Matsushita Electric to Acquire all Outstanding Shares of two Listed Subsidiaries by Share Exchange

Osaka, Japan (PROTEXT) - Move Meant to Enhance the Group's Competitiveness inRefrigeration and Air Conditioning Equipment Businesses Matsushita Electric Industrial Co., Ltd. ("MEI"), (NYSE: MC;PCX) and two of its listed subsidiaries, Matsushita RefrigerationCompany ("MRC") and Wakayama Precision Company ("WPC") todayagreed that, subject to the approval of the shareholders of MRCand WPC, the two subsidiaries will become wholly-ownedsubsidiaries of MEI through share exchange procedures pursuant tothe recently amended Commercial Code of Japan. The three companies are undertaking this agreement in order tounify their business strategies and to achieve greaterefficiency, speed and responsiveness through maximum utilizationof the group's vast management resources in the refrigeration,air conditioning and related equipment fields on a groupwide andglobal business perspective. MEI, headquartered in Osaka, Japan, is one of the world'sleading producers of electronic and electric products forconsumer, business and industrial use, which it markets aroundthe world under the "Panasonic," "National," "Technics" and"Quasar" brand names. Its annual consolidated sales were 7,640.1billion yen for the year ended March 31, 1999. MEI's shares arelisted on all eight stock exchanges in Japan and, outside Japan,on the New York, Pacific, Amsterdam, Dusseldorf, Frankfurt andParis stock exchanges. MRC, based in Osaka, is one of Japan's leading manufacturersof refrigerators, freezers, vending machines, food industry-related equipment and business-use air conditioning equipment.Its products are mostly sold through MEI's sales networks. MRC'sshares are listed on the Tokyo Stock Exchange and the OsakaSecurities Exchange (both on the First Section), withapproximately 52% of its outstanding shares currently held byMEI. WPC, also based in Osaka, mainly manufactures compressors forair conditioning equipment, and compressors for freezing andrefrigeration equipment. It supplies a substantial portion of itsproduct output to MRC and MEI. WPC's shares are listed on theSecond Section of the Osaka Securities Exchange. Of all itsoutstanding shares, approximately 47% are currently held by MEIand approximately 7% by MRC. The share exchange agreements between MEI and each of the twosubsidiaries have been signed, following resolutions passed atthe Board of Directors meetings of the three respective companiesheld today. Subject to approval at the respective extraordinaryshareholders' meetings of MRC and WPC, both to be held onFebruary 22, 2000, they will become wholly-owned subsidiaries ofMEI on or around April 1, 2000. Due to an exemption under theCommercial Code, MEI's shareholders' approval will not be soughtfor the exchange agreements. Details of the agreement reached today are as follows: 1. Purpose of acquiring all outstanding shares of twosubsidiaries To build a stronger management structure that can respond tothe changing business environment, the Matsushita group has beenpromoting the "Inter- Business Cluster Collaboration," in whichMEI's divisional companies and subsidiaries work in cooperation,building on their respective strength and expertise in eachfield. Today's agreement is intended to enhance this groupwidemanagement policy. By converting MRC into a wholly-owned subsidiary, MEI will beable to implement a comprehensive business strategy thatintegrates related operations throughout the group in such areasas refrigeration and freezing equipment, air conditioningequipment and vending machines. In the refrigeration and freezing equipment business, MRC'sposition in the industry will be further enhanced in this corebusiness, through increased coordination with the Matsushitagroup's overall home appliance and household equipment strategy. In the air conditioning equipment business, the Matsushitagroup will be able to improve its competitiveness by integratingthe strategies of MRC into MEI's Air-Conditioner Company (aninternal divisional company). This business will also be furtherenhanced by taking advantage of the tie-up relations with DaikinIndustries, Ltd., the agreement for which was also entered intotoday. Meanwhile, MRC's vending machine operations will benefit fromenhanced coordination with MEI's food industry-related salesdivisions to more effectively integrate such areas as R&D,manufacturing, sales and marketing. These steps are expected toincrease the group's ability to respond to the specific needs ofits customers in this particular industry. As an integral part of these arrangements, WPC, whichprimarily produces compressors for air conditioning and freezingequipment, will also be converted into a wholly-owned subsidiaryof MEI. 2. Terms and conditions of exchange offer

