SWS News The Conclusion of a Stock Swap Agreement Regarding Sumitomo Wiring Systems, Ltd. Becoming a Wholly Owned Subsidiary of Sumitomo Electric Industries, Ltd. : Sumitomo Wiring Systems, Ltd.

PRESS RELEASE: No.04
May 11, 2007

Company name	:	Sumitomo Wiring Systems, Ltd
Representative	:	President Masayoshi Matsumoto
(Security code	:	5802, First Section of the Tokyo Stock Exchange and the Osaka Securities Exchange)
Inquiries	:	Hiroyuki Takeya, Public Relations Department TEL: +81-6-6220-4119
Company name	:	Sumitomo Wiring Systems, Ltd.
Representative	:	President Tadashi Shimokawa
(Security code	:	6948, Second Section of the Nagoya Stock Exchange)
Inquiries	:	Norichika Shimoda, General Affairs Department TEL: +81-59-354-6201

The Conclusion of a Stock Swap Agreement Regarding
Sumitomo Wiring Systems, Ltd. Becoming a Wholly
Owned Subsidiary of Sumitomo Electric Industries, Ltd.

This is to inform you that, at both companies' Board of Directors' meetings held on May 11, 2007, Sumitomo Wiring Systems, Ltd. (hereafter called "SWS") and Sumitomo Electric Industries, Ltd. (hereafter called "SEI") decided that SWS would become, through a stock swap, a wholly owned subsidiary of SEI on August 1, 2007. They also concluded a stock swap agreement.


1.The Purpose of SWS Becoming a Wholly Owned Subsidiary of SEI through a Stock Swap
	The SEI group has positioned the automobile wiring harness business as one of its core businesses; it has developed new products and technologies that integrate the SEI group's information, telecommunications, and electronics technologies, and enhanced production and development frameworks on a global basis. This has been accomplished through a business structure where SEI is in charge of business planning and sales, and SWS is in charge of design and manufacturing. Also, we have expanded business with automakers in Japan and abroad, which is proven by the fact that we acquired major German wiring harness makers last year to officially start dealings with German automakers. Another fact that must be taken into account is the vehicle wiring harness business has experienced increased globalization due to a rapid expansion of the automobile industry in new markets, including BRICs. This has required further expansion of flexible manufacturing and sales bases, as well as more cost competitiveness. And, with cars becoming more intelligent and using more electronics, customers' requirements for technology have become more sophisticated and complicated. Due to these business circumstances, the two companies agreed that SWS would become a wholly owned subsidiary of SEI in order to further expand and grow their businesses. This structure needs to: 1) avoid duplicated decision making and other duties; 2) centralize the operation of managerial resources in the group, such as personnel, capital, and materials, under unified governance; 3) achieve more efficient and functional business operation; 4) develop new products and technologies based on the SEI group's technologies related to raw materials, information, and telecommunications. We hope that we will be able to increase the SEI group's corporate value and meet expectations of all stockholders, including SWS's stockholders who will own stock in SEI. In order to conclude the stock swap agreement, both companies conducted due diligence with help from specialists. As part of procedures for ensuring fairness of a stock swap ratio, the two companies asked independent, third party institutions to calculate the stock swap ratios. The results of these calculations are shown in section 2. (3) below. Based on the due diligence results and the stock swap ratios calculated by the third party institutions, the two companies determined that the stock swap agreement including the stock swap ratio was reasonable and would benefit the two companies' stockholders. The companies decided on the conclusion of the agreement at both companies' Board of Directors' meetings today, after holding a series of negotiations and discussions between the two companies. To prevent possible conflict of interest with minority stockholders and ensure the fairness of the stock swap, SEI's directors who also act as SWS's directors did not participate in the resolution at SWS's Board of Directors' meeting. The stock swap will cause SWS to become a wholly owned subsidiary of SEI, effective August 1, 2007 after SWS is delisted on July 26, 2007.
2.Summary of the Stock Swap
(1)Stock swap schedule

Board of Directors' meeting for resolving the stock swap (Both):		May 11 (Friday), 2007
Conclusion of the stock swap agreement (Both):		May 11 (Friday), 2007
Stockholder meeting to approve the stock swap (SWS):		June 26 (Tuesday), 2007 (planned)
(Stockholder meeting base date (SWS)):		(March 31, 2007)
Final transaction date (SWS):		July 25 (Wednesday), 2007 (planned)
Delisting date (SWS):		July 26 (Thursday), 2007 (planned)
Effective date of the stock swap:		August 1 (Wednesday), 2007 (planned)

* SEI will conduct the stock swap using the simplified stock swap procedures outlined in Clause 3, Article 796 of the Company Laws in Japan, and will therefore not require the approval of a stockholder meeting.

