ITOCHU Corporation (“ITOCHU”) announced today that it has agreed to execute a Memorandum of Understanding with IZUMIYA Co., Ltd. (headquartered in Osaka, Osaka Prefecture; Toshihiro Sakata, President; “IZUMIYA”) that will create a capital and business alliance between the two companies. Details are as follows:

1. Background to the Memorandum and Details

ITOCHU positions daily consumer items as one of its key target markets in its medium-term management plan “Frontiere 2010”, and has actively supported companies in the retail business.

IZUMIYA, under its medium-term management plan “change-I,” has been promoting a community-based strategy in its sales, and has been focusing on high customer satisfaction in its stores. It now operates 89 stores, mainly in the Kansai area, in the GMS, SM and Super Center categories.

　 The changes in Japan’s demographic structure accompanying the declining population, falling childbirth and aging society, as well as the changes to lifestyle being made as a result of future uncertainties, have both had a tremendous influence in terms of the quality and quantity of individual consumption. To respond to these changes, there is a need to establish a new growth strategy, while moving forward with reforms to the cost structure. ITOCHU and IZUMIYA have come to the conclusion that they are capable of improving each other’s corporate value further by making greater effective use of their respective management resources, and have agreed to enter into a capital and business alliance. The alliance will inherently combine IZUMIYA’s stores, customer purchasing history information and product development functions with ITOCHU’s retail support function, including its global networks, procurement and information technologies, and distribution know-how, to add value to both companies. A special coordinated approach will be taken in product development and business operations in China.

　　The companies have agreed that ITOCHU will acquire shares in IZUMIYA to strengthen the cooperative relationship and trust between the two companies. On March 1, 2010, ITOCHU will acquire 3.0% of IZUMIYA's stock (with an additional 2.3% acquired by ITOCHU Group Companies) by the processing of treasury stock through private placement.

2. Areas of Cooperation

1. Product development, sales and procurement
2. Overseas business operations with a focus on China
3. IT and logistics
4. Strengthening product/material procurement and cost-cutting initiatives
5. New, community-based business initiatives centered on the Kansai Market
6. Coordinated approaches to establish a demand chain
7. Other areas as agreed by the two companies

3.Profile of the Two Companies

ITOCHU Corporation Profile

IZUMIYA Co., Ltd.