November 13, 2020
To whom it may concern
Company name: Pressance Corporation Co., Ltd.
Representative:

Yutaka Doi, President and Representative Director(TSE First Section Code No. 3254)

Contact:

Kyosuke Ichikawa, Executive Officer, Deputy General Manager of Management Division andGeneral Manager of Accounting Department
TEL: +81-6-4793-1650

Notice Regarding Expression of Opinion Concerning the Tender Offer for Our Share Certificates by Open House
Co., Ltd. and Execution of Agreement Concerning Amendment, Etc. to Capital and Business Alliance Agreementwith Open House Co., Ltd.
Pressance Corporation Co., Ltd. (“Company”) hereby announces that at the Board of Directors meeting held this day, theCompany approved a resolution, as set forth in “I. Expression of Opinion Regarding Tender Offer” below, to express an
opinion supporting the tender offer (the “Tender Offer”) for common stock of the Company (the “Company’s Stock”) byOpen House Co., Ltd. (the “Tender Offeror”), and to leave the decision of whether to tender shares of stock in the Tender
Offer to the judgment of the Company’s shareholders.
At the Board of Directors meeting held this day, the Company also passed a resolution, as set forth in “II. Agreement”
below and the “Notice Regarding the Issuance of New Shares through Third-Party Allotment” published this day by theCompany: (i) to execute an agreement (the “Agreement”) with the Tender Offeror concerning amendment etc. to the capitaland business alliance agreement (the “Current Capital and Business Alliance Agreement”; and the capital and businessalliance under the Capital and Business Alliance Agreement shall hereinafter be referred to as the “Current Capital andBusiness Alliance”) between the Tender Offeror and the Company dated April 6, 2020, (the amended Capital and Business
Alliance pursuant to the Agreement shall hereinafter be referred to as the “New Capital and Business Alliance”); and (ii) to
implement the Tender Offer of the Company’s Stock by combining both the Tender Offer and the Capital Increase through
Third-Party Allotment described below for the purpose of ultimately making the Company a consolidated subsidiary of theTender Offeror, and to issue offered shares of the Company’s Stock to be allotted to the Tender Offeror through third-party
allotment (the “Capital Increase through Third-Party Allotment”; and the Tender Offer and the Capital Increase through
Third-Party Allotment shall collectively be referred to as the “Transaction”).
Please note that as described in “a. Overview of the Tender Offer” under “(2) Grounds and Reasons for Opinion” of “3.
Opinion Regarding Tender Offer and Grounds and Reasons Therefor,” while the Tender Offeror intends to make theCompany a consolidated subsidiary of the Tender Offeror through the Transaction, the Tender Offeror does not intend todelist the Company’s Stock but has the policy of maintaining the listing of the Company’s Stock on the First Section ofTokyo Securities Exchange Co., Ltd. (the “Tokyo Stock Exchange”) even after the completion of the Tender Offer.
For information on the Capital Increase through Third-Party Allotment, please refer to the “Notice Regarding theIssuance of New Shares through Third-Party Allotment” published this day by the Company.

1

I. Expression of Opinion Regarding Tender Offer
1. Overview of Tender Offeror
(1)

Name

Open House Co., Ltd.

(2)

Address

2-4-1 Marunouchi, Chiyoda-ku, Tokyo(3)

Representative’s namePresident and Representative Director: Masaaki Araiand title(4)

Contents of business

Single-family homes related business, condominiums business, income-producing
real estate business, and other businesses(5)

Capital amount

19,741,000,000 yen (as of September 30, 2020)(6)

Date of incorporation

November 22, 1996

(7)

Major shareholders and

Masaaki Arai

their stakes (as of MarchMSIP CLIENT SECURITIES

31, 2020)(Standing Proxy: Morgan Stanley MUFG Securities Co., Ltd.)

4.26%

The Master Trust Bank of Japan, Ltd. (trust account)

3.51%

Japan Trustee Services Bank, Ltd. (trust account)

3.01%

43.38%TAIYO FUND, L.P.
(Standing Proxy: MUFG Bank, Ltd.)

2.09%

Hitoshi Imamura(Standing Proxy: Mizuho Securities Co., Ltd.)

1.81%

Hiroyuki Hiratsuka

1.45%

BNYM TREATY DTT 15(Standing Proxy: MUFG Bank, Ltd.)

1.39%

SSBTC CLIENT OMNIBUS ACCOUNT(Standing Proxy: The Hongkong and Shanghai Banking Corporation
Limited, Tokyo Branch)

1.32%

TAIYO HANEI FUND, L.P.
(Standing Proxy: MUFG Bank, Ltd.)
(8)

1.15%

Relationship between Company and Tender Offeror
Capital relationship

The Tender Offeror holds 20,621,100 shares of the Company’s Stock (number ofvoting rights: 206,211; shareholding percentage (Note 1): 31.82%), and theCompany is its equity-method affiliate.

Personal relationship

Mr. Kotaro Wakatabi, who is an outside director of the Company, is concurrently
serving as a director of the Tender Offeror.

Transactional relationship

The Tender Offeror’s consolidated subsidiary Open House Development Co., Ltd.
and the Company engage in transactions in which Open House Development Co.,
Ltd. purchases land from the Company.

Related parties(9)

Since the Company is an equity-method affiliate of the Tender Offeror, theCompany is a related party of the Tender Offeror.

Tender Offeror’s consolidated business results and consolidated financial conditions for the past three years(Note 2) (Note 3)
Fiscal Year

Fiscal Year Ended Sep.

Fiscal Year Ended Sep.

Fiscal Year Ended Sep.

2018

2019

2020

Consolidated net assets

113,486 million yen

138,067 million yen

233,723 million yen

Consolidated total assets

393,367 million yen

445,904 million yen

569,066 million yen

960.22 yen

1,246.15 yen

1,855.88 yen

Consolidated total net assets per
share

2

Consolidated revenue

390,735 million yen

540,376 million yen

575,951 million yen

Consolidated operating income

47,304 million yen

57,781 million yen

62,129 million yen

Consolidated ordinary income

46,052 million yen

54,928 million yen

77,357 million yen

31,806 million yen

39,407 million yen

59,491 million yen

285.08 yen

351.22 yen

525.36 yen

98.00 yen

126.00 yen

80.00 yen

Net income attributable toowners of the parent
Consolidated net income per
share
Dividends per share(Note 1) “Shareholding percentage” is the percentage (rounded to two decimal places; the same applies hereinafter in thecalculation of the shareholding percentage) of voting rights held against the number of voting rights (648,100)
obtained by adding the number of voting rights (total 300) relating to the Company’s Stock subject to stockacquisition rights (total 300) held by the special related parties to the number of voting rights (647,800) relating
to the number of shares (64,780,005 shares) obtained by deducting from the total number of issued shares as of
September 30, 2020 (65,336,739 shares), as stated in the Second Quarterly Report for the 24th Fiscal Year that
the Company filed this day (the “Company’s Second Quarterly Report”), the number of treasury shares (556,734
shares) owned by the Company as of September 30, 2020 (which is the number of shares after deducting
309,860 shares held in trust account as of the same date by way of the introduction of stock provision ESOP of
the Company; hereinafter the same.) as stated in the Consolidated Second Quarterly Financial Results for the
Fiscal Year Ending March 2021 <under J-GAAP> that the Company announced this day (the “Company’s
Second Quarterly Financial Results”); which is the percentage prior to the dilution due to the payment of theCapital Increase through Third-Party Allotment; hereinafter the same.
(Note 2) The numerical values representing the Tender Offeror’s consolidated business results and consolidated financial
conditions for the fiscal year ended September 2020 have not been audited by the accounting auditors.
(Note 3) Since the Tender Offeror implemented a stock split effective as of October 1, 2019 at the rate of two-for-one
share of common stock, the consolidated net assets per share and the consolidated net income per share were
calculated assuming that the stock split took place at the beginning of the fiscal year ended September 2018.

2. Tender Offer Price
1,850 yen per one common share (“Tender Offer Price”).

3. Opinion Regarding Tender Offer and Grounds and Reasons Therefor(1) Opinion
The Company’s Board of Directors, at its meeting held this day where, out of the nine directors (including the four
outside directors), eight participated in the deliberation and vote (with the exception of Mr. Kotaro Wakatabi who isconcurrently a director of the Tender Offeror) and adopted, with the unanimous affirmative vote of all directors(including the Audit and Supervisory Committee Members) who participated in the vote, a resolution expressing an
opinion in support of: (i) the proposed execution of the Agreement with the Tender Offeror; and (ii) the Tender Offer,
which will be executed as part of the Transaction, on the grounds and reasons described in “c. The Company’s
Decision-Making Process Leading to Decision to Consent to Tender Offer and Reasons Therefor” under “(2) Grounds
and Reasons for Opinion” below.
The Company believes that the Tender Offer Price is reasonable in light of the valuation results for the Company’s
Stock obtained from Plutus Consulting Co., Ltd. (“Plutus Consulting”), a third-party valuation institution. However,considering the fact that the Tender Offeror has set a maximum number of shares to be purchased in the Tender Offer,and that the Tender Offeror plans to maintain the listing of the Company’s Stock after the Tender Offer, the Company
has decided to adopt a neutral position as to whether or not the Company’s shareholders choose to tender their shares3

in the Tender Offer, and to leave this choice up to the discretion of the shareholders. Accordingly, at the Board of
Directors meeting held this day, the Company adopted a resolution to that effect with the unanimous affirmative voteof all directors (including the Audit and Supervisory Committee Members) who participated in the vote. For further
information on the decision-making process of the Company’s Board of Directors, please refer to “c. Unanimous
Approval by All of the Non-interested Directors of the Company, including the Audit and Supervisory Committee
Members” under “(7) Measures to Ensure Fairness of Tender Offer such as Measures to Ensure Fairness of Tender
Offer Price and to Avoid Conflicts of Interest” below.
Please note that Mr. Kotaro Wakatabi, who is an outside director of the Company and concurrently serves as adirector of the Tender Offeror, did not participate in the deliberation or vote on the Transaction at the aforementioned
Board of Directors meeting of the Company or in discussions or negotiations with the Tender Offeror in any capacity
representing the Company, in order to avoid any suspicion of conflict of interest.
(2) Grounds and Reasons for Opinion
Of the grounds and reasons for the Company’s opinion on the Tender Offer, those related to the Tender Offeror are
based on the explanations provided by the Tender Offeror.
a. Overview of Tender Offer
As of this day, the Tender Offeror is the largest shareholder of the Company holding 20,621,100 shares of its
common stock (number of voting rights: 206,211; shareholding percentage: 31.82%), which is listed on the First
Section of the Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”), and the Company is its equity-method
affiliate.
According to the “Notice Concerning Execution of Agreement Concerning Amendments, etc. to Capital andBusiness Alliance Agreement with Pressance Corporation Co., Ltd., Commencement of Tender Offer against
Pressance Corporation Co., Ltd. Shares (securities code: 3254) and Subscription of Capital Increase through ThirdParty Allotment” published this day by the Tender Offeror, the Tender Offeror resolved at the Board of Directors
meeting held on the same day, (i) to execute the Agreement with the Company and (ii) to implement the Tender
Offer of the Company’s Stock by combining both the Tender Offer and the Capital Increase through Third-Party
Allotment (the payment of the Capital Increase through Third-Party Allotment by the Tender Offeror is scheduled tobe made from the business day following the last day of the period of offer, etc. in the Tender Offer (the “Tender
Offer Period”) until the business day immediately preceding the settlement commencement date (January 20, 2021),
and if the Tender Offer Period ends as originally scheduled, the payment is scheduled to be made on January 19,
2021.) for the purpose of ultimately making the Company a consolidated subsidiary of the Tender Offeror, and to
subscribe for all of the Company’s Stock to be issued, subject to the satisfaction of certain conditions precedent suchas the completion of the Tender Offer, etc. (for these conditions precedent, please refer to “(2) Matters concerning
the Capital Increase through Third-Party Allotment “ under “2. Alliance Particulars” of “II. Agreement” below),upon the Company’s issuance of offered shares through the Capital Increase through Third-Party Allotment of
3,508,772 shares of the Company’s Stock (number of voting rights: 35,087; shareholding percentage: 5.41%) to be
allotted to the Tender Offeror with the payment period from January 15, 2021 to January 19, 2021, which is after theTender Offer Period, and at an issue price of 1,425 yen per share (Note 1) (total issue price of shares to be issued:
approximately 5,000 million yen). Please note that the Tender Offeror will conduct the Transaction for the
principal purpose of making the Company a consolidated subsidiary of the Tender Offeror, and that, therefore, if theTender Offeror fails to make the Company its consolidated subsidiary by acquiring a majority of the voting rights of
the Company through the Transaction, the Tender Offeror will additionally acquire the Company’s Stock to makethe Company its consolidated subsidiary. For the Tender Offeror’s acquisition plan of the Company’s Stock after
the Tender Offer, please refer to “(4) Plan for Acquisition of Company’s Stock after Tender Offer” below.
For details of the Agreement, please refer to “II. Agreement” below.
(Note 1)

