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Mitsubishi Electric Announces Conclusion of a Share Exchange Agreement with Nihon Kentetsu Co., Ltd.
3 July 2005
Mitsubishi Electric Corporation (President and CEO: Tamotsu Nomakuchi) (TSE:6503 - News) and Nihon Kentetsu Co., Ltd. (President Shusaku Masuda) (TSE: 5972 - News) have concluded a share exchange agreement after a meeting today of Mitsubishi Electric executive officers as well as the board of directors of Nihon Kentetsu. The decision was preceded by a Memorandum of Understanding (MOU) on May 16, 2005 in which they would explore making Nihon Kentetsu into a 100 percent subsidiary of Mitsubishi Electric through an exchange of shares in accordance with the Japanese Commercial Code.
Purpose of Nihon Kentetsu becoming a 100 percent subsidiary through share exchange
Mitsubishi Electric Group has been persistently pursuing reform of its business structure in order to better respond to changes in business environments from the three perspectives of "growth," "profitability & efficiency" and "soundness," in order to establish a solid business foundation.
Nihon Kentetsu operates primarily in the home laundry appliances and commercial refrigerated cabinets businesses. The business environments of those industries have become increasingly severe in recent years. Implementation and progress of tough measures in development, production, and sales areas have become a pressing issue for the company.
Under such circumstances, Mitsubishi Electric intends to make Nihon Kentetsu a 100 percent subsidiary company through a share exchange in order to achieve as quickly as possible the business integration of Nihon Kentetsu's home laundry appliances and commercial refrigerated cabinets businesses and Mitsubishi Electric Group's home appliances and air conditioning & refrigeration systems domains with a drastic increase in competitiveness through amassing and effectively utilizing resources within these domains. As a result, Mitsubishi Electric will strengthen its home appliances and air conditioning & refrigeration systems businesses and enhance its presence in these industries while also increasing enterprise value group-wide.
Terms of share exchange
1. Schedule of share exchange
July 4, 2005 Mitsubishi Electric and Nihon
Kentetsu decide to conclude a share
exchange agreement
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July 4, 2005 Conclusion of Share Exchange
Agreement
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August 23, 2005 (scheduled) Approval of share exchange agreement
at an extraordinary meeting of
shareholders of Nihon Kentetsu
----------------------------------------------------------------------
September 27, 2005 (scheduled) Delisting of share certificates of
Nihon Kentetsu
----------------------------------------------------------------------
September 30, 2005 (scheduled) Last day to submit share certificates
----------------------------------------------------------------------
October 1, 2005 (scheduled) Date of share exchange
----------------------------------------------------------------------
2. Simplified share exchange
As this satisfies the requirements of a simplified share exchange for
Mitsubishi Electric, it is not planning to obtain the approval of a
meeting of shareholders, in accordance to provisions of Article 358,
Paragraph 1 of the Japanese Commercial Code.
3. Ratio of share exchange:
Mitsubishi Electric and Nihon Kentetsu concluded a Share Exchange
Agreement today in accordance with the ratio of share exchange below,
which was agreed on in the Memorandum of Understanding (MOU) dated May
16, 2005.
Mitsubishi Electric Co. Nihon Kentetsu Co.
(Parent Company) (100% Subsidiary)
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Ratio of share exchange 1 0.48
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Notes: 1) Share allocation ratio: 0.48 Mitsubishi Electric share of
common stock will be allotted for every 1 Nihon Kentetsu
share outstanding. However, no allocation will be made with
respect to the 4,048,500 shares of Nihon Kentetsu common
stock held by Mitsubishi Electric.
2) Basis of calculation of share exchange ratio: To calculate
the share exchange proportions, Mitsubishi Electric hired
Daiwa Securities SMBC Co, Ltd., and Nihon Kentetsu hired
Mitsubishi Securities Co., Ltd. for its calculations. The
proportions written above were agreed to after discussions
between Mitsubishi Electric and Nihon Kentetsu in
consideration of the valuation results made by those
financial advisors. The agreed share exchange ratio may be
modified upon the parties' discussions when any material
change occurs in the parties' asset or management
conditions.
