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Purpose of the Purchase
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(1)
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Overview of the Tender Offer
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As of today, the Tender Offeror owns 22,682,205 shares (ownership ratio (Note 1) 34.86%) of the Target Company Shares listed on the TSE 1st Section, and the
Target Company is a Tender Offeror equity-method affiliate.
As announced in the October 30 Press Release by the Tender Offeror and the Integration
Press Release, the Tender Offeror, Hitachi Automotive Systems, Keihin, Showa, the Target Company, and Hitachi entered into the Basic Contract on October 30, 2019, to conduct the Integration through implementation of the Absorption-type Merger
after making the Three Target Companies wholly-owned subsidiaries of the Tender Offeror. For details of the Basic Contract, please see (3) Material Agreements Regarding the Tender Offer below.
At the board of directors meeting held on October 30, 2019, the Tender Offeror has determined to conduct the Tender Offer with the Target Company Shares
being the target after satisfaction of the Conditions Precedent, to obtain all of the Target Company Shares, and to make the Target Company a wholly-owned subsidiary of the Tender Offeror, as part of the series of transactions for the Integration,
pursuant to the Basic Contract. Recently, upon the completion of the necessary procedures and activities based on the competition law of Thailand on August 26, 2020, the Tender Offeror confirmed that all of the Conditions Precedent, including
obtaining the permits and licenses, etc., from the respective countries relevant authorities, have been satisfied, and that the conditions to commence the Tender Offer have been fulfilled. Therefore, the Tender Offeror determined to commence
the Tender Offer on September 1, 2020.
As announced in the Notice regarding the Scheduled Commencement of the Tender Offer to Make Keihin
Corporation (Securities Code: 7251) a Wholly-Owned Subsidiary in connection with the Management Integration of Hitachi Automotive Systems, Ltd., Keihin Corporation, Showa Corporation (Securities Code: 7274), and Nissin Kogyo Co., Ltd. (Securities
Code: 7230) and the Notice regarding the Scheduled Commencement of the Tender Offer to Make Showa Corporation (Securities Code: 7274) a Wholly-Owned Subsidiary in connection with the Management Integration of Hitachi Automotive Systems,
Ltd., Keihin Corporation (Securities Code: 7251), Showa Corporation, and Nissin Kogyo Co., Ltd. (Securities Code: 7230) dated October 30, 2019 and announced by the Tender Offeror (collectively, the Other Press Releases by Two Target
Companies), the Tender Offeror also determined at the board of directors meeting held on October 30, 2019 that similar to the Tender Offer, and pursuant to the Basic Contract, as part of a series of transactions for the Integration,
respective common stocks of Keihin and Showa are to be obtained through tender offers to make Keihin and Showa wholly-owned subsidiaries of the Tender Offeror. Such tender offers (collectively with the Tender Offer, the Three Target Companies
Tender Offer) are also scheduled to be conducted after satisfaction of certain conditions precedent such as obtaining permits and licenses, etc. from the respective countries relevant authorities, including notifications or approvals for
business combination to or by the respective countries competition authorities. Recently, the Tender Offeror confirmed that those conditions precedent have been satisfied, and that the conditions to commence the tender offers for Keihin and
Showa have also been fulfilled. Therefore, the Tender Offeror also determined to commence the tender offers for Keihin and Showa on September 1, 2020 (for details, please see the Notice regarding the Commencement of the Tender Offer to Make
Keihin Corporation (Securities Code: 7251) a Wholly-Owned Subsidiary in connection with the Management Integration of Hitachi Automotive Systems, Ltd., Keihin Corporation, Showa Corporation (Securities Code: 7274), and Nissin Kogyo Co., Ltd.
(Securities Code: 7230) and the Notice regarding the Commencement of the Tender Offer to Make Showa Corporation (Securities Code: 7274) a Wholly-Owned Subsidiary in connection with the Management Integration of Hitachi Automotive
Systems, Ltd., Keihin Corporation (Securities Code: 7251), Showa Corporation, and Nissin Kogyo Co., Ltd. (Securities Code: 7230) dated September 1, 2020 and announced by the Tender Offeror).
The Tender Offeror has set the minimum number of shares to be purchased as 20,691,495 shares (Note 2) (ownership ratio 31.80%) in the Tender Offer; and if the
total of the Target Company Shares tendered for the Tender Offer (the Tendered Shares) falls short of the minimum number of shares to be purchased, the Tender Offeror will purchase none of the Tendered Shares. On the other hand, as the
Tender Offeror purports to make the Target Company its wholly-owned subsidiary through the Tender Offer, the maximum number of shares to be purchased has not been set; and if the total number of the Tendered Shares is the same as or more than the
minimum number of shares to be purchased, purchase of all of the Tendered Shares will be conducted. The minimum number of shares to be purchased (20,691,495 shares) is set as the number obtained by the following formula: first, subtract from
(a) the total number of issued shares as of June 30, 2020, as stated in the First Quarterly Report for the 68th Fiscal Year submitted on August 6, 2020 by the Target Company (the Target Companys First Quarterly Report for the 68th
Fiscal Year) (65,452,143 shares), (b) the number of treasury shares owned by the Target Company as of June 30, 2020, as stated in the financial summary (IFRS) (consolidated) for the first quarter of the fiscal year ending in March 2021
published on August 5, 2020 by the Target Company (the Target Companys Financial Summary for the First Quarter of the Fiscal Year Ending in March 2021) (391,642 shares). This amounts to 65,060,501 shares, which corresponds to
650,605 voting rights. Such number of voting rights is then multiplied by 2/3 (433,737 voting rights) (rounded up to the nearest whole number). Based on the number obtained by multiplying by 100 shares the share unit number of the Target Company,
deduct the number of the Target Company Shares owned by the Tender Offeror as of today (22,682,205 shares).
(Note 1)
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Ownership ratio refers to the ratio against the number of shares (65,060,501 shares) obtained by
deduction of the number of treasury shares owned by the Target Company as of June 30, 2020, as stated in the Target Companys Financial Summary for the First Quarter of the Fiscal Year Ending in March 2021 (391,642 shares) out of the total
number of issued shares as of June 30, 2020, as stated in the Target Companys First Quarterly Report for the 68th Fiscal Year (65,452,143 shares) (any fraction is rounded off to two decimal places; hereinafter the same shall apply in the
calculation of ownership ratio).
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