According to the Tender Offeror, while the issue price of the Capital Increase through Third-Party
Allotment is a price discounted by 10% against the closing price (1,583 yen) of the Company’s Stock on
4the First Section of the Tokyo Stock Exchange on November 12, 2020, which is the business day
preceding to the date of the resolution of the Company’s Board of Directors relating to the Capital
Increase through Third-Party Allotment (November 13, 2020), with respect to the Tender Offer Price(1,850 yen), a premium is added to the market share price based on the idea of distributing the synergies
arising from the Tender Offer.
On November 13, 2020, in relation to the Tender Offer, the Tender Offeror entered into a tender offer applicationagreement with K.K. Pacific, which is the third largest shareholder of the Company and is the asset managementcompany of Mr. Shinobu Yamagishi, who is the founder and the former President and Representative Director of
the Company (“Mr. Shinobu Yamagishi”) (number of shares owned as of this day: 4,621,700 shares; number ofvoting rights: 46,217; shareholding percentage: 7.13%, “Pacific”), and another tender offer application agreementwith Mr. Shinobu Yamagishi (number of shares owned as of this day: 183,200 shares; number of voting rights:
1,832; shareholding percentage: 0.28%) (collectively, the “Application Agreements”), and obtained their consent totender all of the Company’s Stock owned by Pacific and Mr. Shinobu Yamagishi (number of shares owned as of thisday: 4,804,900 shares; number of voting rights: 48,049; shareholding percentage: 7.41%; the “Prospective Tendered
Shares”) in the Tender Offer. For details of the Application Agreements, please refer to “4. Matters Concerning
Material Agreements Related to Applications to the Tender Offer Between the Tender Offeror and Its Shareholders”
below.
The maximum number of shares to be purchased is set because the Tender Offer is not intended to delist the Company’s
Stock, and the policy of the Tender Offeror and the Company is to maintain the listing of the Company’s Stock even after
the completion of the Tender Offer. From the viewpoint of providing as many shareholders of the Company as
possible with an opportunity to sell their shares to the extent that (i) the ratio of share certificates, etc. that may beheld by the Tender Offeror after the Tender Offer will be less than two-thirds so as to protect the Tender Offeror
from the statutory obligation to purchase all tendered shares or to offer to purchase all classes of shares, and that (ii)the maximum number of shares to be purchased is able to be set, such maximum is set at 19,881,500 shares (Note 2) (voting
rights: 198,815; shareholding percentage: 30.68%). In the event that the total number of the share certificates, etc. tenderedin accordance with the Tender Offer (the “Tendered Share Certificates, Etc.”) exceeds the maximum number of shares to bepurchased (19,881,500 shares), the Tender Offeror shall not purchase, etc. such exceeding portion, in its entirety or in part,and shall deliver and conduct other settlement relating to the purchase, etc. of share certificates, etc. in accordance with the
pro rata method stipulated in Article 32 of the Cabinet Office Ordinance on Disclosure Required for Tender Offer for Share
Certificates, etc. by Person Other than Issuer (Ministry of Finance Order No. 38 of 1990, as amended). In this case, Pacificand Mr. Shinobu Yamagishi will own a part of the Company’s Stock after the Tender Offer, but the Tender Offeror has notmade any particular arrangement with Pacific or Mr. Shinobu Yamagishi regarding their subsequent holding policy of theCompany’s Stock, nor has the Tender Offeror been informed of the holding policy of Pacific or Mr. Shinobu Yamagishi.
On the other hand, in regard to the Tender Offer, even if the Tender Offeror fails to make the Company its consolidated
subsidiary, the Tender Offeror intends to additionally acquire the Company’s Stock after the Tender Offer in order to makethe Company a consolidated subsidiary (for the acquisition plan of the Company’s Stock after the Tender Offer, please referto “(4) Plan for Acquisition of Company’s Stock after Tender Offer” below); thus, the minimum number of shares to bepurchased has not been set for the Tender Offer. Therefore, the total number of Tendered Share Certificates, Etc. is lessthan or equal to the maximum number of shares to be purchased (19,881,500 shares), the Tender Offeror will purchase, etc.
all of the Tendered Share Certificates, Etc.
(Note 2) “Maximum number of shares to be purchased” is the number of shares obtained by: multiplying 100 by
the number obtained by deducting (A) the sum total (245,257) of (i) the sum (241,298) of the number ofvoting rights (206,211) relating to the Company’s Stock held by the Tender Offeror as of this day (20,621,100
shares) plus the number of voting rights (35,087) relating to the Company’s Stock to be newly issued through theCapital Increase through Third-Party Allotment (3,508,772 shares), and (ii) the sum (3,959) of the number ofvoting rights (total 3,659) relating to the Company’s Stock held by the special related parties plus the5number of voting rights (total 300) of the Company’s Stock subject to stock acquisition rights (total 300)
held by the special related parties, from (B) the number of voting rights (444,072; rounding up to nearest
whole number) which is 65.0% of the number (683,187) obtained by adding the number of voting rights(total 300) relating to the Company’s Stock subject to stock acquisition rights (total 300) held by the
special related parties to the number of voting rights (682,887) relating to the number of shares(68,288,777 shares) obtained by (i) deducting the number of treasury shares (556,734 shares) owned by
the Company as of September 30, 2020, as stated in the Company’s Second Quarterly Financial Results,
from (ii) the sum (68,845,511 shares) of (a) the total number of issued shares as of September 30, 2020
(65,336,739 shares) as stated in the Company’s Second Quarterly Report, plus (b) the number of theCompany’s Stock to be newly issued by the Capital Increase through Third-Party Allotment (3,508,772
shares).
In addition, the Company resolved, at the Board of Directors meeting of the Company held this day, to conduct
the Capital Increase through Third-Party Allotment by making the Tender Offeror a scheduled allottee. The
Tender Offeror plans to subscribe to all of the Company’s Stock to be issued by the Capital Increase through ThirdParty Allotment, subject to the satisfaction of certain conditions precedent such as the completion of the Tender
Offer. Payment by the Tender Offeror is scheduled to be made three business days after the last day of the Tender
Offer Period (or the extended Tender Offer Period if the Tender Offer Period is extended) (January 19, 2021 if theTender Offer Period ends as originally scheduled). For details of the Capital Increase through Third-Party
Allotment, please refer to the “Notice on Issuance of New Shares through Third-Party Allotment” published thisday by the Company.
If the Tender Offeror completes the payment for the Capital Increase through Third-Party Allotment, the dilutedbase shareholding percentage of the Tender Offeror to the Company’s Stock after the Capital Increase through
Third-Party Allotment (the "Shareholding Percentage after Dilution”) will be 35.32% (Note 3). In addition, if theTender Offeror completes the payment of the Capital Increase through Third-Party Allotment and if the Tender
Offeror acquires only the Prospective Tendered Shares (4,804,900 shares, number of voting rights: 48,049;
shareholding percentage: 7.41%) by way of the settlement of the Tender Offer to be conducted thereafter, theShareholding Percentage after Dilution of the Tender Offeror to the Company’s Stock after the Capital Increase
through Third-Party Allotment will be 42.35%. Furthermore, if the Tender Offeror completes the payment of theCapital Increase through Third-Party Allotment, and if the Tender Offeror acquires the maximum number of shares
to be purchased (19,881,500 shares) (number of voting rights: 198,815; shareholding percentage: 30.68%) by wayof the settlement of the Tender Offer to be conducted thereafter, the Tender Offeror’s Shareholding Percentage after
Dilution of the Company’s Stock after the Capital Increase through Third-Party Allotment will be 64.42%.
The Tender Offeror will conduct the Transaction for the principal purpose of making the Company a consolidated
subsidiary of the Tender Offeror, and that, therefore, if the Tender Offeror fails to make the Company its
consolidated subsidiary by acquiring a majority of the voting rights of the Company through the Transaction, theTender Offeror will additionally acquire the Company’s Stock to make the Company its consolidated subsidiary.
For the Tender Offeror’s acquisition plan of the Company’s Stock after the Tender Offer, please refer to “(4) Plan for
Acquisition of Company’s Stock after Tender Offer” below.
(Note 3) The “Shareholding Percentage after Dilution” is the percentage (rounded to the second decimal place; thesame applies hereafter in the calculation of the Shareholding Percentage after Dilution) of shares held
against the number (683,187), which is obtained by adding the number of voting rights relating to theCompany’s Stock subject to stock acquisition rights (total 300) held by the special relation parties (total300) to the number of voting rights (682,887) relating to the number of shares (68,288,777 shares)
obtained by adding the total number of issued shares as of September 30, 2020 (65,336,739 shares), as
stated in the Company’s Second Quarterly Report, plus the number of the Company’s Stock to be newly
issued by the Capital Increase through Third-Party Allotment (3,508,772 shares) ,whose sum of theCompany’s Stock is 68,845,511 shares, and deducting the number of treasury shares (556,734 shares)6

owned by the Company as of September 30, 2020, as stated in the Company’s Second Quarterly
Financial Results.
b. Background, Purpose and Decision-Making Process Leading to Tender Offeror’s Decision to Implement the Tender
Offer
The Tender Offeror group consists of the Tender Offeror and 18 affiliated companies (excluding non-consolidated
subsidiaries and non-equity method affiliated companies), and is engaged mainly in a single-family homes-related
business, as well as condominiums, income-producing real estate, and other businesses.
The Tender Offeror group celebrated its 20th anniversary in the fiscal year ended September 2017, andformulated the “Hop Step 5000” Mid-Term Business Plan aiming for further growth in the future of which final
fiscal year is the fiscal year ended September 2020. During the fiscal year ended September 2020, which was the
final fiscal year of the Mid-Term Business Plan, the sales mainly in the single-family homes related business andthe income-producing real estate business continued to grow steadily until the third cumulative quarter consolidated
period, and drove the growth of the business performance. The Tender Offeror group continues to acknowledges
that: (a) strengthening the competitiveness of single-family homes related business, which is the core of its business;(b) building a business portfolio based on changes in the external environment; (c) reinforcing the management
infrastructure that supports the growth of the company; and (d) acquiring new business opportunities related tochanges in the environment caused by the spread of COVID-19 are issues that need to be addressed, and has
steadily been working toward them. In accordance with the changes of lifestyles in Japan, including women’s
advancement in society since 2000 and an increase in the number of dual-income households, more people tend toseek reasonably priced houses in highly convenient urban areas. Even amid the declining population, the numberof households in urban areas is expected to increase in the future. In light of these business conditions surrounding
the Tender Offeror group, the Tender Offeror group has, in order to continue to provide a stable and efficient supplyof affordable single-family homes in central Tokyo, enhanced its product competitiveness by conducting business
operations that integrate production and sales upon establishing a system that can complete all functions within theTender Offeror group, in addition to the brokerage function it has been offering from the time of its foundation,from purchase of land, design to construction with respect to its core single-family homes related business.
Furthermore, the Tender Offeror’s single-family homes related business has steadily increased market share alongwith high profitability and high efficiency by thoroughly implementing an “aggressive” marketing strategy thatmakes pinpointed approach to customers with a focus on specific areas and by developing a dominant strategy that
intensively supplies single-family homes in major urban areas.
In addition, currently, in the real estate industry to which the Tender Offeror belongs, the rents have declined andthe conditions in the real estate trading market have deteriorated due to the spread of COVID-19 around the world,
including Japan. Nevertheless, as new needs for housing arise from an increase in the number of hours families
spend in their homes triggered by a change in environment due to the spread of COVID-19 and increase in
teleworking opportunities, the Tender Offeror group believes that the utility value of single-family homes will
expand, and that this will be a new business opportunity for the Tender Offeror group and that it will be its social
mission to respond to such new needs. As noted above, even under an environment where COVID-19 isspreading, the business performance and the issues to be addressed under the Mid-Term Business Plan for the fiscal
year ended September 2020 have steadily progressed, driven by single-family homes related business, the corebusiness of the Tender Offeror.
The Tender Offeror group has promoted M&A as its corporate policy as a part of its “Building of businessportfolio based on changes in the external environment” set forth in the Mid-Term Business Plan above, has aimed
for growth of the entire Tender Offeror group and on alliance basis that can realize business synergies, and has been
actively engaged in M&A. For example, the Tender Offeror made Open House Architect Co., Ltd. (former
Asakawa Home K.K.; “OHA”) its wholly-owned subsidiary in January 2015, and made Hawk One Corporation(“Hawk One”) its wholly-owned subsidiary in October 2018, respectively. Both OHA and Hawk One have beenable to increase their revenues as a result of significant increase in the number of houses ordered and other factors
7ever since they became a consolidated subsidiary of the Tender Offeror. OHA and Hawk One have also achieved
substantial growth in operating income as a result of lowering procurement cost and streamlining procurement byrealizing economies of scale as the Tender Offeror group; and furthermore, they have succeeded in recruiting more
personnel by mutually utilizing recruitment know-how and resources of the Tender Offeror group. As such, theTender Offeror has steadily enhanced business performance and improved management effectiveness as the entire
Tender Offeror group through M&A.
In addition, the Tender Offeror executed the Current Capital and Business Alliance Agreement (for a summary of
the Current Capital and Business Alliance, please refer to “Synergies Contemplated under the Current Capital andBusiness Alliance” below) with the Company on April 6, 2020 in order to maximize the interests of both companies
and their customers, shareholders, employees, business partners, and stakeholders, aiming to build regional andproduct complementarity and by realizing business synergies from combining management resources andmanagement know-how of the Tender Offeror and the Company. Subsequently, the Tender Offeror acquired
8,018,300 shares from Pacific and 12,602,800 shares from Mr. Shinobu Yamagishi, a total of 20,621,100 shares of
the Company’s Stock, through off-market trading at 1,100 yen per share on May 8, 2020 and acquired voting rights
equivalent to 31.91% of total voting rights (as of March 31, 2020) of the Company, and made the Company anequity-method affiliate of the Tender Offeror.
On the other hand, the Company was established in October 1997 in Chuo-ku, Osaka City, as Nikkei Prestige Co.,
Ltd. whose purpose was to engage in the business of real estate sales. In November 1998, the Company
commenced the sale of condominiums under its own brand. Later, in April 2002, the Company changed its tradename to Pressance Corporation Co., Ltd. In December 2007, the Company listed its stock on the Second Section of
the Tokyo Stock Exchange. In October 2013, the Company’s stock was designated to the First Section of theTokyo Stock Exchange.
The Company group consists of the Company and its 11 subsidiaries and 3 affiliates. The Company’s main
business is planning, developing, and selling one-room condominiums (i.e., condominiums for investment which
are made available for rent mainly to single-person households) and family condominiums (i.e., condominiums
intended for use by families). Since its foundation in October 1997, the Company has focused on the realizationof a richer, more comfortable life for those who live in its condominiums, by consistently sticking to highly
convenient locations and by providing condominiums with higher asset values. With its corporate philosophy of“Shine Light into a Corner”(Note) in mind, the Company aims to provide condominiums by making use of its
unique development capabilities as an independent condominium developer handling a wide range ofcondominiums from urban- to family-type condominiums, and has operated its business across extensive
geographical areas from the Tokyo metropolitan area to Kyushu, having provided a large number of condominiums
particularly in the Kinki region and the Tokai-Chukyo region.
Furthermore, in recent years the Company: (i) has focused on further increase in its market share in the existing
major geographical markets, mainly in Osaka, Kyoto, Kobe, Nagoya, the Tokyo metropolitan area, and Okinawa;(ii) has further strengthened its market position in the geographical markets newly entered by the Company, such as
Hiroshima, Hakata, and other cities; and (iii) has promoted increases in the number of sales and in resulting
proceeds, by increasing the number of supplied products with high customer satisfaction in price and in location andother aspects of quality, by reinforcing the company structure in such aspects as site purchase and sales activities.
However, in December 2019 an unfortunate situation arose where the Company’s former President andRepresentative Director Mr. Shinobu Yamagishi was arrested for suspected embezzlement.

Under thecircumstances, the Company, thinking that it must recover its trust promptly, had an opportunity in early March
2020 to have a talk with the Tender Offeror to which the Company was introduced through a financial institution.
The Company sympathized with the philosophy and strategy of the Tender Offeror, which had achieved a stable
growth in the same real estate industry as the Company for more than two decades. Therefore, the Company started
its discussions with the Tender Offeror towards the realization of the Current Capital and Business Alliance.
During such discussions, the Company eventually entered into the Current Capital and Business Alliance8Agreement with the Tender Offeror on April 6, 2020, with the belief that the Company would be able to contributeto the maximization of benefits for both the Company and the Tender Offeror and their respective customers,
shareholders, employees, business partners, and other stakeholders, by enhancing the Company’s credit throughalliance with the Tender Offeror to promptly eliminate concerns of the Company’s customers, shareholders,
employees, business partners, and other stakeholders, and by realizing business synergies, such as mutual
complement of geographical areas in which the two companies operate their respective businesses, and expansionof product lineups, through combining the two companies’ respective management resources and management
know-how.
(Note)“Shine Light into a Corner” means a philosophy that each one of us should do our very best in our own
environment and should shine a light around us by working for others as well, and that this will eventuallyshine a light on society as a whole and will lead to the realization of peace and happiness for people
around the world.

Since the execution of the Current Capital and Business Alliance Agreement, the Tender Offeror and theCompany have held numerous discussions in order to realize the synergies initially contemplated in the Current
Capital and Business Alliance Agreement, by mutually providing management know-how. Specifically, withrespect to the planning, development, and sales of condominiums for investment that is being conducted by theCompany in the Kinki and Chukyo regions, though it was difficult to expand business in the Kanto region because
it was not easy for the Company to acquire land on its own, the Tender Offeror and the Company concluded in the
middle of June 2020 that, with the cooperation of the Tender Offeror, which has a strong real estate network in the
Kanto region, the Company could actively expand business in the Kanto region.
In addition, with respect to the real estate fund business, after the execution of the Current Capital and Business
Alliance Agreement, the Tender Offeror and the Company commenced discussions on the possibility of jointly
establishing an asset management company and supplying real estate properties, planned and developed by the twocompanies, as investment products to institutional investors and the financial market.
On the other hand, in order for the Tender Offeror and the Company to cooperate as described above and tofurther promote the Current Capital and Business Alliance, it was recognized in the beginning of September 2020
that it is necessary to further strengthen the capital relationship because there are restrictions under laws, such as the
Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947; as amended, the“Anti-monopoly Act”), which imposes restrictions on cooperative activities between entities that conduct the same
type of business, with respect to smoothly promoting the integrated business activities of the two companies under
the current capital relationship between the Tender Offeror and the Company.
Under such circumstances, in the beginning of September 2020, the Tender Offeror exchanged a broad range ofviews with the Company on prospects of the current business climate and financial condition of the Company andits relationship with its financial institution partners, including financing, etc., in light of the significant changes inthe external environment caused by the COVID-19 pandemic. Accordingly, amid uncertainties in the outlook of
the market condition due to the COVID-19 pandemic, the Company’s current business environment is still affectedby the arrest of the Company’s former President and Representative Director in December 2019, causing theCompany’s financial institutions to keep taking a cautious attitude towards providing finance to the Company. In
addition, the spread of COVID-19 infection has not yet subsided, leaving a possibility that a further spread of theinfection in the future may aggravate the effect of the COVID-19 pandemic. In addition, at the aforementioned
meeting, the Tender Offeror and the Company came to an understanding that, in order to ensure the sustainability of
the Company’s business operations, the acquisition of land for the smooth resumption of new projects andcommencement of new business activities by the Company is necessary, and in order to assure the stability offinancing required thereby, credit enhancement through the strengthening of the capital relationship with the Tender
Offeror, such as making the Company a consolidated subsidiary of the Tender Offeror, is important. The Tender
Offeror and the Company have come to hold a common understanding that, upon strengthening the capital
relationship between the two companies, it would be extremely important to maintain to a certain extent the unique9corporate culture and management autonomy that the Company had thus far cultivated as an independent
condominium developer in order to continuously improve corporate value and shareholder value through thesustainable development of the Company; and that it was desirable to keep the Company listed as a consolidated
subsidiary of the Tender Offeror, rather than making it a wholly owned subsidiary of the Tender Offeror, as deeper
cooperation between the two companies while respecting the Company’s autonomous management would be
effective with respect to enhancing the corporate value of the Tender Offeror and the Company. In addition, as
stated above, since the Tender Offeror and the Company had previously recognized the necessity of further
promoting the capital and business alliance between the Tender Offeror and the Company, and the necessity offurther enhancing the capital relation therefor, the Tender Offeror and the Company had begun specificexaminations and discussions regarding the consolidation of the Company by the Tender Offeror and further
promotion of the Current Capital and Business Alliance from the beginning of September 2020.
Thereafter, while the Tender Offeror conducted the due diligence on the Company from the middle of September
2020 (such due diligence was completed in the middle of October 2020), the Tender Offeror has repeatedly
conducted verification of methods for the consolidation of the Company and of the synergies between the twocompanies. During such verification, the Tender Offeror reaffirmed the current business climate of the Company,
and in the middle of October 2020, the Tender Offeror recognized that making the Company a consolidated
subsidiary of the Tender Offeror by acquiring the Company’s Stock is necessary and effective (i) to enhance thecredit and stabilize the financing of the Company, and (ii) to further enhance the feasibility of the following
synergies contemplated under the Current Capital and Business Alliance. As the specific method for acquiring theCompany’s Stock, a method by way of a tender offer, that provides the general shareholders of the Company withthe opportunity to sell shares and that does not dilute the Company’s Stock was mainly considered; however, inlight of the current business climate of the Company, it is also important to conduct capital financing in order toexpand the income scale and realize the continuous business growth of the Company, and the Tender Offeror
believes that the Tender Offeror’s direct investment of funds will support the Company’s financing and will showthat the Tender Offeror is willing to strongly promote the New Capital and Business Alliance; thus, it would bedesirable to conduct the Capital Increase through Third-Party Allotment together with the Tender Offer, andstrengthen the financial base of the Company by the Tender Offeror subscribing thereto. In such case, upon
considering the existing shareholders, the Tender Offeror recognized that it is necessary to keep the scale of theCapital Increase through Third-Party Allotment at a level that can avoid the substantial dilution of the Company’s
Stock. Accordingly, in the middle of October 2020, the Tender Offeror conveyed to the Company that it isdesirable to make the Company a consolidated subsidiary of the Tender Offeror, and that, as a specific method toacquire the Company’s Stock, it is desirable to combine the capital increase through third-party allotment with thetender offer, and commenced to review and discuss the Transaction.
Synergies Contemplated under the Current Capital and Business Alliance(a) Regional complementarity(i) Establishment of the Company’s business in the Kanto region
By utilizing the Tender Offeror’s real estate network in the Kanto region, the Tender Offeror aims topromote sales, in the Kanto region, of the Company’s business of developing and selling investment
condominiums, which has been conducted by the Company mainly in the Kansai region, and to expand thisbusiness into the Kanto region.
(ii) Establishment of the Tender Offeror’s business in the Kansai region
By utilizing the Company’s real estate network in the Kansai region and receiving information within ascope that does not compete the single-family homes sales business operated by the Company or its
subsidiaries, the Tender Offeror aims to promote sales, in the Kansai region, of its single-family homes
business that it has been conducting mainly in the Kanto region, and to expand this business into the Kansai
region.
10

