offeror; Alps Alpine will reinvest in Tender Offeror through a contribution in kind (such right to demand payment will extinguish through merger pursuant to the Civil Code (Law No. 89 of 1896, as amended), Article 520). [1] It is planned that the valuation of Target Shares, which will be the basis for deciding the pay-in price per one ordinary share of Tender Offeror in the Reinvestment, will be same 5,774 yen as the price for purchases etc. in the Tender Offer ("Tender Offer Price") (however, it is planned that there will be formal adjustments to the price

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based on the consolidation ratio for Target Shares in the share consolidation procedures that will take place as part of the Squeeze-out Procedures) and therefore the pay-in price per one ordinary share of Tender Offeror by Alps Alpine in the Reinvestment is thought to have no substantially advantageous conditions than the Tender Offer Price, and [2] the Reinvestment will be implemented for the purpose of having Alps Alpine, which is a major shareholder of Target, continue to be involved in Target following the delisting through the investment in Tender Offeror and thus is something that was considered independently from the advisability of Alps Alpine tendering its shares in the Tender Offer; for these reasons, we believe that this is not contrary to the purport of the tender offer price uniformity regulations (FIEA, Article 27-2, Paragraph 3).

In making the Tender Offer, Tender Offeror and LOGISTEED have executed with Alps Alpine, as of the Announcement Date, a Transaction Master Agreement ("Transaction Master Agreement"), under which, inter alia,

1. Alps Alpine will not tender its Non-Tendered Shares (Alps Alpine) in the Tender Offer and will not cause Alpine to tender its Non-Tendered Shares (Alpine) in the Tender Offer; and [2] the Non-Tendered Shares etc. will be sold in the Share Buyback. For details regarding the Transaction Master Agreement, see below, "(6) Matters Relating to Important Agreements Relating to the Tender Offer", "[1] Transaction Master Agreement". The share transfer agreement for the Share Buyback is scheduled to be executed between Alps Alpine and the Target by the Tender Offer commencement date.
   Further, in making the Transaction, LOGISTEED has executed with Alps Alpine and Target, as of the Announcement Date, a Capital and Business Tie-Up Agreement relating to the operation of Target. For details regarding the Capital and Business Tie-Up Agreement, see below, "(6) Matters Relating to Important Agreements Relating to the Tender Offer", "[3] The Capital and Business Tie-Up Agreement".

Transaction Structure Diagram

Ⅰ. Prior to Tender Offer (current conditions)

As of the Announcement Date, Alps Alpine owns 16,526,800 Target Shares (ownership percentage: 46.51%), Alpine owns 792,000 Target Shares (ownership percentage: 2.23%), other minority shareholders own 18,141,872 Target Shares (ownership percentage: 51.06%) and 598 Share Options (number of Target Shares that are the object of the Share Options: 69,800 shares (ownership percentage: 0.20%)).

Alps Alpine

Alpine

Other Shareholders and Share

Option Holders

46.51%

2.23%51.26%

Target

Ⅱ. Tender Offer by Tender Offeror; Procuring the Funds for Settling the Tender Offer

Tender Offeror will implement the Tender Offer for all Shares Subject to Tender Offer and all Share Options. Tender Offeror plans to arrange for the funds required for settling the Tender Offer by raising funds through

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an equity contribution and loan by LOGISTEED ("Contribution etc.").

					Other shareholders
					and Share Option
Alps Alpine		Alpine
		Holders

Target

LOGISTEED

Tender Offer

Tender Offeror

Ⅲ. (After the Tender Offer) The Absorption-type Demerger

If the Tender Offer is successful, Alps Alpine will, by the Share Consolidation effective date, cause Alpine to transfer the Non-Tendered Shares (Alpine) to Alps Alpine through an absorption-type demerger in which Alps Alpine is the succeeding company and Alpine is the splitting company (the "Absorption-type Demerger"; since the Absorption-type Demerger will be conducted between parties that have been in a special relationship as defined in Article 27-2, Paragraph 7, Item 1 of FIEA for more than one year continuously, it falls under the category of "purchase, etc. excluded from application" as defined in the proviso of Article 27-2, Paragraph 1 of FIEA).

