Komatsu Signs a Letter of Intent to Sell its Outdoor Power Equipment Business to Husqvarna AB of Sweden

Komatsu Ltd. (President: Masahiro Sakane, hereinafter referred to as "Komatsu") and KOMATSU ZENOAH CO. (President: Kazuhiro Aoyagi, hereinafter referred to as "KOMATSU ZENOAH"), a subsidiary of Komatsu, have signed a letter of intent to sell KOMATSU ZENOAH's outdoor power equipment business (hereinafter referred to as "OPE business") to Sweden's Husqvarna AB, (President: Mr. Bengt Andersson, hereinafter referred to as "HUSQVARNA"). The definitive agreement is expected to be executed in December 2006 and the sale is expected to be completed within the second half of the 2006 fiscal year ending March 2007.

KOMATSU ZENOAH has played a central role in the mini construction equipment business and hydraulic equipment business in the Komatsu Group. Komatsu has strategically focused on the expansion and strengthening of its construction equipment business, but in order to improve management efficiency, has decided to sell its OPE business, which has limited synergy with its construction equipment business.

HUSQVARNA is a leading global manufacturer in the outdoor power equipment industry. Through this transaction, HUSQVARNA will acquire KOMATSU ZENOAH's distinguished 2-cycle engine technology and expand its business in East Asian countries including Japan and China. The "ZENOAH" brand will be transferred to HUSQVARNA, while the "KOMATSU" brand will no longer be used for outdoor power equipment products after this transaction.

Profit from the sale of the OPE business will be treated in the consolidated financial statements of Komatsu for the fiscal year ending March 31, 2007.