(iii) Collaboration in other regions
In other regions as well, both companies will explore potential opportunities for collaboration and willconsider offering a wider range of products, including implementing joint projects.
(b) Product complementarity(i) Expansion of product lineup
From the viewpoint of expanding the lineup of investment products, both companies will bring together
investment products, which they are capable of providing, such as investment condominiums, overseas realestate and other income-producing real estate, and provide a wide range of investment products to current
and potential investors to respond to their needs; thereby aiming to further expand the businesses of bothcompanies.
(ii) Promotion of product development
Through collaboration between the product development divisions of the two companies, we will
promote product development that meets the various needs of customers (currency diversification,
inheritance tax measures, expansion of earnings, etc.) and flexibly provide products to customers byimplementing joint projects, etc.
(c)Management and administration of lease properties and properties for sale
By sharing the Company’s business platform and know-how in the recurring revenue business, which theCompany obtained through lease management and property management of the properties it developed, theTender Offeror will provide similar services for its sales properties and will aim to develop its own recurring
revenue business.

(d) Cost reduction
The purchasing divisions of both companies will aim to reduce costs by standardizing parts and materials
and increasing the transaction volume.
Subsequently, the Tender Offeror and the Company continued to review and discuss the Transaction, and in the
middle of October 2020, reaffirmed their understanding that ensuring the Company’s credit enhancement and thestabilization of financing by making the Company a consolidated subsidiary of the Tender Offeror through theTransaction, and at the same time, deepening the cooperation between both companies while respecting theindependence of the Company’s management, will promote the capital and business alliance between the twocompanies and will contribute to the enhancement of the corporate value of both companies.
With respect to the total subscription price of the Capital Increase through Third-Party Allotment, the Tender
Offeror has reviewed the amount that is expected to be applied to the acquisition of land by the Company, while
avoiding significant dilution of the Company’s Stock, and with respect to the maximum number of shares to bepurchased through the Tender Offer, to the extent that (i) the ratio of share certificates, etc. that may be held by theTender Offeror after the Tender Offer will be less than two-thirds so as to protect the Tender Offeror from thestatutory obligation to purchase all tendered shares or to offer to purchase all classes of shares, and that (ii) the
maximum number of shares to be purchased is able to be set, the Tender Offeror set a policy that the percentage ofvoting rights held by the Tender Offeror after the Transaction will be around 65% at maximum, from theperspective of providing as many of the Company’s shareholders as possible with opportunities to sell their shares,
while respecting the Company’s independent management (The Tender Offeror plans to maintain and respect theautonomy of the Company’s management after the Tender Offer, and the number of officers, which officers and theroles of the officers the Tender Offeror will assign to the Company at the 24th Ordinary General Meeting of
Shareholders of the Company to be held in June 2021 (the “Ordinary General Meeting of Shareholders”) have not11yet been decided and will be discussed in good faith with the Company after the settlement of the Tender Offer, but
the discussions will be conducted on the premise that two to three personnel will be assigned. For details, pleaserefer to “ d. Management Policy after the Tender Offer” below.). In the middle of October 2020, the Tender
Offeror proposed to the Company that (i) the aggregate amount to subscribe in the Capital Increase through ThirdParty Allotment be 5 billion yen, (ii) the percentage of voting rights of the Company held by the Tender Offeror
after the implementation of the Capital Increase through Third-Party Allotment and the Tender Offer be around
65%, (iii) the Tender Offer Price be set at 1,750 yen, and (iv) the issue price of the Capital Increase through ThirdParty Allotment be the price discounted by 10% against the closing price of the Company’s Stock on the First
Section of the Tokyo Stock Exchange on the business day prior to the date of announcement of the Transaction, as
an amount that does not fall under “particularly favorable amount” as set forth in the Japan Securities Dealers
Association’s “Guidelines Concerning Treatment of Capital Increase through Third-Party Allotment” (dated April 1,
2010). In response, in late October 2020, the Company requested the Tender Offeror to reexamine such proposal
for the reason that the Company viewed that setting the Tender Offer Price at 1,750 yen would not be enough to add
a reasonable premium, as compared to the level of premiums in tender offer cases where the target company isintended to remain listed. Thereafter, following discussions with the Company, the Tender Offeror made a final
proposal and reached an agreement in early November 2020 providing that the Tender Offer Price will be set at
1,850 yen and the issue price of the Capital Increase through Third-Party Allotment will be the price discounted by
10% against the closing price of the Company’s Stock on the First Section of the Tokyo Stock Exchange on thebusiness day prior to the date of announcement of the Transaction (for the reasons for why the Tender Offer Priceand the issue price of the Capital Increase through Third-Party Allotment are different from each other, please refer
to (Note 1) in “(1) Overview of Tender Offer” above). The Tender Offeror also approached Pacific and Mr.
Shinobu Yamagishi in late September 2020 with the sale of the Company’s Stock, and made a proposal to them inearly November 2020 to set the Tender Offer Price at 1,750 yen. Thereafter, as part of continuing discussions, theCompany made a subsequent proposal in the middle of November to set the Tender Offer Price at 1,850 yen. As aresult, an agreement was reached at such price with Pacific and Mr. Shinobu Yamagishi in the middle of November
2020, with the Application Agreements being executed as of November 13.
Following such discussions and negotiations, the Tender Offeror resolved, at the Board of Directors meeting held
on November 13, 2020, to implement the Transaction in order to make the Company a consolidated subsidiary of
the Tender Offeror, and executed the Agreement with the Company on the same date.
c. The Company’s Decision-Making Process Leading to Decision to Consent to Tender Offer and Reasons Therefor
As described in “b. Background, Purpose and Decision-Making Process Leading to Tender Offeror’s Decision to
Implement the Tender Offer” above, since starting specific investigations and discussions in early September 2020
on the Tender Offeror’s proposed making of the Company its consolidated subsidiary, the Company has carefully
investigated into, and discussed with the Tender Offeror, the particulars of the Agreement, the necessity and terms of
the Capital Increase through Third-Party Allotment, and the tender offer price and other terms and conditions of theTender Offer.

As described in “b. Background, Purpose and Decision-Making Process Leading to Tender

Offeror’s Decision to Implement the Tender Offer” above, the Tender Offeror aims to further increase the feasibilityof synergies in (a) regional complementarity, (b) product complementarity, (c) management of properties for leaseand sale, and (d) cost reduction, all of which were intended in the Current Capital and Business Alliance. In early
September 2020, the Company considered that the above policy contemplated by the Tender Offeror was in linewith the direction in which the Company intended to proceed, and that, in order for the Company to continue toincrease its corporate value and shareholder value on a mid- to long-term basis through continuing, as before, theprovision of condominiums with high asset value and the realization of a rich, comfortable life for those who live inthem, it was also necessary for the Company to further increase the feasibility of the above described synergies, andit was essential for the Company to promote its business through building stronger capital and cooperative ties with
the Tender Offeror by becoming its consolidated subsidiary instead of its equity-method affiliate, as the Company isat the moment.
12In addition, in early September 2020, the Company considered that, while it was necessary for the Company topromote its business through building stronger capital and cooperative ties with the Tender Offeror, it was extremely
important to maintain, to a certain extent, the Company’s own corporate culture and autonomy in management that
the Company has cultivated thus far as an independent condominium developer, in order to continue to increase thecorporate value and shareholder value of the Company through its continuous development, and that, instrengthening the capital ties between the two companies, it was desirable to maintain the Company’s listed status
by making the Company a consolidated subsidiary of the Tender Offeror instead of its wholly-owned subsidiary, inorder to allow the two companies to deepen cooperation between them while respecting the Company’s
autonomous management.
Furthermore, amid uncertainties in the outlook of the market condition due to the COVID-19 pandemic, theCompany’s current business environment is still affected by the arrest of the Company’s former President andRepresentative Director in December 2019, causing the Company’s financial institutions to keep taking a cautious
attitude towards providing finance to the Company. In addition, the spread of COVID-19 infection has not yet
subsided, leaving a possibility that a further spread of the infection in the future may aggravate the effect of the
COVID-19 pandemic. The Company realizes that, in order to achieve increase in the size of its proceeds and torealize its continuous business growth under these circumstances, the Company needs to increase its funds for siteacquisition by making financial arrangements of a capital nature. The Company believes that making thesearrangements will, at the same time, lead to a prompt improvement of the financial institutions’ attitude towards
financing the Company and to a realization of permanent business operations of the Company, through increasing
its own capital. Based on these facts and considerations, in late September 2020 the Tender Offeror and theCompany reached the conclusion that, among specific methods for making the Company a consolidated subsidiaryof the Tender Offeror, the most appropriate method is to combine the Tender Offer and the Capital Increase through
Third-Party Allotment, because allowing the Company to raise funds by implementing the Capital Increase through
Third-Party Allotment in addition to the Tender Offer by the Tender Offeror will further increase the Company’s
financial strength, resulting in an increase in its management stability, and will also further improve the Company’s
reputation among financial institutions, allowing the Company to increase its fundraising capabilities and to achieve
increase in the size of its proceeds and to realize its continuous business growth by further strengthening purchase ofsites for condominium buildings, which will, in turn, contribute to increasing the corporate value and shareholder
value of the Company.
To ensure the fairness of the Tender Offer Price and the Transaction in the process of the investigations anddiscussions with the Tender Offeror described above, the Company retained Nishimura & Asahi as a legal advisor inearly September 2020, from which the Company has received necessary legal advice (see “b. Advice from an
Independent Law Firm Received by the Company” under “(7) Measures to Ensure Fairness of Tender Offer Suchas Measures to Ensure Fairness of Tender Offer Price and to Avoid Conflicts of Interest” below). The Company
also retained Deloitte Tohmatsu Financial Advisory LLC as a financial advisor in early September 2020, fromwhich the Company has received advice from a financial point of view. Furthermore, in mid-September 2020 theCompany requested Plutus Consulting, a third-party valuation institution, to assess the share value of theCompany’s Stock, and received a share valuation report (the “Company’s Valuation Report”) on November 12,
2020 (see “(3) Matters Relating to Calculations” below).
As a result of the above discussions and investigations, the Company’s Board of Directors, at its meeting held thisday where, out of the nine directors (including the four outside directors), eight participated in the deliberation andvote (with the exception of Mr. Kotaro Wakatabi who is concurrently a director of the Tender Offeror) and adopted,
with the unanimous affirmative vote of all directors (including the Audit and Supervisory Committee Members)
who participated in the vote, a resolution expressing an opinion in support of: (i) the proposed execution of theAgreement with the Tender Offeror; and (ii) the Tender Offer, which will be executed as part of the Transaction.
In light of the valuation results for the Company’s Stock obtained from Plutus Consulting, which is a third-party
valuation institution, the Company believes that the Tender Offer Price is reasonable. However, considering thefact that a maximum number of shares to be purchased during the Tender Offer has been set, and that the13Company’s Stock is planned to remain listed after the Tender Offer, the Company has decided to adopt a neutral
position as to whether or not the Company’s shareholders choose to tender their shares in the Tender Offer, and toleave this choice up to the discretion of the shareholders. Accordingly, at the Board of Directors meeting held thisday, the Company adopted a resolution to that effect with the unanimous affirmative vote of all directors (including
the Audit and Supervisory Committee Members) who participated in the vote.
Please note that Mr. Kotaro Wakatabi, who is an outside director of the Company and concurrently serves as adirector of the Tender Offeror, did not participate in the deliberation or vote on the Transaction at the
aforementioned Board of Directors meeting of the Company or in discussions or negotiations with the Tender
Offeror in any capacity representing the Company, in order to avoid any suspicion of conflict of interest.
d. Management Policy after the Tender Offer
The Tender Offeror’s the management policy for the Company after the Tender Offer is to maintain the listing of
the Company’s Stock on the First Section of the Tokyo Stock Exchange and to maintain and respect the autonomyof the Company’s management.
As for the management framework of the Company, Mr. Kotaro Wakatabi, who is a director of the Tender
Offeror, concurrently serves as an outside director of the Company as of this day.

The Tender Offeror plans,

pursuant to the Agreement, to request the Company to make Mr. Masaaki Arai (“Mr. Arai”), who is therepresentative director of the Tender Offeror as of this day, chairman promptly after the settlement of the Tender
Offer, and to submit a proposal for the election of directors, including Mr. Arai as a candidate for director, at theOrdinary General Meeting of Shareholders. If the proposal to appoint Mr. Arai as a director is approved at theOrdinary General Meeting of Shareholders, the Tender Offeror plans to request, pursuant to the Agreement, to have
Mr. Arai made Chairman of the Board of Directors at the meeting of the Board of Directors to be held after such
Ordinary General Meeting of Shareholders. (The Tender Offeror does not currently plan to go as far as to request
the Company to grant representative authority to Mr. Arai at such meeting of the Board of Directors.) In addition,
pursuant to the Agreement, the number, person and the roles of officers to be dispatched to the Company have notyet been decided, since the Tender Offeror and the Company shall discuss such matter in good faith after thesettlement of the Tender Offer. However, the Tender Offeror anticipates holding discussions with the Company
with the view of dispatching around two to three officers. The Tender Offeror intends to start the discussions with
the Company promptly after the settlement of the Tender Offer on the topic of officers to be dispatched, which isincluded in the proposal for the election of directors to be submitted at the Ordinary General Meeting of
Shareholders.
Moreover, after the day on which the Company becomes a consolidated subsidiary of the Tender Offeror, theTender Offeror and the Company shall discuss changing the fiscal year of the Company to the period from October
1 to September 30 each year.
(3) Matters Relating to Calculations
a. Name of the Appraisal Organization and its Relationship with the Tender Offeror and the Company
Prior to expressing its opinion regarding the Tender Offer, the Company requested Plutus Consulting as a thirdparty valuation institution independent from the Tender Offeror, the Company, Pacific, and Mr. Shinobu Yamagishi,
to evaluate the share value of the Company’s Stock, and received the Company’s Valuation Report on November 12,
2020. Plutus Consulting is not a related party to the Tender Offeror or the Company and does not have any
material interest in the Tender Offer.
b. Overview of Calculations
After examining which methods of valuation analysis to be adopted for the valuation of the share value of theCompany’s Stock from among several share several methods of valuation analysis of share value, Plutus Consulting
conducted the valuation of the share value per share of the Company’s Stock using the following methods, on theassumption that the Company is a going concern, and based on its philosophy that multifaceted evaluation of the14Company’s Stock would be appropriate: (i) the market share price analysis, because the Company’s Stock is listedon the First Section of the Tokyo Stock Exchange, and the market prices are available for the Company’s Stock, and(ii) the Discounted Cash Flow analysis (“DCF analysis”), so as to reflect the future business activities in theevaluation. However, the Company has not obtained an opinion concerning the fairness of the Tender Offer Price(a fairness opinion) from Plutus Consulting.
The ranges of the share value per share of the Company’s Stock calculated using the foregoing methods are as
follows:
Market share price analysis:

1,341 yen to 1,583 yen

DCF analysis:

1,280 yen to 2,119 yen

Under the market share price analysis, with November 12, 2020 set as the record date for valuation, the range ofthe share value per share of the Company’s Stock was evaluated to be from 1,341 yen to 1,583 yen, based on theclosing price of the Company’s Stock on the First Section of Tokyo Stock Exchange on the record date which was
1,583 yen, the simple average of the closing price for the most recent one (1) month period which was 1,513 yen(rounded off to the nearest whole number; the same applies hereinafter in the calculation of a simple average ofclosing price), the simple average of the closing price for the most recent three (3) month period which was 1,439
yen, and the simple average of the closing price for the most recent six (6) month period which was 1,341 yen.
Under the DCF analysis, the share value per share of the Company’s Stock was evaluated to be in the range of
1,280 yen to 2,119 yen as a result of evaluating the corporate value and the share value of the Company bydiscounting the free cash flow that is expected to be generated by the Company in and after the 2nd quarter of the
fiscal year ending March 2021 to the present value using a certain discount rate, based on various factors, such as
the Company’s investment plans and the earnings estimates in the Company’s the business plan for the fiscal year
ending March 2021 through the fiscal year ending March 2023 that were prepared by the Company, and publicly
available information.
It should be noted that the business plans of the Company used in the valuation in the DCF analysis include a
fiscal year for which a large increase or decrease in income or profit is expected. Specifically, amid uncertainties
in the outlook of the market condition due to the influence of the spread of COVID-19 during the period from thefiscal year ended March 2020 to the fiscal year ending March 2021, the operating income in the fiscal year ending
March 2022 is expected to decrease by 38.6% from the previous fiscal year due to such causes as restraint ofpurchase in order to optimize the inventory stock levels and sufficiently ensure cash reserves. An outline of thesebusiness plans is shown below. Since it is difficult at this time to specifically estimate the synergies expected to berealized as a result of the implementation of the Transaction, the aforementioned business plans are not based on theassumption of the implementation of the Transaction.
(in millions of yen)
Fiscal Year Ending

Fiscal Year Ending

Fiscal Year Ending

March 2021

March 2022

March 2023

Revenue

234,496

162,627

148,913

Operating income

26,72816,401

14,309(4) Plan for Acquisition of Company’s Stock after Tender Offer
The Tender Offeror will conduct the Transaction for the principal purpose of making the Company aconsolidated subsidiary of the Tender Offeror and plans to have the Company’s Stock remain listed after theTransaction. Therefore, if the Tender Offeror acquires a majority of the voting rights of the Company (i.e., theTender Offeror holds 341,444 or more voting rights after the Transaction, or acquires 10,014,528 shares or more of
the Company’s Stock through the Tender Offer) through the Transaction, the Tender Offeror, at this point in time,
does not plan to additionally acquire the Company’s Stock after the Transaction. On the other hand, (i) if Tender15

Offeror fails to make the Company its consolidated subsidiary as a result of failing to acquire a majority of thevoting rights of the Company through the Transaction (i.e., the Tender Offeror holds less than 341,444 voting rights
after the Transaction, or acquires less than 10,014,528 shares the Company’s Stock through the Tender Offer), or(ii) if the Tender Offeror succeeds in making the Company its consolidated subsidiary by acquiring a majority of thevoting rights of the Company through the Transaction, but if the percentage of voting rights held by the Tender
Offeror decreases to 50% or less due to the exercise of stock acquisition rights of the Company, or other reasons, theTender Offeror will additionally acquire the Company’s Stock, in the number which is sufficient for the Tender
Offeror to acquire the majority of the voting rights of the Company, for the purpose of making the Company its
consolidated subsidiary, and will discuss with the Company specific methods therefor, including acquisition in themarket and subscription to the Company’s capital increase through third-party allotment, taking into consideration
the market trends and capital needs of the Company. Although the number of shares to be acquired is planned to
be a number of shares based on which the total number of voting rights of the Company owned by the Tender
Offeror will be more than 50% of the number of voting rights of the Company, so that the number of shares to beacquired would be sufficient for the Tender Offeror to acquire the majority of the voting rights of the Company, theTender Offeror plans to discuss with the Company the specific number of shares to be acquired.
(5) Possibility of Delisting and Reasons Therefor
As of this day, the Company’s Stock are listed on the First Section of the Tokyo Stock Exchange. The Tender
Offeror has no intention to delist the Company’s Stock through the Tender Offer and will conduct the Tender Offer by
setting the maximum number of shares to be purchased at 19,881,500 shares (number of voting rights: 198,815;
shareholding percentage: 30.68%). The Tender Offeror’s Shareholding Percentage after Dilution will be 64.42% at a
maximum after the payment for the Capital Increase through Third-Party Allotment is made and the Tender Offer iscompleted. Therefore, the Company’s Stock will remain listed on the First Section of the Tokyo Stock Exchange
after the completion of the Tender Offer.
(6) Concerning So-Called Two-Step Acquisition
The Tender Offer is not designed as part of a so-called two-step acquisition.
(7) Measures to Ensure Fairness of Tender Offer Such as Measures to Ensure Fairness of Tender Offer Price and to Avoid
Conflicts of Interest
Since the Company is not a subsidiary of the Tender Offeror as of this day and the Tender Offer does not constitutea tender offer or an MBO by a controlling shareholder, which is subject to the “Fair M&A Guidelines” formulated by
the Ministry of Economy, Trade and Industry, the Company is not required to take certain measures which would be
generally required to be taken as fairness ensuring measures. However, considering that the Tender Offeror owns
20,621,100 shares (number of voting rights: 206,211; shareholding percentage: 31.82%) of the Company’s Stock andthe Company is an equity-method affiliate of the Tender Offeror, and that the Application Agreements will be
executed with Pacific and Mr. Shinobu Yamagishi, and that Mr. Kotaro Wakatabi, who is an outside director of theCompany, is concurrently serving as a director of the Tender Offeror, the Tender Offeror and the Company have taken
the following measures to ensure the fairness of the Transaction and to avoid conflicts of interest. The measures
implemented by the Tender Offeror described below are based on the explanation received from the Tender Offeror.
a. Obtaining of the Company’s Valuation Report from an Independent Third-party Valuation Institution by theCompany
Please refer to “a. Name of the Appraisal Organization and its Relationship with the Tender Offeror and theCompany” and “b. Overview of Calculations” under “(3) Matters Relating to Calculations” above.
b. Advice from an Independent Law Firm Received by the Company
To ensure transparency and fairness in, among other things, the process of decision-making by the Company’s
16Board of Directors on the Transaction, the Company has retained Nishimura & Asahi as a legal advisor independent
from both the Tender Offeror, the Company, Pacific, and Mr. Shinobu Yamagishi, from which the Company hasreceived necessary legal advice on the approach and process of, and other points to note regarding, decision-making
by the Company’s Board of Directors on the Transaction.
c. Unanimous Approval by All of the Non-interested Directors of the Company, including the Audit and Supervisory
Committee Members
The Company, at its Board of Directors meeting held this day where eight of its nine directors (including four
outside directors and excluding Mr. Kotaro Wakatabi who is concurrently a director of the Tender Offeror)
participated in the deliberation and vote, adopted a resolution expressing an opinion in support of: (i) the proposed
execution of the Agreement with the Tender Offeror; and (ii) the Tender Offer, which will be executed as part of theTransaction, based on the grounds and reasons described in “c. The Company’s Decision-Making Process Leading
to Decision to Consent to Tender Offer and Reasons Therefor” under “(2) Grounds and Reasons for Opinion”
above, with the unanimous affirmative vote of all directors (including audit and supervisory committee members)
who participated in the vote.
The Company believes that the Tender Offer Price is reasonable, since (i) it is above the upper limit of the rangeof the valuation results produced by the market share price analysis described in the valuation results of theCompany’s Stock obtained from Plutus Consulting, which is a third-party valuation institution, and (ii) it is within
the range of the valuation results produced by the DCF analysis described in the same valuation results. However,considering the fact that the Tender Offeror has set a maximum number of shares to be purchased in the Tender
Offer, and that the Tender Offeror plans to maintain the listing of the Company’s Stock after the Tender Offer, theCompany has decided to adopt a neutral position as to whether or not the Company’s shareholders choose to tendertheir shares in the Tender Offer, and to leave this choice up to the discretion of the shareholders. Accordingly, at
the Board of Directors meeting held this day, the Company adopted a resolution to that effect with the unanimous
affirmative vote of all directors (including Audit and Supervisory Committee Members) who participated in the vote.
Please note that Mr. Kotaro Wakatabi, who is an outside director of the Company and concurrently serves as adirector of the Tender Offeror, did not participate in the deliberation or vote on the Transaction at the
aforementioned Board of Directors meeting of the Company or in discussions or negotiations with the Tender
Offeror in any capacity representing the Company, in order to avoid any suspicion of conflict of interest.
d. Obtaining of the Share Valuation Report from an Independent Third-party Valuation Institution by Tender Offeror
The Tender Offeror requested SMBC Nikko Securities Inc. (“SMBC Nikko Securities”), a financial advisor, as athird-party valuation institution that is independent from the Tender Offeror, the Company, Pacific, and Mr.
Shinobu Yamagishi, to evaluate the share value of the Company’s Stock for determining the Tender Offer Price,and obtained a share valuation report from SMBC Nikko Securities concerning the share value of the Company’s
Stock on November 12, 2020. SMBC Nikko Securities is not a related party of the Tender Offeror or theCompany, and has no material interest in the Tender Offer. In addition, the Tender Offeror has not obtained an
opinion concerning the fairness of the Tender Offer Price (a fairness opinion) from SMBC Nikko Securities.
After examining which methods of valuation analysis to be adopted for the valuation of the share value of theCompany’s Stock from among several methods of valuation analysis of share value, SMBC Nikko Securities
conducted the valuation of the share value of the Company’s Stock using the following methods of analysis: (i) themarket share price analysis, because the Company’s Stock is listed on the First Section of Tokyo Stock Exchange,
and the market prices are available for the Company’s Stock, (ii) the comparable listed company analysis, because
an analogical inference of the share value of the Company’s Stock is possible through the comparison with listedcompanies similar to the Company, and (iii) the DCF analysis, so as to reflect the future business activities in theevaluation.
The ranges of the share value per share of the Company’s Stock calculated using the above methods is as follows:17Market share price analysis:

1,341 yen to 1,513 yen

Comparable listed company analysis:

703 yen to 1,746 yen

DCF analysis:

1,686 yen to 2,853 yen

Under the market share price analysis, with November 12, 2020 set as the record date for valuation, the range ofthe share value per share of the Company’s Stock was analyzed to be from 1,341 yen to 1,513 yen, based on thesimple average of the closing price for the most recent one (1) month period up to the record date for valuation(from October 13, 2020 to November 12, 2020) of the Company’s Stock on the First Section of Tokyo Stock
Exchange which was 1,513 yen, the simple average of the closing price for the most recent three (3) month period(from August 13, 2020 to November 12, 2020) which was 1,439 yen and the simple average of the closing price forthe most recent six (6) month period (from May 13, 2020 to November 12, 2020) which was 1,341 yen.
Under the comparable listed company analysis, the share value of the Company’s Stock was calculated bycomparing the market share prices and financial indicators showing profitability of some listed companies engaged
in a business similar to that conducted by the Company, and the share value per share of the Company’s Stock wasanalyzed to be in the range of 703 yen to 1,746 yen.
Under the DCF analysis, the share value per share of the Company’s Stock was analyzed to be in the range of
1,686 yen to 2,853 yen as a result of analyzing the corporate value and the share value of the Company bydiscounting the free cash flow that is expected to be generated by the Company in the future in and after the 2nd
quarter of the fiscal year ending March 2021 to the present value using a certain discount rate, based on the future
earnings forecasts of the Company in and after the 3rd quarter of the fiscal year ending March 2021, taking into
account various factors, such as the business plans for the fiscal year ending March 2021 through the fiscal year
ending March 2023 that were provided by the Company, interviews with the Company’s personnel and publicly
available information. It should be noted that, the business plans of the Company based on which the DCF
analysis above was performed include a fiscal year in which a large increase or decrease in income or profit isexpected is included. Specifically, amid uncertainties in the outlook of the market condition due to the influence ofthe spread of COVID-19 during the period from the fiscal year ended March 2020 to the fiscal year ending March
2021, the operating income for the fiscal year ending March 2022 is expected to decrease by 38.6% from theprevious fiscal year because of restraint of purchase in order to optimize the inventory stock levels and sufficiently
ensure cash reserves. An outline of these business plans is shown below. Since it is difficult at this time to
specifically estimate the synergies expected to be realized as a result of the implementation of the Transaction, theaforementioned business plans are not based on the assumption of the implementation of the Transaction.

Fiscal year ending
March 31, 2021
Net sales
Operating income

Fiscal year ending
March 31, 2022

(in millions of yen)
Fiscal year ending March
31, 2023

234,496

162,627

148,913

26,72816,401

14,309Referring to the valuation results indicated in the share valuation report provided by SMBC Nikko Securities, theTender Offeror comprehensively reviewed several factors, such as the results of the due diligence on the Company
conducted from the middle of September 2020 to the middle of October 2020, the premiums added in tender offers
conducted in the past by any parties other than an issuer, aiming to make the issuer a consolidated subsidiary,
whether or not the Company’s board of directors would support the Tender Offer, and the prospect of shares being
tendered in the Tender Offer; and took into consideration the result of the discussions and negotiations with Pacific,
Mr. Shinobu Yamagishi and the Company. As a result, the Tender Offeror set the Tender Offer Price at 1,850 yen
on November 13, 2020.
The Tender Offer Price of 1,850 yen represents (a) a premium of 16.87% on 1,583 yen, which is the closing priceof the Company’s Stock on the First Section of Tokyo Stock Exchange on November 12, 2020, the business day
18

immediately preceding the announcement date of implementation of the Tender Offer; (b) a premium of 22.27% on
1,513 yen, which is the simple average closing price of the Company’s Stock for the past one (1) month up to thesame date; (c) a premium of 28.56% on 1,439 yen, which is the simple average closing price of the Company’s
Stock for the past three (3) months up to the same date; and (d) a premium of 37.96% on 1,341 yen, which is thesimple average closing price of the Company’s Stock for the past six (6) months up to the same date. On May 8,
2020, the Tender Offeror acquired 20,621,100 shares of the Company’s Stock (number of voting rights: 206,211;
shareholding percentage: 31.82%) at 1,100 yen per share through off-market trading. The reason for the differencein the amount of 750 yen between such purchase price and the Tender Offer Price is that the former is the pricedetermined based on the market price of the Company’s Stock at the time of the off-market trading, while the latteris the price including a premium added on the market price of the Company’s Stock based on the aforementioned
examinations.

4. Matters Concerning Material Agreements Related to Applications to the Tender Offer Between the Tender Offeror and Its
Shareholders
The Tender Offeror has entered into the Application Agreements with both Pacific and Mr. Shinobu Yamagishi.
In the Application Agreements, Pacific and Mr. Shinobu Yamagishi agreed to tender 4,621,700 shares of theCompany’s Stock which Pacific holds, and 183,200 shares of the Company’s Stock which Mr. Shinobu Yamagishi holds,
respectively, to the Tender Offer subject to the conditions precedent that: (i) representations and warranties of the Tender
Offeror (Note) are true and correct in their entirety; (ii) the Board of Directors of the Company has resolved an
expression of opinion to support the Tender Offer and made an announcement to such effect; (iii) there are no laws or
regulations, etc. or any other orders, dispositions, or decisions by courts or other judicial agencies, administrative
agencies, financial instruments exchanges, or other self-regulatory organizations that restrict or prohibit the Tender Offeror the tendering of shares by Pacific and Mr. Shinobu Yamagishi; and (iv) Pacific and Mr. Shinobu Yamagishi do nothave knowledge of any nonpublic material facts set forth in Article 166, Paragraph 2 of the Financial Instruments andExchange Act (Act No. 25 of 1948; as amended; the same applies hereinafter) related to the Company.
(Note)

In each of the Application Agreements, the Tender Offeror made representations and warranties as to (i) lawful
and valid establishment and existence of the Tender Offeror, (ii) authority to execute and perform theApplication Agreement, (iii) enforceability of the Application Agreement, (iv) acquisition of the permits andauthorization, etc. required for execution and performance of the Application Agreement, (v) non-existence ofany conflict with laws and regulations, etc., due to the execution and performance of the Application Agreement,(vi) non-existence of bankruptcy proceedings with respect to the Tender Offeror, and (vii) non-existence of any
relationship with anti-social forces.

5. Provision of Profit by the Tender Offeror or Its Special Related Parties
Not applicable

6. Policy of Addressing Basic Policy concerning Company Control
Not applicable

7. Questions for Tender Offeror
Not applicable

8. Request to Extend Tender Offer Period
19Not applicable

9. Prospects Going Forward(1)

Policy after the Transaction
For the policy after the Transaction, please refer to: “d. Management Policy after the Tender Offer” under “(2)Grounds and Reasons for Opinion” of “3. Opinion Regarding Tender Offer and Grounds and Reasons Therefor”; and“(5) Possibility of Delisting and Reasons Therefor” of “3. Opinion Regarding Tender Offer and Grounds and Reasons
Therefor” above.

(2)

Prospects for Business Going Forward
With respect to the effects of the Transaction on the Company’s business performance, a detailed analysis iscurrently underway. If it becomes necessary to revise results forecasts or if any matters that should be publishedoccur, the Company will promptly disclose the same.