(2)Stock swap ratio

Company	Sumitomo Electric Industries, Ltd. (Wholly owning parent company)	Sumitomo Wiring Systems, Ltd. (Wholly owned subsidiary)
Stock swap ratio	1	1.57

Notes1. Stock assignment ratio
	1.57 shares of SEI's common stock will be granted in place of 1 share of SWS's common stock. However, in this stock swap, no stocks will be granted for the 20,362,900 SWS stocks owned by SEI.
2. The number of new stocks issued with the stock swap
	SEI will grant 30,002,643 shares of common stock (decimals are dropped) to SWS's stockholders (including real stockholders) indicated or recorded on SWS's final stock lists (including real stockholder lists) dated July 31, 2007.

(3)Reasons for the stock swap ratio calculations
	(1)Basics and background of the calculations
	To ensure the fairness of the stock swap ratio, SEI selected PwC Advisory Co., Ltd. (hereafter called "PwC") as a third party calculating institution; SWS selected Ernst & Young ShinNihon as a third party calculating institution. Each of the two companies asked each of the third party institutions to calculate the stock swap ratios. PwC used the market stock price criteria, comparable companies analysis, and Discounted Cash Flow (hereafter called "DCF") methods to analyze the values of the two companies' stocks. Please note that the periods of market stock price calculation for the market stock price criteria method were the previous six months, three months, and one month before May 8, 2007. Average stock prices (simple average of closing prices and volume weighted average prices) in each period were used to analyze the two companies' stock values. No significant increase or decrease in profit was expected in the two companies' future plans that were premises in the analysis with the DCF method. As a result of the analysis of the values of the two companies' stocks, PwC calculated that the number of shares of SEI stock assigned to one SWS share was 1.31 to 1.48 shares using the market stock price criteria method, 1.33 to 1.37 shares using the comparable companies analysis method, and 1.44 to 1.59 shares using the DCF method. The company submitted the calculation results to SEI. Ernst & Young ShinNihon used the market stock price average and DCF methods to analyze the values of the two companies' stocks. Please note that the periods of market stock price calculation for the market stock price average method were the previous six months, three months, and one month before May 10, 2007. Average stock prices (volume weighted average prices) in each period were used to analyze the two companies' stock values. No significant increase or decrease in profit was expected in the two companies' future plans that were premises in the analysis with the DCF method. As a result of the analysis of the values of the two companies' stocks, Ernst & Young ShinNihon calculated that the number of shares of SEI stock assigned to one SWS share was 1.323 to 1.402 shares using the market stock price average method and 1.556 to 1.664 shares using the DCF method. The company submitted the calculation results to SWS. Based on the results of the stock swap ratios received from the third party institutions above, the two companies considered factors, such as their financial standing, forecasts, and market stock price trends, and held a series of negotiations and discussions after a deliberate examination. As a result, the companies determined that the stock swap ratio in 2. (2) above was reasonable and it would benefit their stockholders. The two companies resolved the conclusion of the stock swap agreement at their Board of Directors' meetings held on May 11, 2007. They concluded the agreement between the two companies on the same day. Please note that the stock swap ratio may be changed in discussions between the two companies if there are critical changes in the terms and conditions that were the basis of the calculations.
	(2)Relationships with the calculating institutions
	PwC and Ernst & Young ShinNihon are not parties related to SEI and SWS.
(4)Treatment of SWS's stock subscription rights and corporate bonds with stock subscription rights
	SWS will, free of charge, by the day before the effective date of the stock swap, acquire and extinguish the stock subscription rights (issued in July 2005 and July 2006) granted by SWS according to the resolutions at the annual stockholder meetings held on June 28, 2005 and June 27, 2006. Along with SWS's announcement of the stock swap, they announced today that they will prematurely redeem all the remaining amount of their first unsecured convertible bonds (issued on September 11, 1996).