The Absorption-type Demerger

Alps Alpine		Alpine

Other shareholders and Share Option Holders

LOGISTEED

Tender Offeror

Target

Ⅳ. (After the Tender Offer) Squeeze-out Procedures using Share Consolidation

If Tender Offeror is unable to acquire all the Shares Subject to Tender Offer in the Tender Offer, Tender Offeror will request that Target carry out Share Consolidation and implement the procedures necessary to make Tender

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Offeror and Alps Alpine the sole shareholders of Target.

Alps Alpine

Other shareholders and Share Option holders

LOGISTEED

Squeeze-out

Procedures

Tender Offeror

Target

• Provision of Capital and Capital Reduction etc. for the Purpose of Target's Securing the Distributable Amount and Funds for the Share Buyback

Following the delisting and the coming-into-effect of the Share Consolidation, in order to secure the funds for the Share Buyback and the distributable amount, the Provision of Capital and Capital Reduction etc. will be implemented. Prior to the Provision of Capital, the Reinvestment will be implemented.

LOGISTEED

Alps Alpine Tender Offeror

Capital Reduction etc.

Reinvestment

Target

Provision of Capital

Ⅵ. Target's Buyback of Shares from Alps Alpine

Target will utilize the distributable amount secured from the Provision of Capital and Capital Reduction etc. to implement a Share Buyback to acquire all Non-Tendered Shares etc. owned by Alps Alpine.

LOGISTEED

Alps Alpine Tender Offeror

Share Buyback

Target

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Ⅶ．After the Transaction

It is planned that after the Transaction, the percentages of voting rights held in Tender Offeror by Alps Alpine and LOGISTEED will be 20% and 80%, respectively.

Alps Alpine

LOGISTEED

20%

80%

Tender Offeror

Target

In the event that the total number of share certificates tendered in the Tender Offer ("Tendered Share Certificates etc.") does not reach the minimum number of shares planned for purchase (6,368,200 shares), Tender Offeror will not purchase any of the Tendered Share Certificates. Meanwhile, because the purpose of the Tender Offer is to delist the Target Shares, no maximum number of shares planned for purchase will be set, and as long as the total number of Tendered Share Certificates etc. is at or above the minimum number of shares planned for purchase (6,368,200 shares), all the Tendered Share Certificates etc. will be purchased. While these are provisional figures relying on information as of the Announcement Date, it is planned that the minimum number of shares planned for purchase (6,368,200 shares) will be obtained by multiplying the number of voting rights attached to the Total Number of Shares on a Fully Diluted Basis (355,304) by two-thirds (resulting in 236,870, rounded up to the nearest whole number), subtracting from this product the number of voting rights (173,188) attached to the Non-Tendered Shares etc. (17,318,800 shares), and multiplying that result (63,682) by 100, which is the number of shares in one share unit of Target. The object of the Transaction is to acquire all the Shares Subject to Tender Offer and the Share Options; in order to implement the Share Consolidation Procedures discussed below in "(4) Post-Tender Offer Reorganization Policy (Matters Relating to Two-Step Acquisition)", a special resolution of a general shareholders meeting specified in the Companies Act, Article 309, Paragraph 2 is required; in addition, Tender Offeror and Alps Alpine have agreed that Alps Alpine will not tender its shares in the Tender Offer and that it will support the resolutions relating to Squeeze-out Procedures if the Tender Offer is successful; in light of this, the minimum number of shares planned for purchase was set to make it certain that the Transaction can be carried out.