10. Others
As announced in the “Notice Regarding Differences Between (Consolidated and Non-Consolidated) Results Forecasts
and Financial Results for Cumulative Second Quarter Period of Fiscal Year Ending March 2021 and Revision of(Consolidated and Non-Consolidated) Results Forecasts for Fiscal Year Ending March 2021 and Regarding Decision on(Interim) Dividend of Surplus and Revision of Fiscal Year-End Dividend Forecast” published this day, the Company
experienced differences between the (consolidated and non-consolidated) results forecasts for the cumulative second
quarter period of the fiscal year ending March 2021 and the financial results announced this day, as well as revising the(consolidated and non-consolidated) results forecasts for the fiscal year ending March 2021. In addition, at its Board of
Directors meeting held this day, the Company adopted a resolution to pay an (interim) dividend of surplus, as well as
revising the year-end dividend forecast. For details, please refer to the Company’s relevant notice.
Consolidated Second Quarterly Financial Results for the Fiscal Year Ending March 2021 <under J-GAAP>
II. Agreement
1. Reasons for Alliance
Please refer to “(2) Grounds and Reasons for Opinion” under “3. Opinion Regarding Tender Offer and Grounds andReasons Therefor” of “I. Expression of Opinion Regarding Tender Offer” above.

2. Alliance Particulars
The Company executed the Agreement dated November 13, 2020 with the Tender Offeror. An overview of theAgreement is as follows.
(1) Matters concerning the Tender Offer
The Company shall, on the execution date of the Agreement, make a Board of Directors resolution in support of theTender Offer (which requires unanimous consent of all directors except those who have or are likely to have interest;
hereinafter the “Expression of Opinion Resolution”) and announce the content thereof. The Company shall notwithdraw or amend the Expression of Opinion Resolution during the Tender Offer Period, nor make a Board of
Directors resolution that is inconsistent with the content of the Expression of Opinion Resolution.
(2) Matters concerning the Capital Increase through Third-Party Allotment
20

The Company shall, in accordance with the offering terms set forth in (a) to (e) below, allot 3,508,772 shares of
the Company’s Stock to the Tender Offeror subject to (f)(y) below as conditions precedent, and the Tender Offeror
shall make payment of the total amount to be paid and subscribe for all of the 3,508,772 shares of such Company’
Stock subject to (f)(x) below as conditions precedent.
(a) Type of offered shares: Common stock(b) Number of offered shares: 3,508,772 shares(c) Amount to be paid: 1,425 yen per share(d) Total amount to be paid: 5,000,000,100 yen(e) Payment period: From January 15, 2021 to January 19, 2021
However, if the Tender Offer Period is extended and the settlement commencement date changes
accordingly, the Company shall change the payment period so that the payment period includes the period
from the business day following the last day of the Tender Offer Period after the change until the business
day immediately preceding the settlement commencement date after the change and the Company shallpromptly submit an amendment statement to the securities registration statement pertaining to suchchange of the payment period.
(f) Conditions precedent:(x)

Conditions precedent for payment by the Tender Offeror
On the payment date, (1) all representations and warranties by the Company (Note 1) are true andcorrect in material respects; (2) the Company has performed or complied with all obligations to be
performed or complied with under the Agreement by the payment date in material respects; (3) the
filing of the securities registration statement (and the amendment statement thereof) under the Act
related to the Capital Increase through Third-Party Allotment has taken effect and has not beensuspended as of the payment date; (4) there is no pending preliminary injunction to suspend theissuance of the Company’s Stock or any other litigation or legal procedures that would causesignificant interference with the Capital Increase through Third-Party Allotment (limited to legal
procedures in which claims by the opposing party are deemed to have a reasonable basis), and no
judicial decision, etc. has been issued by judicial authorities that would cause significant interferencewith the Capital Increase through Third-Party Allotment through a preliminary injunction or otherprocedures; (5) the Tender Offer has been completed; and (6) no events having a material adverse
effect on the financial conditions or the performance of the Company group have occurred and arelikely to occur.

(y)Conditions precedent for issuance of shares by the Company
On the payment date, (1) all representations and warranties by the Tender Offeror (Note 2) are trueand correct in material respects; (2) the Tender Offeror has performed or complied with all
obligations to be performed or complied with under the Agreement by the payment date in material
respect; (3) there is no pending preliminary injunction to suspend issuance of the Company’s Stockor any other litigation or legal procedures that would cause significant interference with the Capital
Increase through Third-Party Allotment (limited to legal procedures in which claims by the opposing
party are deemed to have a reasonable basis), and no judicial decision, etc. has been issued by
judicial authorities of those procedures; and (4) the filing of securities registration statement (and theamendment statement thereof) under the Act related to the Capital Increase through Third-Party
Allotment has taken effect and has not been suspended as of the payment date.
(Note 1) In the Agreement, the Company made representations and warranties as to (i) authority of
the Company to execute and perform the agreement, (ii) validity and enforceability of theAgreement, (iii) non-existence of bankruptcy proceedings with respect to the Company,(iv) non-existence of any violation of laws and regulations etc., and contracts, etc., due tothe execution and performance of the Agreement, (v) non-existence of any relationshipwith anti-social forces, (vi) non-existence of undisclosed material facts, (vii) accuracy of21

disclosed information, (viii) shares, etc. issued by the Company, (ix) subsidiaries andaffiliated companies of the Company, (x) accuracy of the disclosure documents of theCompany, (xi) non-existence of any subsequent events occurred after the end of theprevious fiscal year of the Company group, (xii) property owned by the Company group,(xiii) material contracts executed by the Company group, (xiv) compliance with laws andregulations, etc. by the Company group, (xv) permits and authorization, etc., held by theCompany group, (xvi) labor relations of the Company group, (xvii) taxes and publiccharges, and social insurance of the Company group, and (xviii) litigation, etc. withrespect to the Company group.
(Note 2) In the Agreement, the Tender Offeror made representations and warranties as to (i)authority of the Tender Offeror to execute and perform the agreement, (ii) validity andenforceability of the Agreement, (iii) non-existence of bankruptcy proceedings withrespect to the Tender Offeror, (iv) non-existence of any violation of laws and regulations,etc. and contracts, etc., due to the execution and performance of the Agreement, and (v)non-existence of any relationship with anti-social forces.

(3) Matters concerning amendments to the Current Capital and Business Alliance(A)

The Tender Offeror and the Company shall amend the statements in “(i) Expansion of product lineup”
under “(b) Product complementarity” of the Current Capital and Business Alliance (for details of “(i)Expansion of product lineup” of “(b) Product complementarity” of the Current Capital and Business
Alliance, please refer to “(i) Expansion of product lineup” in “(b) Product complementarity” in “Synergies
Contemplated under the Current Capital and Business Alliance” under “(2) Background, Purpose andDecision-Making Process Leading to Decision to Implement Tender Offer, and Management Policy After
Tender Offer” above), as follows (the changes are underlined):“From the viewpoint of expanding the lineup of investment products, both companies will bring together
investment products, which they are capable of providing, such as investment condominiums, overseas
real estate and other income-producing real estate, and provide a wide range of investment products tocurrent and potential investors to respond to their needs; thereby aiming to further expand the businessesof both companies. As part of this effort, the two companies will consider jointly establishing a real estate
asset management company in order to start a real estate fund business, and offering real estate investment
products developed by each company to institutional investors and the financial market.”(B)

After the day on which the Company becomes a consolidated subsidiary of the Tender Offer, the Tender
Offeror and the Company shall discuss in good faith (a) to change the fiscal year of the Company to aperiod from October 1 to September 30 each year, and (b) how to develop the shareholder return policy of
the Company.

(4) Matters concerning officers
The Company will make Mr. Arai, the representative director of the Tender Offeror as of this day, its chairman
promptly after the settlement of the Tender Offer, and submit a proposal for election of directors, including Mr. Araias a candidate for director, will be submitted at the Ordinary General Meeting of Shareholders. If a proposal toappoint Mr. Arai as a director is approved at the Ordinary General Meeting of Shareholders, the Company shallappoint Mr. Arai as its Chairman and Director at the meeting of the Board of Directors held after the Ordinary
General Meeting of Shareholders. In addition, after the settlement of the Tender Offer, the Tender Offeror and theCompany shall discuss in good faith the number, person and the role of officers dispatched to the Company.
(5) Matters concerning conditions for amendments to the Capital and Business Alliance to become effective
Paragraph (A) under “(iii) Matters concerning amendment to the Current Capital and Business Alliance” above22

shall become effective from the execution date of the Agreement. Matters concerning (B) under “(iii) Mattersconcerning amendment to the Current Capital and Business Alliance” and “(iv) Matters concerning officers” above
shall become effective from the time the Tender Offeror’s voting rights ratio in the Company exceeds 50% or when
the Company becomes a consolidated subsidiary of the Tender Offeror.
3. Number of Shares to be Newly Acquired by the Counterparty; Percentage of Outstanding Shares
Please refer to “a. Overview of Tender Offer” under “(2) Grounds and reasons for Opinion” of “3. Opinion Regarding
Tender Offer and Grounds and Reasons Therefor” of “I. Expression of Opinion Regarding Tender Offer” above.

4. Overview of the Counterparty to Alliance
Please refer to “1. Overview of Tender Offeror” of “I. Expression of Opinion Regarding Tender Offer” above.

5. Schedule of Alliance(1)

Resolution by the Board of Directors

November 13 2020(2)

Execution date of the Agreement

November 13 2020

(3)

Commencement of the Tender Offer

November 16 2020 (estimate)(4)

Termination of the Tender Offer

January 14, 2021 (estimate)(5)

Payment commencement date for theJanuary 20, 2021 (estimate)

Tender Offer(6)

Pay-in period for the Capital Increase

From January 15, 2021 to January 19, 2021 (estimate)through Third-Party Allotment

6. Prospects Going Forward(1) Policy after the New Capital and Business Alliance
For the policy after the New Capital and Business Alliance, please refer to “d. Management Policy after the Tender
Offer” under “(2) Grounds and Reasons for Opinion” and “(5) Possibility of Delisting and Reasons Therefor” of “3.
Opinion Regarding Tender Offer and Grounds and Reasons Therefor” of “I. Expression of Opinion Regarding Tender
Offer” above.
(2) Prospects for Business Going Forward
With respect to the effects of the New Capital and Business Alliance on the Company’s business performance, adetailed analysis is currently underway. If it becomes necessary to revise results forecasts or if any matters thatshould be published occur, the Company will promptly disclose the same.
End(Reference) “Notice Concerning Execution of Agreement Concerning Amendments, etc. to Capital and Business AllianceAgreement with Pressance Corporation Co., Ltd., Commencement of Tender Offer against Pressance Corporation Co., Ltd.
Shares (securities code: 3254) and Subscription of Capital Increase through Third-Party Allotment” dated November 13

2020 (attached hereto)23

[Translation for Reference Purpose Only]
November 13, 2020
To All Concerned Parties
Company Name:Open House Co., Ltd.

Representative:

Masaaki Arai, President and CEO

Securities code:

3288, First section of TSE

Contact:

Kotaro Wakatabi, Managing Director, CFO

Notice Concerning Execution of Agreement Concerning Amendments, etc. to Capital andBusiness Alliance Agreement with Pressance Corporation Co., Ltd., Commencement of Tender
Offer against Pressance Corporation Co., Ltd. Shares (Securities Code: 3254) and Subscriptionof Capital Increase through Third-Party Allotment
Open House Co., Ltd. (the “Company” or the “Tender Offeror”) announces that it has resolved at its
Board of Directors meeting held today to acquire the common stock (the “Target Company’s Stock”) of
Pressance Corporation Co., Ltd. (as listed on the First Section of the Tokyo Stock Exchange, Inc. (the“Tokyo Stock Exchange”) securities code: 3254; the “Target Company” ) through a tender offer (the“Tender Offer”) under the Financial Instruments and Exchange Act (Act No. 25 of 1948, as amended;“Act”).
1.

Purpose of Purchase, Etc.

(1) Overview of Tender Offer
As of the date hereof, the Company holds 20,621,100 shares of the Target Company’s Stock (numberof voting rights: 206,211; shareholding percentage (Note 1): 31.82%) which are listed on the First
Section of the Tokyo Stock Exchange and is the largest shareholder among the major shareholders, andthe Target Company is its equity-method affiliate .
The Company resolved at the Board of Directors meeting held today, (i) to execute an agreement (the“Agreement”) with the Target Company to amend etc. the capital and business alliance agreement (the“Current Capital and Business Alliance Agreement”; and the capital and business alliance under theCurrent Capital and Business Alliance Agreement shall hereinafter be referred to as the “Current Capitaland Business Alliance”) between the Company and the Target Company dated April 6, 2020 (theamended Capital and Business Alliance pursuant to the Agreement shall hereinafter be referred to as the“New Capital and Business Alliance”); and (ii) to implement the Tender Offer of the Target Company’s
Stock by combining both the Tender Offer and the Capital Increase through Third-Party Allotment
described below (the payment of the Capital Increase through Third-Party Allotment by the Company
1

is scheduled to be made between the business day following the last day of the Tender Offer Period andthe business day immediately preceding the settlement commencement date (January 20, 2021), and if
the Tender Offer Period ends as originally scheduled, the payment is scheduled to be made on January
19, 2021.) for the purpose of ultimately making the Target Company a consolidated subsidiary of theCompany, and to subscribe for all of the Target Company’s Stock to be issued, subject to the satisfactionof certain conditions precedent (for such conditions precedent, please refer to “(ii) Matters concerning
the Capital Increase through Third-Party Allotment” in “a. Agreement” under “(3) Matters Concerning
Material Agreements Related to Tender Offer” below) such as the completion of the Tender Offer, etc.,
upon the Target Company’s issuance of offered shares through third-party allotment (the “Capital
Increase through Third-Party Allotment”; and the Tender Offer and the Capital Increase through ThirdParty Allotment shall collectively be referred to as the “Transaction”) of 3,508,772 shares of the Target
Company’s Stock (number of voting rights: 35,087; shareholding percentage: 5.41%) to be allotted to
the Company with the payment period from January 15, 2021 to January 19, 2021 after the Tender Offer
Period, and at an issue price of 1,425 yen per share (Note 2) (total issue price of shares to be issued:
approximately 5,000 million yen).

Since the Company will conduct the Transaction for the principal

purpose of making the Target Company a consolidated subsidiary of the Company, if the Company fails
to make the Target Company its consolidated subsidiary by acquiring a majority of the voting rights of
the Target Company through the Transaction, the Company plans to additionally acquire the Target
Company’s Stock in order to make the Target Company a consolidated subsidiary.

For acquisition

plan of the Target Company’s Stock after the Tender Offer, please refer to “(5) Plan for Acquisition of
Share Certificates, etc. of Target Company’s Stock after Tender Offer” below.
For details of the Agreement, please refer to “a. Agreement” under “(3) Matters Concerning Material
Agreements Related to Tender Offer” below.
(Note 1) “Shareholding percentage” is the percentage (rounded to the second decimal place; thesame applies hereinafter in the calculation of the Shareholding percentage) of voting
rights held against the number of voting rights (648,100) obtained by adding (A) the
number of voting rights (300 in total) relating to the Target Company’s Stock subject tostock acquisition rights (300 in total) held by the special related parties to the number ofvoting rights (647,800) relating to (B) the number of shares (64,780,005 shares) obtainedby deducting from (x) the total number of issued shares as of September 30, 2020
(65,336,739 shares), as stated in the Second Quarterly Report for the 24th Fiscal Yearthat the Target Company filed today (the “Target Company’s Second Quarterly Report”)(y) the number of treasury shares (556,734 shares) owned by the Target Company as of
September 30, 2020 (which is the number of shares deducting 309,860 shares held in
trust account as of the same date by way of the introduction of stock provision ESOP of
the Target Company; hereinafter the same.) as stated in the second quarterly financial
results for the fiscal year ending March 2021 that the Target Company announced on
2

November 13, 2020 (the “Target Company’s Second Quarterly Financial Results”);
which is the percentage prior to the dilution due to the payment of the Capital Increase
through Third-Party Allotment; hereinafter the same.
(Note 2) While the issue price of the Capital Increase through Third-Party Allotment is a pricediscounted by 10% against the closing price (1,583 yen) of the Target Company’s Stockon the First Section of the Tokyo Stock Exchange on November 12, 2020, which is thebusiness day preceding to the date of the resolution of the Target Company’s Board of
Directors relating to the Capital Increase through Third-Party Allotment (November 13,2020), with respect to the purchase price (1,850 yen) in the Tender Offer (the “Tender
Offer Price”), a premium is added to the market share price based on the idea of
distributing the synergies arising from the Tender Offer.
In relation to the Tender Offer, the Company entered into a tender offer application agreement todaywith K.K. Pacific, which is the third largest shareholder of the Target Company and the asset
management company of Mr. Shinobu Yamagishi, who is the founder and the former representative
director and president of the Target Company (number of shares owned as of the date hereof: 4,621,700
shares; number of voting rights: 46,217; shareholding percentage: 7.13%, “Pacific”), and another tender
offer application agreement with Mr. Shinobu Yamagishi (number of shares owned as of the date hereof:
183,200 shares; number of voting rights: 1,832; shareholding percentage: 0.28%) (collectively, the“Application Agreements”),

and obtained their consent to tender all of the Target Company’s Stockowned by Pacific and Mr. Shinobu Yamagishi (number of shares owned as of the date hereof: 4,804,900
shares; number of voting rights: 48,049; shareholding percentage: 7.41%; the “Prospective Tendered
Shares”) in the Tender Offer.