(1) Method

Subject to their approval at the extraordinary shareholders'meetings referred to below, the shareholders (excluding MEI) ofMRC and WPC will become shareholders of MEI by acceptingallotment of new shares of common stock to be issued by MEIthrough the exchange offer procedures. Concurrently, shares ofMRC and WPC, held by their respective shareholders, will betransferred to MEI, and the two subsidiaries will become wholly-owned subsidiaries of MEI.

(2) Schedule

On February 22, 2000, the share exchange agreements will bepresented for approval at the extraordinary shareholders'meetings of MRC and WPC. (Note: MEI is not required to convene ashareholders' meeting for approval of the agreements as mentionedabove.)

According to the current schedule, March 31, 2000 will bethe final date for MRC and WPC shareholders to submit their sharecertificates, and April 1, 2000 is set as the effective date ofthe share exchange.

(3) Share exchange ratios

The shareholders of MRC will be allotted new shares of MEIcommon stock (with par value 50 yen per share) at the ratio of0.186 MEI shares for each MRC share held; while the shareholdersof WPC will be given new MEI shares of common stock (with parvalue 50 yen per share) at the ratio of 0.093 MEI shares for eachWPC share held.

In determining the above exchange ratios, MEI sought advicefrom The Nomura Securities Co., Ltd. (Nomura), while the twosubsidiaries received advice from KPMG Corporate Finance K.K.(KPMG), in each case as independent advisors. In order tocalculate the exchange ratios, Nomura primarily applied marketprice analysis and discounted cash flow analysis for assessmentof corporate values of MEI and MRC, and market price analysis andre-evaluated net worth method for WPC. Meanwhile, KPMG calculatedthe exchange ratios by primarily utilizing market price analysisand discounted cash flow analysis for assessment of corporatevalues of all three companies. Following examination of thesecalculations by Nomura and KPMG and discussions among MEI and thetwo subsidiaries, the three group companies have agreed to theexchange ratios set forth above. (Note: These ratios may be revised by consultation among thethree companies in the event any material changes arise to theposition of assets or management condition of any of the threecompanies.) 3. Basic data of the three parties (as of March 31, 1999)

(1) Matsushita Electric Industrial Co., Ltd. (Parent companyalone)

-- Principal line of business: Manufacture and sale ofelectronic and electric equipment

-- Date of incorporation: December 1935

-- Location of head office: Kadoma, Osaka, Japan

-- Representative: Yoichi Morishita, President and Director

-- Share capital: 209,444 million yen

-- Total number of shares issued and outstanding:2,062,344,774 shares of common stock (with par value 50 yen each)

-- Shareholders' equity: 2,376,413 million yen

-- Total assets: 4,165,861 million yen

-- Number of employees: 45,485

(2) Matsushita Refrigeration Company

-- Principal line of business: Manufacture and sale ofrefrigerators, vending machines and other food industry-relatedequipment, and air conditioning equipment

-- Date of incorporation: February 1939

-- Location of head office: Higashi-Osaka, Osaka, Japan

-- Representative: Tadashi Kubota, President and Director

-- Share capital: 11,942 million yen

-- Total number of shares issued and outstanding:176,583,954 shares of common stock (with par value 50 yen each)

-- Shareholders' equity: 76,081 million yen

-- Total assets: 125,944 million yen

-- Number of employees: 4,442

(3) Wakayama Precision Co., Ltd.