3) Results and methods of calculation by third parties: Daiwa
Securities SMBC Co., Ltd. comprehensively took into account
the results of the valuations by the market stock price
method, the discounted cash flow method and the adjusted
book net asset value method when calculating the share
exchange ratio. Mitsubishi Securities Co. Ltd. took into
account the results of the valuations by the market stock
price method, the discounted cash flow method, and the
current net asset value method when calculating the share
exchange ratio.
4) Number of shares allocated for share exchange: Mitsubishi
Electric will allocate 7,656,720 shares. No new shares of
Mitsubishi Electric will be issued as Mitsubishi Electric
will use its treasury stock.
4. Cash distribution upon share exchange subsidy
There will be no cash distribution in relation to the share exchange.
Outline of companies (as of March 31, 2005)
Mitsubishi Electric Nihon Kentetsu Co.,
(1) Business Name Corporation Ltd.
(Parent Company) (100% Subsidiary)
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Energy and Electric,
Industrial Automation, Home laundry
Information and appliances,
(2) Description of Communication systems, Commercial
Business Electronic Devices, Home refrigerated
Appliances, other research, cabinets, etc.
manufacturing, sales, and
services
----------------------------------------------------------------------
(3) Date of January 5, 1921 January 4, 1950
Incorporation
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(4) Address of Head 2-2-3 Marunouchi Chiyoda-ku 1-1-1 Yamate
Office Tokyo Funabashi-shi,
Chiba-ken
----------------------------------------------------------------------
(5) Company President and CEO, Mr. President, Mr.
Representative Tamotsu Nomakuchi Shusaku Masuda
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(6) Capital Funds 175.82 billion yen 1 billion yen
----------------------------------------------------------------------
(7) Number of
Distributed
Stocks 2,147,201,551 20,000,000
----------------------------------------------------------------------
(8) Shareholders' 523.167 billion yen 1.996 billion yen
Equity
----------------------------------------------------------------------
(9) Total Assets 2.075983 trillion yen 14.854 billion yen
----------------------------------------------------------------------
(10) Fiscal Year End March 31 March 31
----------------------------------------------------------------------
(11) Number of
Employees 27,319 435
----------------------------------------------------------------------
Mitsubishi Electric
Domestic and overseas Corp.
manufacturing, non- Mitsubishi Electric
(12) Main Customers manufacturing such as Life Network Corp.
civil and government Mitsubishi Electric
contracts Living Environment
Systems Corp.
----------------------------------------------------------------------
The Master Trust Bank of Mitsubishi Electric
Japan, Ltd. (trust Corp. 20.24%
accounts) 6.70% Mitsubishi Estate
Japan Trustee Services Co., Ltd. 14.90%
(13) Major Bank, Ltd. (trust accounts)Asahi Glass Co.,Ltd.
Shareholders 5.29% 10.87%
and Their Meiji Yasuda Life The Bank of Tokyo-
Shareholding Insurance Company Mitsubishi, Ltd.
Ratios 3.95% 4.81%
Nippon Life Insurance Mitsubishi
Company 3.64% Corporation 2.70%
----------------------------------------------------------------------
The Bank of Tokyo- The Bank of Tokyo-
Mitsubishi, The Mitsubishi Mitsubishi, The
(14)Main Financing Bank Trust and Banking Mitsubishi Trust
Corporation, etc. and Banking
Corporation, etc.
----------------------------------------------------------------------
Mitsubishi Electric
Owner's Equity has 20.24% of stock
already issued by
Nihon Kentetsu
-----------------------------------------------
(15)Company 8 temporary and 8
Relationship permanent employees
Personnel to Nihon Kentetsu
from Mitsubishi
Electric
-----------------------------------------------
Home laundry
appliances and
Accounting Commercial
refrigerated
cabinets, sales,
etc.