For details of the Application Agreement, please refer to “b. Application

Agreement” under “(3) Matters Concerning Material Agreements Related to Tender Offer” below.
The maximum number of shares to be purchased is set because the Tender Offer is not intended to delist
the Target Company’s Stock, and the policy of the Company and the Target Company is to maintain thelisting of the Target Company’s Stock even after the completion of the Tender Offer; however, from theviewpoint of providing as many shareholders of the Target Company as possible with an opportunity tosell their shares to the extent that (i) the ratio of share certificates, etc. that may be held by the Company
after the Tender Offer will be less than two-thirds so as to protect the Company from the statutory
obligation to purchase al tendered shares or to offer to purchase all classes of shares, and that (ii) setting
such maximum number is permissible, such maximum is set at 19,881,500 shares (Note 3) (number ofvoting rights: 198,815; shareholding percentage: 30.68%). In the event that the total number of theshare certificates, etc. tendered in accordance with the Tender Offer (the “Tendered Share Certificates,
Etc.”) exceeds the maximum number of shares to be purchased (19,881,500 shares), the Company shallnot purchase, etc. such exceeding portion, in its entirety or in part, and shall deliver and conduct othersettlement relating to the purchase, etc. of share certificates, etc. in accordance with the pro rata method
stipulated in Article 32 of the Cabinet Office Ordinance on Disclosure Required for Tender Offer for3

Share Certificates, etc. by Person Other than Issuer (Ministry of Finance Order No. 38 of 1990, as
amended; “TOB Order”). In this case, Pacific and Mr. Shinobu Yamagishi will own a part of the Target
Company’s Stock after the Tender Offer, but the Company has not made any particular arrangementwith Pacific or Mr. Shinobu Yamagishi regarding their subsequent holding policy of the Target
Company’s Stock, nor has the Company been informed of the holding policy of Pacific or Mr. Shinobu
Yamagishi. On the other hand, in regard to the Tender Offer, even if the Company fails to make theTarget Company its consolidated subsidiary, the Company intends to additionally acquire the Target
Company’s Stock after the Tender Offer in order to make the Target Company a consolidated subsidiary(for the acquisition plan of the Target Company’s Stock after the Tender Offer, please refer to “(5) Plan
for Acquisition of Share Certificates, etc. of Target Company’s Stock after Tender Offer” below); thus,
the minimum number of shares to be purchased has not been set for the Tender Offer. Therefore, if thetotal number of Tendered Share Certificates, Etc. is less than or equal to the maximum number of shares
to be purchased (19,881,500 shares), the Company will purchase, etc. all of the Tendered Share
Certificates, Etc.
(Note 3) “Maximum number of shares to be purchased” is the number of shares obtained by:multiplying 100 by the number obtained by deducting (A) the number of voting rights(245,257 in total) obtained by adding (x) the sum (3,959 in total) of (i) the number ofvoting rights relating to the Target Company’s Stock held by the special related parties(3,659 in total) and (ii) the voting rights (300 in total) relating to the number of the Target
Company’s Stock subject to stock acquisition rights (300 in total) to (y) the sum (241,298
in total) of (i) the voting rights (206,211) relating to the number of the Target Company’s
Stock held by the Company as of the date hereof (20,621,100 shares) and (ii) the voting
rights (35,087) relating to the number of the Target Company’s Stock to be newly issued
through the Capital Increase through Third-Party Allotment (3,508,772 shares) from (B)the number of voting rights (444,072; rounded up to the nearest whole number)constituting 65.0% of the number (683,187) obtained by adding (x) the number of voting
rights (300 in total) relating to the Target Company’s Stock subject to the stockacquisition rights (300 in total) held by the special related parties to (y) the number ofvoting rights (682,887) relating to the number of shares (68,288,777 shares) obtained bydeducting (i) the number of treasury shares (556,734 shares) owned by the Target
Company as of September 30, 2020, as stated in the Target Company’s Second Quarterly
Financial Results from (ii) the sum (68,845,511 shares) of (a) the total number of issued
shares as of September 30, 2020 (65,336,739 shares) as stated in the Target Company’s
Second Quarterly Report, plus (b) the number of the Target Company’s Stock to be newly
issued by the Capital Increase through Third-Party Allotment (3,508,772 shares).
On the other hand, according to the “Notice Regarding Expression of Opinion Concerning the Tender
Offer for Our Share Certificates by Open House Co., Ltd. and Execution of Agreement Concerning
4

Amendment, Etc. to Capital and Business Alliance Agreement with Open House Co., Ltd.,” as disclosedby the Target Company today (the “Target Company’s Press Release”), the Target Company resolved,
at the Board of Directors meeting of the Target Company held today, based on the grounds and reasonsdescribed in “b. Target Company’s Decision-Making Process Leading to Decision to Consent to Tender
Offer and Reasons Therefor” under “(2) Background, Purpose and Decision-Making Process Leading
to Decision to Implement Tender Offer, and Management Policy After Tender Offer” below, (i) to
execute the Agreement with the Company and (ii) to express its opinion to support the Tender Offer,
which will be conducted as part of the Transaction.

In addition, although the Target Company believes

that the Tender Offer Price is reasonable in light of the valuation results for the Target Company’s Stockobtained from Plutus Consulting Co., Ltd. (“Plutus Consulting”), a third-party valuation institution, theTarget Company decided, by a resolution at the Board of Directors meeting of the Target Company heldon the same day, which was passed with the unanimous consent of all directors, including audit andsupervisory committee members, who participated in the resolution, to take a neutral stance and let theTarget Company’s shareholders decide whether they would tender their shares in the Tender Offer
because the maximum number of shares to be purchased is set in the Tender Offer and the plan is for theTarget Company’s Stock to continue being listed after the Tender Offer.

For further information on thedecision-making process of the Target Company’s Board of Directors above, please refer to the Target
Company’s Press Release and “d. Unanimous Approval by All of the Non-interested Directors of theTarget Company, including the Audit and Supervisory Committee Members” under “(4) Measures to
Ensure Fairness of Tender Offer such as Measures to Ensure Fairness of Tender Offer Price and to Avoid
Conflicts of Interest” below.
According to the Target Company’s securities registration statement filed by the Target Company with
the Kinki Local Finance Bureau today (the “Target Company’s Securities Registration Statement”) andthe “Notice regarding Issuance of New Shares through Third-Party Allotment” published by the Target
Company on the same date (together with the Target Company’s Securities Registration Statement, the“Target Company’s Securities Registration Statement, Etc.”), the Target Company resolved, at the above
Board of Directors meeting of the Target Company held today, to conduct the Capital Increase through
Third-Party Allotment by making the Company a scheduled allottee and the Company plans to subscribe
to all of the Target Company’s Stock to be issued by the Capital Increase through Third-Party Allotment,
subject to the satisfaction of certain conditions precedent such as the completion of the Tender Offer.
Payment by the Company is scheduled to be made three business days after the last day of the Tender
Offer Period (or the extended Tender Offer Period if the Tender Offer Period is extended) (January 19,
2021 if the Tender Offer Period ends as originally scheduled).

For details of the Capital Increase

through Third-Party Allotment, please refer to the Target Company's Securities Registration Statement,
Etc., “(ii) Matters concerning the Capital Increase through Third-Party Allotment” in “a. Agreement”
under “(3) Matters Concerning Material Agreements Related to Tender Offer” and “(5) Plan for
Acquisition of Share Certificates, etc. of Target Company’s Stock after Tender Offer” below.
5The Company’s diluted-base shareholding percentage of the Target Company’s Stock following theCapital Increase through Third-Party Allotment (the “Shareholding Percentage after Dilution”) at thetime the Company completes the payment for the Capital Increase through Third-Party Allotment will
be 35.32% (Note 4).

In addition, if the Company completes the payment for the Capital Increase

through Third-Party Allotment, and if the Company acquires only the Prospective Tendered Shares(4,804,900 shares; number of voting rights: 48,049; shareholding percentage 7.41%) by way of thesettlement of the Tender Offer to be conducted thereafter, the Company’s Shareholding Percentage after
Dilution of the Target Company’s Stock following the Capital Increase through Third-Party Allotment
will be 42.35%. Furthermore, if the Company completes the payment for the Capital Increase through
Third-Party Allotment, and if the Company acquires the maximum number of shares to be purchased(19,881,500 shares) (number of voting rights: 198,815; shareholding percentage: 30.68%) by way of thesettlement of the Tender Offer to be conducted thereafter, the Company’s Shareholding Percentage after
Dilution of the Target Company’s Stock following the Capital Increase through Third-Party Allotment
will be 64.42%.
Since the Company will conduct the Transaction for the principal purpose of making the Target
Company a consolidated subsidiary of the Company, if the Company fails to make the Target Company
its consolidated subsidiary by acquiring a majority of the voting rights of the Target Company throughthe Transaction, the Company plans to additionally acquire the Target Company’s Stock in order tomake the Target Company a consolidated subsidiary.

For the acquisition plan of the Target Company’s

Stock after the Tender Offer, please refer to “(5) Plan for Acquisition of Share Certificates, etc. of Target
Company’s Stock after Tender Offer” below.
(Note 4) The “Shareholding Percentage after Dilution” is the percentage (rounded to the second
decimal place; the same applies hereafter in the calculation of the Shareholding
Percentage after Dilution) of voting rights held against the number of voting rights(683,187) obtained by adding (A) the number of voting rights relating to the Target
Company’s Stock subject to stock acquisition rights (300 in total) held by the special
related parties (300 in total) to (B) the number of voting rights (682,887) relating to thenumber of shares (68,288,777 shares) obtained by (x) adding (i) the sum(68,845,511shares) of the total number of issued shares as of September 30, 2020
(65,336,739 shares), as stated in the Target Company’s Second Quarterly Report plus (ii)the number of the Target Company’s Stock to be newly issued by the Capital Increase
through Third-Party Allotment (3,508,772 shares) and (y) deducting therefrom thenumber of treasury shares (556,734 shares) owned by the Target Company as of
September 30, 2020, as stated in the Target Company’s Second Quarterly Financial
Results.
(2) Background, Purpose and Decision-Making Process Leading to Decision to Implement Tender6

Offer, and Management Policy After Tender Offera.

Background, Purpose and Decision-Making Process Leading to Decision to Implement Tender
Offer

The Company group consists of the Company and 18 affiliated companies (excluding non-consolidated
subsidiaries and non-equity method affiliated companies), and is engaged mainly in the single-family
homes related business, condominiums business, property resales business and other businesses.
The Company group celebrated its 20th anniversary in the fiscal year ended September 2017, andformulated the “Hop Step 5000” Mid-Term Business Plan aiming for further growth in the future ofwhich final fiscal year is the fiscal year ended September 2020.

During the fiscal year ended

September 2020, which was the final fiscal year of the Mid-Term Business Plan, the sales mainly in the
single-family homes related business and the income-producing real estate business continued to growsteadily until the third cumulative quarter consolidated period, and drove the growth of the businessperformance.

The Company group continues to acknowledges that: (a) strengthening thecompetitiveness of single-family homes related business, which is the core of our business; (b) building
a business portfolio based on changes in the external environment; (c) reinforcing the management
infrastructure that supports the growth of the company; and (d) acquiring new business opportunities
related to changes in the environment caused by the spread of COVID-19 are issues that need to beaddressed, and has steadily been working toward them.

In accordance with the changes of lifestyles

in Japan, including women’s advancement in society since 2000 and an increase in the number of dualincome households, more people tend to seek reasonably priced houses in highly convenient urban areas.
Even amid the declining population, the number of households in urban areas is expected to increase in
the future.

In light of these business conditions surrounding the Company group, the Company grouphas, in order to continue to provide a stable and efficient supply of affordable single-family homes incentral Tokyo, enhanced its product competitiveness by conducting business operations that integrate
production and sales upon establishing a system that can complete all functions within the Company
group, in addition to the brokerage function it has been offering from the time of its foundation, frompurchase of land, design to construction with respect to its core single-family homes related business.
Furthermore, the Company’s single-family homes related business has steadily increased market sharealong with high profitability and high efficiency by thoroughly implementing an “aggressive” marketingstrategy that makes pinpointed approach to customers with a focus on specific areas and by developing
a dominant strategy that intensively supplies single-family homes in major urban areas.
In addition, currently, in the real estate industry to which the Company belongs, the rents have declined
and the conditions in the real estate trading market have deteriorated due to the spread of COVID-19
around the world, including Japan. Nevertheless, as new needs for housing arise from an increase in
the number of hours families spend in their homes triggered by a change in environment due to the
spread of COVID-19 and increase in teleworking opportunities, the Company group believes that the7utility value of single-family homes will expand, and that this will be a new business opportunity for theCompany group and that it will be its social mission to respond to such new needs.

As noted above,even under an environment where COVID-19 is spreading, the business performance and the issues tobe addressed under the Mid-Term Business Plan for the fiscal year ended September 2020 have steadily
progressed, driven by single-family homes related business, the core business of the Company. The
Company group has promoted M&A as its corporate policy as a part of its “Building of businessportfolio based on changes in the external environment” set forth in the Mid-Term Business Plan above,
has aimed for growth of the entire Company group and on alliance basis that can realize businesssynergies, and has been actively engaged in M&A. For example, the Company made Open House
Architect Co., Ltd. (former Asakawa Home Co., Ltd.; “OHA”) its wholly-owned subsidiary in January
2015, and made Hawk One Corporation (“Hawk One”) its wholly-owned subsidiary in October 2018,
respectively.

Both OHA and Hawk One have been able to increase their revenues as a result ofsignificant increase in the number of houses ordered and other factors ever since they became aconsolidated subsidiary of the Company.

OHA and Hawk One have also achieved substantial growthin operating income as a result of lowering procurement cost and streamlining procurement by realizing
economies of scale as the Company group; and furthermore, they have succeeded in recruiting more
personnel by mutually utilizing recruitment know-how and resources of the Company group.

As such,the Company has steadily enhanced business performance and improved management effectiveness as
the entire Company group through M&A.
In addition, the Company executed the Current Capital and Business Alliance Agreement (for asummary of the Current Capital and Business Alliance, please refer to “Synergies Contemplated under
the Current Capital and Business Alliance” below) with the Target Company on April 6, 2020 in orderto maximize the interests of both companies and their customers, shareholders, employees, business
partners, and stakeholders, aiming to build regional and product complementarity and by realizing
business synergies from combining management resources and management know-how of the Company
and the Target Company.

Subsequently, the Company acquired 8,018,300 shares from Pacific and12,602,800 shares from Mr. Shinobu Yamagishi, a total of 20,621,100 shares of the Target Company’s
Stock, through off-market trading at 1,100 yen per share on May 8, 2020 and acquired voting rights
equivalent to 31.91% of total voting rights (as of March 31, 2020) of the Target Company, and madethe Target Company an equity-method affiliate of the Company.
On the other hand, the Target Company was established in October 1997 in Chuo-ku, Osaka City, as
Nikkei Prestige Co., Ltd. whose purpose was to engage in the business of real estate sales.

In

November 1998, the Target Company commenced the sale of condominiums under its own brand.
Later, in April 2002, the Target Company changed its trade name to Pressance Corporation Co., Ltd. In
December 2007, the Target Company listed its stock on the Second Section of the Tokyo Stock Exchange.
In October 2013, the Target Company’s stock was designated to the First Section of the Tokyo Stock
Exchange.
8The Target Company group consists of the Target Company and its 11 subsidiaries and 3 affiliates. The
Target Company’s main business is planning, developing, and selling one-room condominiums (i.e.,
condominiums for investment which are made available for rent mainly to single-person households)
and family condominiums (i.e., condominiums intended for use by families). Since its foundation in
October 1997, the Target Company has focused on the realization of a richer, more comfortable life forthose who live in its condominiums, by consistently sticking to highly convenient locations and byproviding condominiums with higher asset values.

With its corporate philosophy of “Shine Light intoa Corner” (Note 5) in mind, the Target Company aims to provide condominiums by making use of its
unique development capabilities as an independent condominium developer handling a wide range ofcondominiums from urban to family-type condominiums, and has operated its business across extensive
geographical areas from the Tokyo metropolitan area to Kyushu, having provided a large number ofcondominiums particularly in the Kinki region and the Tokai-Chukyo region.
Furthermore, in recent years the Target Company: (i) has focused on further increase in its market sharein the existing major geographical markets, mainly in Osaka, Kyoto, Kobe, Nagoya, the Tokyo
metropolitan area, and Okinawa; (ii) has further strengthened its market position in the geographicalmarkets newly entered by the Target Company, such as Hiroshima, Hakata, and other cities; and (iii) has
promoted increases in the number of sales, and by extension, increases in the proceeds, by increasing
the number of supplied products with high customer satisfaction in price and in location and otheraspects of quality, by reinforcing the company structure in such aspects as land purchase and sales
activities.
However, in December 2019 a situation arose where the Target Company’s former President andRepresentative Director Mr. Shinobu Yamagishi was arrested for suspected embezzlement.

Under thecircumstances, the Target Company, thinking that it must recover its trust promptly, had an opportunity
in early March 2020 to have a talk with the Company to which the Target Company was introduced
through a financial institution. The Target Company sympathized with the philosophy and strategy of
the Company, which had achieved a stable growth in the same real estate industry as the Target Company
for more than two decades. Therefore, the Target Company started its discussions with the Company
towards the realization of the Current Capital and Business Alliance.