Tender Offeror plans to cover the funds need for settlement of the Tender Offer with the Contribution etc. Further, while the Share Buyback will be carried out to the extent of the distributable amount of Target, Tender Offeror plans to take into account the amount of funds Target requires for the Share Buyback and the levels of cash and deposit Target possesses and the cash and deposits necessary for business operation and, following the Share Consolidation, to cover any shortfall in Target's distributable amount through the Provision of Capital and Capital Reduction etc.

According to "Notice Regarding Expression of Opinion in Support of the Planned Commencement of and Recommendation to Tender in the Tender Offer for Company's Share Certificates etc. by LDEC, Ltd. and Notice of Capital and Business Alliance", which Target released on the Announcement Date ("Target Press Release"), the Board of Directors, at a meeting held on the Announcement Date, expressed that the current opinion of Target was to support the Tender Offer if it commences, and passed a resolution recommending that Target shareholders and

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owners of Share Option Holders to tender their shares and Share Options in the Tender Offer.

Further, it is planned that if the Conditions Precedent to Tender Offer are satisfied (or waived by Tender Offeror), the Tender Offer will commence promptly; as of the Announcement Date, the aim is to commence the Tender Offer around mid-August 2024, but because it is difficult to predict exactly how much time will be required for procedures etc. especially at foreign competition authorities, the Board of Directors, at the above meeting, also passed a resolution under which, when the Tender Offer is commenced, Target's Special Committee will be asked to consider whether there are any changes to the opinion it expressed to Target's Board of Directors on May 8, 2024 ("Business Day Prior to the Announcement"), and if there are no changes, to tell that to the Board of Directors, and if there are changes, to express that changed opinion; in light of this, and such opinion of the Special Committee, at the point in time the Tender Offer commences, an expression of opinion regarding the Tender Offer will again be made. For details regarding the resolution by Target's Board of Directors, see below, "(3) Measures for Ensuring the Fairness of the Tender Offer Price, Measures for Avoiding Conflicts of Interest, and Other Measures for Ensuring the Fairness of the Tender Offer", "[8] Approval of All Target Directors (including Directors Who Are Audit and Supervisory Committee Members)".

1. The Background, Objective and Decision-Making Process Leading to the Decision to Implement the Tender Offer; Post-Tender Offer Managerial Policy
   The background leading to the decision to implement the Tender Offer, the objective of the Tender Offer, and the decision-making process, as well as the Post-Tender Offer Managerial Policy, are as follows. It should be noted that the following sections relating to Target are based on information Target publicly announced, the Target Press Release, and explanations received from Target.

1. The Business Environment Target Faces

Target was established in July 1964 under its former name of Watakoma Co., Ltd. in Kohoku Ward, Yokohama City, where it began operations involving the transportation and storage of products manufactured by Alps Electric Co., Ltd. (currently Alps Alpine Co., Ltd.; hereinafter, "Alps Electric") and the sale of packaging materials. Subsequently, in June 1967, Alps Electric made a capital participation in Target, and then in April 1987, Target took over the business of the Import/Export Operations Division of Alps Travel Service Co., Ltd., at which time it changed its trade name to Alps Logistics Co., Ltd. In April 1988, it took over the business of the Product Management Department of Alps Electric, and then in September 1995, it was listed on the Second Section of the TSE. It subsequently merged with TDK Logistics Corporation in October 2004, and then in January 2021 its listing was switched to the First Section of the TSE. Furthermore, in conjunction with the restructuring of the TSE's market divisions, Target transitioned from the First Section of the TSE to the TSE Prime Market in April 2022. Target Group (referring to the corporate group constituted by Target and 26 consolidated subsidiaries (as of the Announcement Date); hereinafter the same) currently operates the following businesses.

(i) Electronic components-related business

This consists of the electronic component logistics business and the product sales business. The electronic component logistics business involves integrated logistics services, in which Target provides services on a global scale that include the transportation, storage, and forwarding (Note 1) of electronic components cargo for domestic and foreign customers. The product sales business involves the sale of electronic components-related molded materials and packaging materials as well as electronic devices.