3.Outline of the Companies Interested in the Stock Swap (As of the end of March, 2007)

(1) Trade name	Sumitomo Electric Industries, Ltd. Wholly owning parent company (planned)	Sumitomo Wiring Systems, Ltd. Wholly owned subsidiary (planned)
(2) Business description	Automobile-related businesses Businesses related to information and telecommunications Electronics-related businesses Businesses related to electric wires, equipment, and energy Industrial raw material-related businesses	Manufacturing and sales of wiring harnesses for automobiles and equipment Manufacturing and sales of parts for wiring harnesses and electrical equipment Manufacturing and sales of automobile electric wires
(3) Established	December 10, 1920	December 22, 1917
(4) Head office location	Osaka city, Osaka prefecture	Yokkaichi city, Mie prefecture
(5) Title and name of representative	President Masayoshi Matsumoto	President Tadashi Shimokawa
(6) Capital	96,784 million yen	7,541 million yen
(7) Number of shares of stock issued	759,293,049 shares	39,472,864 shares
(8) Net assets	1,052,989 million yen (consolidated)	102,843 million yen (consolidated)
(9) Gross assets	2,126,405 million yen (consolidated)	331,306 million yen (consolidated)
(10) Settlement term	March 31	March 31
(11) Number of employees	133,853 employees (consolidated)	53,147 employees (consolidated)
(12) Main customers	Power companies, NTT, automakers, electric-appliance makers, etc.	Sumitomo Electric Industries, Ltd. Yazaki Parts Co., Ltd. Furukawa Automotive Parts Inc. Others
(13) Major stockholders and stockholding ratios	Japan Trustee Services Bank, Ltd. (Trust account): 9.17% The Master Trust Bank of Japan, Ltd. (Trust account): 8.60% Nippon Life Insurance Company: 5.27%	Sumitomo Electric Industries, Ltd.: 51.59% The Master Trust Bank of Japan, Ltd. (Trust account): 5.17% Sony Life Insurance Co., Ltd.: 4.47%
(14) Main financing banks	Sumitomo Mitsui Banking Corporation The Sumitomo Trust & Banking Co., Ltd. Mizuho Corporate Bank, Ltd.	The Sumitomo Trust & Banking Co., Ltd. Sumitomo Mitsui Banking Corporation The Mie Bank, Ltd.

(15) Relationship between the interested companies and others	Capital relationship	SEI owns 52.10% of SWS's issued stock (including indirectly-held stocks).
	Personnel relationship	SEI's directors also act as one director and one corporate auditor at SWS.
	Business relationship	In the SEI group's automobile wiring harness business, SWS is in charge of design and manufacturing and SEI is in charge of business planning and sales.
	Applicable status between the relevant parties	SWS is SEI's consolidated subsidiary.

(16) Performance over the past three years (consolidated)

(Unit: Million yen)

	Sumitomo Electric Industries, Ltd.			Sumitomo Wiring Systems, Ltd.
Settlement term	Fiscal year ending March 2005	Fiscal year ending March 2006	Fiscal year ending March 2007	Fiscal year ending March 2005	Fiscal year ending March 2006	Fiscal year ending March 2007
Sales	1,740,198	2,007,134	2,384,395	372,831	441,498	511,958
Operating profit	81,429	105,495	128,745	10,062	9,729	15,866
Ordinary profit	92,498	113,194	145,368	16,040	15,519	18,146
Current-term net profit	36,540	58,346	76,029	9,065	8,120	11,020
Current-term net profit per stock (yen)	48.01	76.43	100.22	236.24	210.79	288.28
Dividend per stock (yen)	10	13	17	23	32	36
Net asset per stock (yen)	911.24	1,068.73	1,170.54	1,650.47	1,965.53	2,358.07

4. Situation after the Stock Swap

(1) Trade name	Sumitomo Electric Industries, Ltd.
(2) Business description	Automobile-related businesses Businesses related to information and telecommunications Electronics-related businesses Businesses related to electric wires, equipment, and energy Industrial raw material-related businesses
(3) Head office location	Osaka city, Osaka prefecture
(4) Title and name of representative	President Masayoshi Matsumoto
(5) Capital	96,784 million yen
(6) Net assets	Not yet determined
(7) Gross assets	Not yet determined
(8) Settlement term	March 31
(9) Outline of accounting procedures	Among businesses under common control, businesses with minority stockholders will be applicable. The stock swap will generate goodwill equivalent to approximately 9 billion yen, which will be amortized using the straight-line method over a five-year period.
(10) Influence of the stock swap on performance	The stock swap is expected to have little influence on SEI's consolidated and separate performance as SWS is currently SEI's consolidated subsidiary.