During such discussions, theTarget Company eventually entered into the Current Capital and Business Alliance Agreement with theCompany on April 6, 2020, with the belief that the Target Company would be able to contribute to the
maximization of benefits for both the Target Company and the Company and their respective customers,
shareholders, employees, business partners, and other stakeholders, by enhancing the Target Company’s
credit by Company to promptly eliminate concerns of the Target Company’s customers, shareholders,
employees, business partners, and other stakeholders, and by realizing business synergies, such as
mutual complement of geographical areas in which the two companies operate their respective
businesses, and expansion of product lineups, through combining the two companies’ respective
management resources and management know-how.
9

(Note 5) “Shine Light into a Corner” means a philosophy that each one of us should do our very
best in our own environment and should shine a light around us by working for others as
well, and that this will eventually shine a light on society as a whole and will lead to therealization of peace and happiness for people around the world.
Since the execution of the Current Capital and Business Alliance Agreement, the Company and theTarget Company have held numerous discussions in order to realize the synergies initially contemplated
in the Current Capital and Business Alliance Agreement, by mutually providing management knowhow.

Specifically, with respect to the planning, development, and sales of condominiums forinvestment that is being conducted by the Target Company in the Kinki and Chukyo regions, though it
was difficult to expand business in the Kanto region because it was not easy for the Target Company toacquire land on its own, the Company and the Target Company concluded in the middle of June 2020
that, with the cooperation of the Company, which has a strong real estate network in the Kanto region,
the Target Company could actively expand business in the Kanto region.
In addition, with respect to the real estate fund business, after the execution of the Current Capital andBusiness Alliance Agreement, the Company and the Target Company commenced discussions on thepossibility of jointly establishing an asset management company and supplying real estate properties,
planned and developed by the two companies, as investment products to institutional investors and thefinancial market.
On the other hand, in order for the Company and the Target Company to cooperate as described above
and to further promote the Current Capital and Business Alliance, it was recognized in the beginning of
September 2020 that it is necessary to further strengthen the capital relationship because there are
restrictions under laws, such as the Act on Prohibition of Private Monopolization and Maintenance ofFair Trade (Act No. 54 of 1947; as amended, the “Anti-monopoly Act”), which imposes restrictions oncooperative activities between entities that conduct the same type of business, with respect to smoothly
promoting the integrated business activities of the two companies under the current capital relationshipbetween the Company and the Target Company.
Under such circumstances, in the beginning of September 2020, the Company exchanged a broad rangeof views with the Target Company on prospects of the current business climate and financial conditionof the Target Company and its relationship with its financial institution partners, including financing,etc., in light of the significant changes in the external environment caused by the COVID-19 pandemic.
Accordingly, amid uncertainties in the outlook of the market condition due to the COVID-19 pandemic,
the Target Company’s current business environment is still affected by the arrest of the Target
Company’s former President and Representative Director in December 2019, causing the Target
Company’s financial institutions to keep taking a cautious attitude towards providing finance to theTarget Company.

In addition, the spread of COVID-19 infection has not yet subsided, leaving a

possibility that a further spread of the infection in the future may aggravate the effect of the COVID-19
10

pandemic.

In addition, at the aforementioned meeting, the Company and the Target Company cameto an understanding that, in order to ensure the sustainability of the Target Company’s business
operations, the acquisition of land for the smooth resumption of new projects and commencement of
new business activities by the Target Company is necessary, and in order to assure the stability offinancing required thereby, credit enhancement through the strengthening of the capital relationship with
the Company, such as making the Target Company a consolidated subsidiary of the Company, is
important. The Company and the Target Company have come to hold a common understanding that,upon strengthening the capital relationship between the two companies, it would be extremely important
to maintain to a certain extent the unique corporate culture and management autonomy that the Target
Company had thus far cultivated as an independent condominium developer in order to continuously
improve corporate value and shareholder value through the sustainable development of the Target
Company; and that it was desirable to maintain the Target Company’s listed status by making the Target
Company a consolidated subsidiary of the Company instead of its wholly-owned subsidiary, in order toallow the two companies to deepen the cooperation between them while respecting the Target
Company’s autonomous management would be effective with respect to enhancing the corporate valueof the Company and the Target Company.

In addition, as stated above, since the Company and theTarget Company had previously recognized the necessity of further promoting the capital and businessalliance between the Company and the Target Company, and the necessity of further enhancing thecapital relation therefor, the Company and the Target Company had begun specific examinations anddiscussions regarding the consolidation of the Target Company by the Company and further promotionof the Current Capital and Business Alliance from the beginning of September 2020.
Thereafter, while the Company conducted the due diligence on the Target Company from the middle ofSeptember 2020 (such due diligence was completed in the middle of October 2020), the Company hasrepeatedly conducted verification of methods for the consolidation of the Target Company and of thesynergies between the two companies.

During such verification, the Company reconfirmed the current

business climate of the Target Company, and in the middle of October 2020, the Company recognizedthat making the Target Company a consolidated subsidiary of the Company by acquiring the Target
Company’s Stock is necessary and effective (i) to enhance the credit and stabilize the financing of theTarget Company, and (ii) to further enhance the feasibility of the following synergies contemplated
under the Current Capital and Business Alliance.

As the specific method for acquiring the Target

Company’s Stock, it would be desirable to conduct the Capital Increase through Third-Party Allotment
together with the Tender Offer, and strengthen the financial base of the Target Company by theCompany subscribing thereto because the Company believed that a method by way of a tender offer thatprovides the general shareholders of the Target Company with the opportunity to sell shares and that
does not dilute the Target Company’s Stock was mainly considered; in light of the current businessclimate of the Target Company, it is also important to conduct capital financing in order to expand theincome scale and realize the continuous business growth of the Target Company, and that the Company
is able to support the Target Company’s financing and show that the Company is committed to strongly
11

promoting the New Capital and Business Alliance by directly investing funds. In such case, upon
considering the existing shareholders, the Company recognized that it is necessary to keep the scale of
the Capital Increase through Third-Party Allotment at a level that can avoid the substantial dilution of
the Target Company’s Stock.

Accordingly, in the middle of October 2020, the Company conveyed to

the Target Company that it is desirable to make the Target Company a consolidated subsidiary of theCompany, and that, as a specific method to acquire the Target Company’s Stock, it is desirable tocombine the capital increase through third-party allotment with the tender offer, and commenced toreview and discuss the Transaction.
Synergies Contemplated under the Current Capital and Business Alliance(a) Regional complementarity(i) Establishment of the Target Company’s business in the Kanto region
By utilizing the Company’s real estate network in the Kanto region, the Target Company aims
to promote sales, in the Kanto region, of the Target Company’s business of developing andselling investment condominiums, which has been conducted by the Target Company mainlyin the Kansai region, and to expand this business into the Kanto region.
(ii) Establishment of the Company’s business in the Kansai region
By utilizing the Target Company’s real estate network in the Kansai region and receiving
information within a scope that does not compete the single-family homes sales business
operated by the Target Company or its subsidiaries, the Company aims to promote sales, inthe Kansai region, of its single-family homes business that it has been conducting mainly in
the Kanto region, and to expand this business into the Kansai region.
(iii) Collaboration in other regions
In other regions as well, both companies will explore potential opportunities for collaborationand consider offering a wider range of products, including implementing joint projects.
(b) Product complementarity(i) Expansion of product lineup
From the viewpoint of expanding the lineup of investment products, both companies will bring
together investment products, which they are capable of providing, such as investment
condominiums, overseas real estate and other income-producing real estate, and provide awide range of investment products to current and potential investors to respond to their needs;
thereby aiming to further expand the businesses of both companies.
(ii) Promotion of product development
Through collaboration between the product development divisions of the two companies, we
12will promote product development that meets the various needs of customers (currency
diversification, inheritance tax measures, expansion of earnings, etc.) and flexibly provide
products to customers by implementing joint projects, etc.
(c) Management and administration of lease properties and properties for sale
By sharing the Target Company’s business platform and know-how in the recurring revenue
business, which the Target Company obtained through lease management and property
management of the properties it developed, the Company will provide similar services for its
sales properties and will aim to develop its own recurring revenue business.
(d) Cost reduction
The purchasing divisions of both companies will aim to reduce costs by standardizing partsand materials and increasing the transaction volume.
Subsequently, the Company and the Target Company continued to review and discuss the Transaction,and in the middle of October 2020, reaffirmed their understanding that ensuring the Target Company’s
credit enhancement and stabilization of financing by making the Target Company a consolidated
subsidiary of the Company through the Transaction, and at the same time, deepening the cooperation
between both companies while respecting the independence of the Target Company’s management,
promote the capital and business alliance between the two companies and contribute to the enhancementof the corporate value of both companies.
With respect to the total subscription price of the Capital Increase through Third-Party Allotment, theCompany has reviewed the amount that is expected to be applied to the acquisition of land by the Target
Company, while avoiding significant dilution of the Target Company’s Stock, and with respect to the
maximum number of shares to be purchased through the Tender Offer, to the extent that (i) the ratio ofshare certificates, etc. that may be held by the Company after the Tender Offer will be less than twothirds so as to protect the Company from the statutory obligation to purchase all tendered shares or tooffer to purchase all classes of shares, and that (ii) setting such maximum number is permissible, theCompany set a policy that the percentage of voting rights held by the Company after the Transaction
will be around 65% at maximum, from the perspective of providing as many of the Target Company’s
shareholders as possible with opportunities to sell their shares, while respecting the Target Company’s
independent management (the Company plans to maintain and respect the autonomy of the Target
Company’s management after the Tender Offer, and the number of officers, their identity and the rolesof the officers the Company will dispatch to the Target Company at the 24th Ordinary General Meetingof Shareholders of the Target Company to be held in June 2021 (the “Ordinary General Meeting of
Shareholders”) have not yet been decided and will be discussed in good faith with the Target Company
after the settlement of the Tender Offer, but the discussions will be conducted on the premise that twoto three personnel will be dispatched..

For details, please refer to “c. Management Policy after the13

Tender Offer” below).

In the middle of October 2020, the Company proposed to the Target Company

that (i) the aggregate amount to subscribe in the Capital Increase through Third-Party Allotment be 5
billion yen, (ii) the percentage of voting rights of the Target Company held by the Company after the
implementation of the Capital Increase through Third-Party Allotment and the Tender Offer be around
65%, (iii) the Tender Offer Price be set at 1,750 yen , and (iv) the issue price of the Capital Increase
through Third-Party Allotment be the price discounted by 10% against the closing price of the Target
Company’s Stock on the First Section of the Tokyo Stock Exchange on the business day prior to thedate of announcement of the Transaction, as an amount that does not fall under “particularly favorable
amount” as set forth in the Japan Securities Dealers Association’s “Guidelines Concerning Treatmentof Capital Increase through Third-Party Allotment” (dated April 1, 2010).

In response, in late October

2020, the Company was requested by the Target Company to reexamine such proposal for the reason
that it was difficult to determine whether or not setting the Tender Offer Price at 1,750 yen would beappropriate as an amount which was the result of the addition of a reasonable premium, as compared to
the level of premiums in tender offer cases where the target company is intended to remain listed.
Thereafter, following discussions with the Target Company, the Company made a final proposal andreached an agreement in early November 2020 providing that the Tender Offer Price will be set at 1,850
yen and the issue price of the Capital Increase through Third-Party Allotment will be the pricediscounted by 10% against the closing price of the Target Company’s Stock on the First Section of theTokyo Stock Exchange on the business day prior to the date of announcement of the Transaction (forthe reasons for why the Tender Offer Price and the issue price of the Capital Increase through ThirdParty Allotment are different from each other, please refer to (Note 2) in “(1) Overview of Tender Offer”
above.). The Company also approached Pacific and Mr. Shinobu Yamagishi in late September 2020
regarding the sale of the Target Company’s Stock, and made a proposal to them in early November 2020
to set the Tender Offer Price at 1,750 yen. Thereafter, as part of continuing the discussions, in the middleof November 2020, the Company made a subsequent proposal to set the Tender Offer Price at 1,850 yen,
and reached an agreement at such price in the middle of November 2020, and the Application
Agreements were executed on November 13.
Following such discussions and negotiations, the Company resolved, at the Board of Directors meeting
held today, to implement the Transaction mainly in order to make the Target Company a consolidated
subsidiary of the Company, and executed the Agreement with the Target Company on the same date.
b.

Target Company’s Decision-Making Process Leading to Decision to Consent to Tender Offer andReasons Therefor

As described in “a. Background, Purpose and Decision-Making Process Leading to Decision to
Implement Tender Offer” above, since starting specific investigations and discussions in early
September 2020 on the consolidation of the Target Company by the Company, the Target Company has
carefully investigated into, and discussed with the Company, the particulars of the Agreement, the14necessity and terms of the Capital Increase through Third-Party Allotment, and the tender offer priceand other terms and conditions of the Tender Offer. As described in “a. Background, Purpose andDecision-Making Process Leading to Decision to Implement Tender Offer” above, the Company aims
to further increase the feasibility of synergies in (a) regional complementarity, (b) productcomplementarity, (c) management of properties for lease and sale, and (d) cost reduction, all of whichwere intended in the Current Capital and Business Alliance.

In early September 2020, the Target

Company considered that the above policy contemplated by the Company was in line with the directionin which the Target Company intended to proceed, and that, in order for the Target Company to continue
to increase its corporate value and shareholder value on a mid to long-term basis through continuing, as
before, the provision of condominiums with high asset value and the realization of a rich, comfortable
life for those who live in them, it was also necessary for the Target Company to further increase thefeasibility of the above described synergies, and it was essential for the Target Company to promote its
business through building stronger capital and cooperative ties with the Company by becoming its
consolidated subsidiary instead of its equity-method affiliate, as the Target Company is at the moment.
In addition, in early September 2020, the Target Company considered that, while it was necessary for
the Target Company to promote its business through building stronger capital and cooperative ties with
the Company, it was extremely important to maintain to a certain extent the unique corporate culture
and management autonomy that the Target Company has thus far cultivated as an independent
condominium developer, in order to continue to increase the corporate value and shareholder value of
the Target Company through its continuous development, and that, in strengthening the capital ties
between the two companies, it was desirable to maintain the Target Company’s listed status by making
the Target Company a consolidated subsidiary of the Company instead of its wholly-owned subsidiary,
in order to allow the two companies to deepen the cooperation between them while respecting the Target
Company’s autonomous management.
Furthermore, amid uncertainties in the outlook of the market condition due to the COVID-19 pandemic,
the Target Company’s current business environment is still affected by the arrest of the Target
Company’s former President and Representative Director in December 2019, causing the Target
Company’s financial institutions to keep taking a cautious attitude towards providing finance to theTarget Company.

In addition, the spread of COVID-19 infection has not yet subsided, leaving a

possibility that a further spread of the infection in the future may aggravate the effect of the COVID-19
pandemic. The Target Company realizes that, in order to achieve increase in the size of its proceeds
and to realize its continuous business growth under these circumstances, the Target Company needs toincrease its funds for site acquisition by making financial arrangements of a capital nature. The Target
Company believes that making these arrangements will, at the same time, lead to a prompt improvementof the financial institutions’ attitude towards financing the Target Company and to a realization of
permanent business operations of the Target Company, through increasing its own capital.

Based onthese facts and considerations, in late September 2020 the Company and the Target Company reached15the conclusion that, among specific methods for making the Target Company a consolidated subsidiaryof the Company, the most appropriate method is to combine the Tender Offer and the Capital Increase
through Third-Party Allotment, because allowing the Target Company to raise funds by implementing
the Capital Increase through Third-Party Allotment in addition to the Tender Offer by the Company willfurther increase the Target Company’s financial strength, resulting in an increase in its management
stability, and will also further improve the Target Company’s reputation among financial institutions,allowing the Target Company to increase its fundraising capabilities and to achieve increase in the sizeof its proceeds and to realize its continuous business growth by further strengthening purchase of sites
for condominium buildings, which will, in turn, contribute to increasing the corporate value andshareholder value of the Target Company.
To ensure the fairness of the Tender Offer Price and the Transaction in the process of the investigations
and discussions with the Company described above, the Target Company retained Nishimura & Asahi
as a legal advisor in early September 2020, from which the Target Company has received necessary
legal advice (see “c. Advice from an Independent Law Firm Received by the Target Company” under“(4) Measures to Ensure Fairness of Tender Offer Such as Measures to Ensure Fairness of Tender Offer
Price and to Avoid Conflicts of Interest” below). The Target Company also retained Deloitte Tohmatsu
Financial Advisory LLC as a financial advisor in early September 2020, from which the Target Company
has received advice from a financial point of view. Furthermore, in mid-September 2020 the Target
Company requested Plutus Consulting, a third-party valuation institution, to assess the share value of
the Target Company’s Stock, and received a share valuation report (the “Target Company’s Valuation
Report”) on November 12, 2020 (see “b. Obtaining of the Share Valuation Report from an Independent
Third-party Valuation Institution by the Target Company” under “(4) Measures to Ensure Fairness ofTender Offer Such as Measures to Ensure Fairness of Tender Offer Price and to Avoid Conflicts ofInterest” below).
As a result of the above discussions and investigations, the Target Company’s Board of Directors, at its
meeting held today where, out of the nine directors (including the four outside directors), eightparticipated in the deliberation and vote (with the exception of Mr. Kotaro Wakatabi, who is concurrently
a director of the Company) and adopted, with the unanimous affirmative vote of all directors (including
audit and supervisory committee members) who participated in the vote, a resolution expressing an
opinion in support of: (i) the execution of the Agreement with the Company; and (ii) the Tender Offer,
which will be executed as part of the Transaction.
In light of the valuation results for the Target Company’s Stock obtained from Plutus Consulting, which
is a third-party valuation institution, the Target Company believes that the Tender Offer Price isreasonable.