-- Principal line of business: Manufacture and sale ofcompressors for air conditioning equipment, compressors forfreezing and refrigeration equipment, and oil temperatureregulators

-- Date of incorporation: September 1949

-- Location of head office: Suita, Osaka, Japan

-- Representative: Takuya Fujimoto, President and Director

-- Share capital: 500 million yen

-- Total number of shares issued and outstanding: 10,000,000shares of common stock (with par value 50 yen each)

-- Shareholders' equity: 990 million yen

-- Total assets: 1,715 million yen

-- Number of employees: 78 (Note: Amounts less than 1 million yen have been omitted.) 4. Financial results for the most recent 3 years (in millionsof yen, except per share amounts) (1) Matsushita Electric Industrial Co., Ltd. (Parent companyalone) Fiscal year ended:

1997/3/31

1998/3/311999/3/31 Net sales

4,797,706

4,874,5264,597,561 Recurring profit

143,312

156,350122,746 Net income

83,125

91,20362,019 Net income per Share (yen) 39.43

43.1829.67 Dividends per Share (yen)

13.00

12.5014.00 (2) Matsushita Refrigeration Company Fiscal year ended:

1997/3/31

1998/3/311999/3/31 Net sales

174,287

158,261149,476 Recurring profit (loss)

4,971

2,527(2,015) Net income

4,622

2,050189 Net income per Share (yen) 26.18

11.611.07 Dividends per Share (yen)

10.00

10.007.50 (3) Wakayama Precision Co., Ltd. Fiscal year ended:

1997/3/31

1998/3/311999/3/31 Net sales

2,503

2,4222,276 Recurring profit

5

183 Net income

4

183 Net income per Share (yen)

0.49

1.840.40 Dividends per Share (yen)

--

--

-- (Note: Amounts less than 1 million yen have been omitted,except per share amounts.) 5. Change after the share exchange No changes are currently contemplated with respect to tradenames, principal lines of business, location of head offices andcorporate representatives of the three companies, all of whichwill remain as stated above in the section titled "3. Basic dataof the three parties." The share capital of MRC and WPC will remain the same as atpresent. However, MEI's share capital will increase toapproximately 210,370 million yen, as a result of the issue ofnew shares for exchange with MRC and WPC shareholders. (Note: Newshares to be issued upon conversion of outstanding convertiblebonds are not included in this calculation.) It should also be noted that the share exchange will have noimmediate material effect on MEI's consolidated financialresults, since MRC was already a consolidated subsidiary of MEIand WPC's sales have been substantially incorporated in the salesof MRC and MEI. However, it is expected that transforming MRC andWPC into wholly-owned subsidiaries of MEI will raise the group'soverall management efficiency and enhance business strategies,thus leading to the possibility of operational performanceimprovements within the entire Matsushita group in the future. This release includes forward-looking statements that reflectMatsushita group's plans and expectations in relation to theshare exchange schemes described above and the benefits resultingfrom them. These forward-looking statements involve known andunknown risks, uncertainties and other factors, including inparticular the ability of MEI to integrate the operations of MRCand WPC effectively, that may cause Matsushita group's actualresults, performance, achievements or financial position to bematerially different from any future results, performance,achievements or financial position expressed or implied by theseforward-looking statements. Notice to United States investors The business combination referred to in this release (the"Transaction") involves securities of foreign companies. TheTransaction is subject to disclosure requirements of a foreigncountry that are different from those of the United States.Financial information included in this release has been preparedin accordance with foreign accounting standards that may not becomparable to similar financial information of United Statescompanies. It may be difficult for you to enforce your rights and anyclaim you may have arising under the federal securities laws,since MEI, MRC and WPC are located in a foreign country, and someor all of their officers and directors may be residents of aforeign country. You may not be able to sue a foreign company orits officers or directors in a foreign court for violation ofU.S. securities laws. It may be difficult to compel a foreigncompany and its affiliates to subject themselves to a U.S.court's judgment. You should be aware that MEI, MRC and WPC may purchasesecurities otherwise than through the Transaction, such as inopen market or privately negotiated purchases. ots Original TextService: Matsushita Electric Industrial Co., Ltd. Internet:http://www.newsaktuell.de Contact: Mr. Akihiro Takei ofPanasonic Finance (America), Inc., Tel.: (USA) 212-371-5447

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