----------------------------------------------------------------------
Results of 3 Most Recent Fiscal Years
in millions of yen
Mitsubishi Electric Nihon Kentetsu Co.,
Corporation Ltd.
(Parent Company) (100% Subsidiary)
----------------------------------------------------------------------
Fiscal Year End March March March March March March
2003 2004 2005 2003 2004 2005
----------------------------------------------------------------------
Sales 2,319,210 1,996,556 2,022,035 27,494 23,143 20,692
----------------------------------------------------------------------
Operating Income
(loss) 608 32,566 48,938 (707) 233 (731)
----------------------------------------------------------------------
Income (loss)
before Income
Taxes 26,494 41,713 59,472 (617) 182 (799)
----------------------------------------------------------------------
Net Income (loss) (12,167) 26,344 26,224 139 154 (977)
----------------------------------------------------------------------
Net Income (loss)
per share (in
yen) (5.67) 12.27 12.22 6.99 7.73 (48.87)
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Annual dividend
per share (in
yen) 3.00 4.00 6.00 - - -
----------------------------------------------------------------------
Shareholders'
Equity per share
(in yen) 216.91 236.95 243.76 119.03 149.79 99.86
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Situation after share exchange
1. Business Name
Mitsubishi Electric: no change from what is written in the
"outline of companies" section on page 3 Nihon Kentetsu: will
investigate a possible business name change after the share
exchange date
2. Other Changes
No changes are planned for the lines of business, address of head
office, and company representative written in the "Outline of
Companies" on page 3
3. Capital Funds
There is no increase of Mitsubishi Electric's capital funds from
this share exchange
4. Effects on Earnings
Only a slight impact on Mitsubishi Electric's consolidated results
for this period is forecasted as a result of this share exchange
Regarding the share exchange between Mitsubishi Electric Corporation and Nihon Kentetsu Co., Ltd.
Mitsubishi Electric Corporation and Nihon Kentetsu Co., Ltd. are Japanese companies. Information distributed in connection with the proposed share exchange is subject to Japanese disclosure requirements, which are different form those of the United States. Financial information included herein is prepared in accordance with Japanese accounting standards and may therefore not be comparable to the financial information of U. S. companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the United States securities laws in respect of the share exchange, since the companies are located in Japan, and some or all of its officers and directors are residents of Japan. You may not be able to sue the companies or their officers or directors in a Japanese court for violations of the U.S. securities laws. Finally, it may be difficult to compel the companies and their affiliates to subject themselves to a U.S. court's judgment.
About Mitsubishi Electric
With over 80 years of experience in providing reliable, high-quality products to both corporate clients and general consumers all over the world, Mitsubishi Electric Corporation (TSE:6503 - News) is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and building equipment. The company recorded consolidated group sales of 3,410 billion yen (US$ 31.9billion)(a) in the fiscal year ended March 31, 2005. For more information visit http://global.mitsubishielectric.com.
(a) At an exchange rate of 107 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31, 2005.
About Nihon Kentetsu
With its main business in handling total support commercial refrigerated cabinets and home laundry appliances as an affiliated company of Mitsubishi Electric, Nihon Kentetsu (TSE: 5972 - News) is also engaged in environment businesses such as water treatment and purification equipment as well as heat exchangers. The company recorded consolidated group sales of 21,357 million yen (US$199.6 million)(b) in the fiscal year ended March 31, 2005.
(b) At an exchange rate of 107 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31, 2005.
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Contact:
Mitsubishi Electric Corporation
Investor Relations:
Yasumitsu Kugenuma, +81-3-3218-2391
Yasumitsu.Kugenuma@hq.melco.co.jp
http://global.mitsubishielectric.com/investors/index.html
or
Media:
Travis Woodward, +81-3-3218-2346
Travis.Woodward@hq.melco.co.jp
http://global.mitsubishielectric.com/news/
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Source: Mitsubishi Electric Corporation
Source: Business Wire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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