(ii) Consumer logistics business

This business consists of providing logistics services, mainly involving home deliveries for consumer co-ops as well as the transportation, storage, and distribution processing of cargo for domestic consumer logistics. (Note 1) "Forwarding" refers to the freight transportation services using airlines or shipping companies, as

opposed to having one's own means of shipment. 9

With regard to the electronic components-related business, given factors such as the spread of 5G-related equipment for communications in the electronic components industry (to which Target's major customers belong), the ongoing electrification of automobiles, and the growing practical applications of AI, IoT, and DX, demand for electronics can be expected to increase, and thus further growth is envisioned for this business going forward. Meanwhile, Target has been carrying out production site changes and making its supply chain more sophisticated and resilient to keep up with product and market changes, and its customers' logistics transformation needs have also grown more advanced and diversified. In addition, with geopolitical risks, infectious disease risks, and other economic uncertainties currently on the rise, logistics operators are required to practice what is known as economic security risk management. Given these business conditions, on May 11, 2022, Target announced its fifth medium- term (three-year) business plan ("Fifth Medium-term Business Plan"), and Target Group began conducting operations based on the Fifth Medium-term Business Plan in FY2022, with the electronic components-related business as its domain. The Fifth Medium-term Business Plan specifies its basic medium-term policy as "being friendly to the earth and society, and pursuing and evolving optimal logistics", and Target is promoting the follow strategies and measures to grow its business globally.

(ⅰ) GTB ("Get The Business"/Expansion of Markets and Products)

Expanding business domains, enhancing global network, and expanding collaborative innovation and alliance

(ⅱ) GTP ("Get The Profit"/Improvement of Indirect and Direct Productivities)

Promoting labor saving and automation, expanding strategic investments and ensuring successful returns, and taking on the DX challenge

(ⅲ) GTC ("Get The Confidence"/Pursuing Sustainability)

Strengthening ESG measures, maintaining and ensuring safety and high quality, and maintaining and strengthening non-financial capital

In the consumer logistics field, changes in people's lifestyles as well as the growth of delivery services and of online shopping have led to growing demand for home deliveries and online sales of food and daily necessities. Meanwhile, given the accompanying rise in cargo volumes and the spread of same-day delivery services, for example, logistics infrastructures are facing a growing burden, and in particular, the shortage of drivers and warehouse workers and higher costs have led to a critical situation. In this business environment, one of Target's consolidated subsidiaries by the name of Ryutsu Service Co., Ltd. ("Ryutsu Service") also began conducting operations under its own three-yearmedium-term business plan in FY2022. Target Group aims to strengthen its business management structure and sales structure, and seeks to further expand business with consumer co-ops as major customers and to increase its market share, as well as to further grow its sales in "online shopping and EC logistics" (Note 2). Moreover, in terms of new domains, it has also been exploring the pharmaceutical market and other markets. In order to deal with the industry-wide challenge of labor shortages, it is also pursuing automation, promoting workstyle reforms, and so forth in an effort to improve its retention rate and to recruit, retain, and train human resources more effectively.

Target Group's FY2023 consolidated financial results were 118,844 million yen in sales, 5,578 million yen in operating income, 6,019 million yen in recurring income, and 3,570 million yen in net income attributable to shareholders of the parent company. With regard to the electronic components-related business, Target Group focused its efforts on expanding its warehouses, growing sales to new customers, and so forth, yet the failure to make up for the decrease in air cargo, decline in international freight, decrease in cargo volumes being handled due to stagnated production, and other decreases in cargo volumes led sales to decline. In terms of profits, despite the efforts that were made to boost productivity etc., worsened efficiency in conjunction with a greater decline than expected in international cargo volumes being handled in the greater China region in the fourth quarter, a downturn in cargo movement, impact of the intensifying competition environment, and other factors led to a profit decline.

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