However, considering the fact that a maximum number of shares to be purchased during

the Tender Offer has been set, and that the Target Company’s Stock is planned to remain listed after theTender Offer, the Target Company has decided to adopt a neutral position as to whether or not the Target
16

Company’s shareholders choose to tender their shares in the Tender Offer, and to leave this choice up to
the discretion of the shareholders.

Accordingly, at the Board of Directors meeting held today, theTarget Company adopted a resolution to that effect with the unanimous affirmative vote of all directors(including audit and supervisory committee members) who participated in the vote.
Please note that Mr. Kotaro Wakatabi, who is an outside director of the Target Company andconcurrently serves as a director of the Company, did not participate in the deliberation or vote on theTransaction at the aforementioned Board of Directors meeting of the Target Company or in discussions
or negotiations with the Company in any capacity representing the Target Company, in order to avoid
any suspicion of conflict of interest.
c.

Management Policy after the Tender Offer

The Company’s management policy for the Target Company after the Tender Offer is to maintain thelisting of the Target Company’s Stock on the First Section of the Tokyo Stock Exchange and to maintainand respect the autonomy of the Target Company’s management.
As for the management framework of the Target Company, Mr. Kotaro Wakatabi, who is a director of
the Company, concurrently serves as an outside director of the Target Company as of today.

The

Company plans, pursuant to the Agreement, to request the Target Company, to make Mr. Masaaki Arai(“Mr. Arai”), who is the representative director of the Company as of today, Chairman promptly after
the settlement of the Tender Offer, and to submit a proposal for the election of directors, including Mr.
Arai as a candidate for director, at the Ordinary General Meeting of Shareholders.

If the proposal toappoint Mr. Arai as a director is approved at the Ordinary General Meeting of Shareholders, theCompany plans to request, pursuant to the Agreement, to have Mr. Arai made Chairman and director at
the meeting of the Board of Directors to be held after such Ordinary General Meeting of Shareholders.
(The Company does not currently plan to go as far as to request the Target Company to grant
representative authority to Mr. Arai at such meeting of the Board of Directors.) In addition, pursuant
to the Agreement, the number of officers, their identity and the roles of the officers the Company will
dispatch to the Target Company have not yet been decided and will be discussed in good faith with theTarget Company after the settlement of the Tender Offer, but the discussions will be conducted on thepremise that two to three personnel will be dispatched.

The Company intends to start the discussions

with the Target Company promptly after the settlement of the Tender Offer on the topic of officers to
be dispatched, which would be included in the proposal for the election of directors to be submitted at
the Ordinary General Meeting of Shareholders.
Moreover, after the day on which the Target Company becomes a consolidated subsidiary of theCompany, the Company and the Target Company are going to discuss changing the fiscal year of theTarget Company to the period from October 1 to September 30 each year.

17

(3) Matters Concerning Material Agreements Related to Tender Offera.

Agreement

The Company has entered into the Agreement with the Target Company as of today.

The summary of

the Agreement is as follows:(i)

Matters concerning the Tender Offer

The Target Company shall, on the execution date of the Agreement, make a Board of Directors
resolution in support of the Tender Offer (which requires unanimous consent of all directors
except those who have or are likely to have interest; hereinafter the “Expression of Opinion
Resolution”) and announce the content thereof. The Target Company shall not withdraw oramend the Expression of Opinion Resolution during the Tender Offer Period, nor make a Boardof Directors resolution that is inconsistent with the content of the Expression of Opinion
Resolution.
(ii) Matters concerning the Capital Increase through Third-Party Allotment
The Target Company shall, in accordance with the offering terms set forth in (a) to (e) below,
allot 3,508,772 shares of the Target Company’s Stock to the Company subject to (f)(y) below
as conditions precedent, and the Company shall make payment of the total amount to be paid
and subscribe for all of the 3,508,772 shares of such Target Company’ Stock subject to (f)(x)below as conditions precedent.
(a) Type of offered shares: Common stock(b) Number of offered shares: 3,508,772 shares(c) Amount to be paid: 1,425 yen per share(d) Total amount to be paid: 5,000,000,100 yen(e) Payment period: From January 15, 2021 to January 19, 2021
However, if the Tender Offer Period is extended and the settlement commencement datechanges accordingly, the Target Company shall change the payment period so that thepayment period includes the period from the business day following the last day of theTender Offer Period after the change until the business day immediately preceding thesettlement commencement date after the change and the Target Company shall promptly
submit an amendment statement to the securities registration statement pertaining to suchchange of the payment period.
(f) Conditions precedent:(x) Conditions precedent for payment by the Company
On the payment date, (1) all representations and warranties by the Target Company(Note 1) are true and correct in material respects; (2) the Target Company has
performed or complied with all obligations to be performed or complied with underthe Agreement by the payment date in material respects; (3) the filing of the
securities registration statement (and the amendment statement thereof) under the18

Act related to the Capital Increase through Third-Party Allotment has taken effectand has not been suspended as of the payment date; (4) there is no pending
preliminary injunction to suspend the issuance of the Target Company’s Stock or
any other litigation or legal procedures that would cause significant interference with
the Capital Increase through Third-Party Allotment (limited to legal procedures inwhich claims by the opposing party are deemed to have a reasonable basis), and no
judicial decision, etc. has been issued by judicial authorities that would causesignificant interference with the Capital Increase through Third-Party Allotment
through a preliminary injunction or other procedures; (5) the Tender Offer has been
completed; and (6) no events having a material adverse effect on the financial
conditions or the performance of the Target Company group have occurred and arelikely to occur.
(y) Conditions precedent for issuance of shares by the Target Company
On the payment date, (1) all representations and warranties by the Company (Note2) are true and correct in material respects; (2) the Company has performed orcomplied with all obligations to be performed or complied with under the Agreementby the payment date in material respect; (3) there is no pending preliminary
injunction to suspend issuance of the Target Company’s Stock or any other litigationor legal procedures that would cause significant interference with the Capital
Increase through Third-Party Allotment (limited to legal procedures in which claimsby the opposing party are deemed to have a reasonable basis), and no judicial
decision, etc. has been issued by judicial authorities of those procedures; and (4) the
filing of securities registration statement (and the amendment statement thereof)
under the Act related to the Capital Increase through Third-Party Allotment has taken
effect and has not been suspended as of the payment date.
(Note 1) In the Agreement, the Target Company made representations andwarranties as to (i) authority of the Target Company to execute andperform the agreement, (ii) validity and enforceability of the Agreement,(iii) non-existence of insolvency proceedings with respect to the Target
Company, (iv) non-existence of any violation of laws and regulationsetc., and contracts, etc., due to the execution and performance of theAgreement, (v) non-existence of any relationship with anti-social forces,(vi) non-existence of undisclosed material facts, (vii) accuracy of
disclosed information, (viii) shares, etc. issued by the Target Company,(ix) subsidiaries and affiliated companies of the Target Company, (x)accuracy of the disclosure documents of the Target Company, (xi) nonexistence of any subsequent events occurred after the end of theprevious fiscal year of the Target Company group, (xii) property owned
19

by the Target Company group, (xiii) material contracts executed by theTarget Company group, (xiv) compliance with laws and regulations, etc.
by the Target Company group, (xv) permits and authorization, etc., heldby the Target Company group, (xvi) labor relations of the Target
Company group, (xvii) taxes and public charges, and social insuranceof the Target Company group, and (xviii) litigation, etc. with respect to
the Target Company group.
(Note 2) In the Agreement, the Company made representations and warranties
as to (i) authority of the Company to execute and perform the agreement,(ii) validity and enforceability of the Agreement, (iii) non-existence ofinsolvency proceedings with respect to the Company, (iv) nonexistence of any violation of laws and regulations, etc. and contracts,
etc., due to the execution and performance of the Agreement, and (v)non-existence of any relationship with anti-social forces.
(iii) Matters concerning amendment to the Current Capital and Business Alliance(A) The Company and the Target Company shall amend the statements in “(i) Expansion of
product lineup” under “(b) Product complementarity” of the Current Capital and Business
Alliance (for details of “(i) Expansion of product lineup” of “(b) Product complementarity” of
the Current Capital and Business Alliance, please refer to “(i) Expansion of product lineup” in“(b) Product complementarity” in “Synergies Contemplated under the Current Capital andBusiness Alliance” in “a. Background, Purpose and Decision-Making Process Leading to
Decision to Implement Tender Offer” under “(2) Background, Purpose and Decision-Making
Process Leading to Decision to Implement Tender Offer, and Management Policy After Tender
Offer” above), as follows (the changes are underlined):“From the viewpoint of expanding the lineup of investment products, both companies
will bring together investment products, which they are capable of providing, such as
investment condominiums, overseas real estate and other income-producing real estate,
and provide a wide range of investment products to current and potential investors to
respond to their needs; thereby aiming to further expand the businesses of both companies.
As part of this effort, the two companies will consider jointly establishing a real estate
asset management company in order to start a real estate fund business, and offering realestate investment products developed by each company to institutional investors and thefinancial market.”(B) After the day on which the Target Company becomes a consolidated subsidiary of theCompany, the Company and the Target Company shall discuss in good faith (a) to change thefiscal year of the Target Company to a period from October 1 to September 30 each year, and(b) how to develop the shareholder return policy of the Target Company.
20

(iv) Matters concerning officers
The Target Company will make Mr. Arai, the representative director of the Company as of today,
its chairman promptly after the settlement of the Tender Offer, and submit a proposal for electionof directors, including Mr. Arai as a candidate for director, at the Ordinary General Meeting of
Shareholders.

If a proposal to appoint Mr. Arai as a director is approved at the Ordinary

General Meeting of Shareholders, the Target Company shall appoint Mr. Arai as its Chairman
and Director at the meeting of the Board of Directors held after the Ordinary General Meetingof Shareholders. In addition, after the settlement of the Tender Offer, the Company and theTarget Company shall discuss in good faith the number of officers, their identity and the rolesof the officers the Company will dispatch to the Target Company.
(v) Matters concerning conditions for amendment to the Current Capital and Business Alliance tobecome effective
Paragraph (A) under “(iii) Matters concerning amendment to the Current Capital and Business
Alliance” above shall become effective from the execution date of the Agreement. Mattersconcerning (B) under “(iii) Matters concerning amendment to the Current Capital and Business
Alliance” and “(iv) Matters concerning officers” above shall become effective from the time theCompany’s voting rights ratio in the Target Company exceeds 50% or when the Target
Company becomes a consolidated subsidiary of the Company.
b.

Application Agreement

The Company has entered into the Application Agreements with Pacific and Mr. Shinobu Yamagishi,
respectively.
In the Application Agreements, Pacific and Mr. Shinobu Yamagishi agreed to tender 4,621,700 sharesof the Target Company’s Stock held by Pacific, and 183,200 shares of the Target Company’s Stock held
by Mr. Shinobu Yamagishi, respectively, to the Tender Offer subject to the conditions precedent that:(i) representations and warranties of the Company (Note 3) are true and correct in their entirety; (ii) the
Board of Directors of the Target Company has resolved an expression of opinion to support the Tender
Offer and made an announcement to such effect, and such expression of opinion has not been changed
or withdrawn; (iii) there are no laws or regulations, etc. or any other orders, dispositions, or decisions
by courts or other judicial agencies, administrative agencies, financial instruments exchanges, or otherself-regulatory organizations that restrict or prohibit the Company the tendering of shares by Pacific and
Mr. Shinobu Yamagishi; and (iv) Pacific and Mr. Shinobu Yamagishi do not have knowledge of any
nonpublic material facts set forth in Article 166, Paragraph 2 of the Act related to the Target Company.
(Note 3) In each of the Application Agreements, the Company made representations and21

warranties as to (i) lawful and valid establishment and existence of the Company, (ii)authority to execute and perform the Application Agreements, (iii) enforceability of the
Application Agreements, (iv) acquisition of the permits and authorization, etc. required
for execution and performance of the Application Agreements, (v) non-existence of any
conflict with laws and regulations, etc., due to execution and performance of the
Application Agreements, (vi) non-existence of insolvency proceedings with respect to theCompany, and (vii) non-existence of any relationship with anti-social forces.
(4) Measures to Ensure Fairness of Tender Offer Such as Measures to Ensure Fairness of Tender Offer
Price and to Avoid Conflicts of Interest
Since the Target Company is not a subsidiary of the Company as of today and the Tender Offer does
not constitute a tender offer or an MBO by a controlling shareholder, which is subject to the “Fair M&A
Guidelines” formulated by the Ministry of Economy, Trade and Industry, the Target Company is not
required to take certain measures which would be generally required to be taken as fairness ensuring
measures.

However, considering that the Company owns 20,621,100 shares (number of voting rights:

206,211, shareholding percentage: 31.82%) of the Target Company’s Stock and the Target Company isan equity-method affiliate of the Company, that the Application Agreements will be executed withPacific and Mr. Shinobu Yamagishi, and that Mr. Kotaro Wakatabi, who is an outside director of theTarget Company, is concurrently serving as a director of the Company, the Company and the Target
Company have taken the following measures to ensure the fairness of the Transaction and to avoid
conflicts of interest. The measures implemented by the Target Company described below are basedon the explanation received from the Target Company.
a.

Obtaining of the Share Valuation Report from an Independent Third-party Valuation Institution by
the Company

The Company requested SMBC Nikko Securities Inc. (“SMBC Nikko Securities”), a financial advisor,
as a third-party valuation institution that is independent from the Company, the Target Company, Pacific,
and Mr. Shinobu Yamagishi to evaluate the share value of the Target Company’s Stock for determining
the Tender Offer Price.
SMBC Nikko Securities is not a related party of the Company or the Target Company, and has nomaterial interest in the Tender Offer.

In addition, the Company has not obtained an opinion concerning

the fairness of the Tender Offer Price (a fairness opinion) from SMBC Nikko Securities. For details,
please refer to “a. Basis of Calculation” in “(4) Basis of Calculation, Etc. of Price for Purchase, Etc.”
under “2. Outline of Purchase, Etc.” below.
b.

Obtaining of the Share Valuation Report from an Independent Third-party Valuation Institution by
the Target Company
22According to the Target Company’s Press Release, the Target Company, in expressing its opinion
regarding the Tender Offer, requested Plutus Consulting as a third-party valuation institution
independent from the Company, the Target Company, Pacific, and Mr. Shinobu Yamagishi, to evaluate
the share value of the Target Company’s Stock, and received the Target Company’s Valuation Report on
November 12, 2020.

Plutus Consulting is not a related party to the Company or the Target Company

and does not have any material interest in the Tender Offer.
After examining which methods of valuation analysis to be adopted for the valuation of the share valueof the Target Company’s Stock from among several methods of valuation analyses of share value, Plutus
Consulting conducted the valuation of the share value per share of the Target Company’s Stock using
the following methods, on the assumption that the Target Company is a going concern, and based on its
philosophy that multifaceted evaluation of the Target Company’s Stock would be appropriate: (i) themarket share price analysis, because the Target Company’s Stock is listed on the First Section of theTokyo Stock Exchange, and the market prices are available for the Target Company’s Stock, and (ii) the
Discounted Cash Flow analysis (“DCF analysis”), so as to reflect the future business activities of theTarget Company in evaluating the share value per share of the Target Company’s Stock.

In addition,

the Target Company has not obtained an opinion concerning the fairness of the Tender Offer Price (afairness opinion) from Plutus Consulting.
The ranges of the share value per share of the Target Company’s Stock calculated using the foregoing
methods are as follows:
Market share price analysis: 1,341 yen to 1,583 yen
DCF analysis:

1,280 yen to 2,119 yen

Under the market share price analysis, with November 12, 2020, set as the record date for the valuation,
the range of the share value per share of the Target Company’s Stock was evaluated to be from 1,341
yen to 1,583 yen, based on the closing price of the Target Company’s Stock on the First Section of Tokyo
Stock Exchange on the record date which was 1,583 yen, the simple average of the closing price for themost recent one (1) month period which was 1,513 yen (rounded off to the nearest whole number; thesame applies hereinafter in the calculation of a simple average of closing price), the simple average ofthe closing price for the most recent three (3) month period which was 1,439 yen, and the simple averageof the closing price for the most recent six (6) month period which was 1,341 yen.
Under the DCF analysis, the share value per share of the Target Company’s Stock was evaluated to bein the range of 1,280 yen to 2,119 yen as a result of evaluating the corporate value and the share valueof the Target Company by discounting the free cash flow that is expected to be generated by the Target
Company in and after the 2nd quarter of the fiscal year ending March 2021 to the present value using acertain discount rate, based on various factors, such as the Target Company’s investment plans and theearnings estimates in the Target Company’s the business plan for the fiscal year ending March 2021
23

through the fiscal year ending March 2023 that were prepared by the Target Company and publicly
available information.
It should be noted that the business plans of the Target Company used in the valuation in the DCF
analysis include a fiscal year for which a large increase or decrease in income or profit is expected.
Specifically, amid uncertainties in the outlook of the market condition due to the influence of the spreadof COVID-19 during the period from the fiscal year ended March 2020 to the fiscal year ending March
2021, the operating income in the fiscal year ending March 2022 is expected to decrease by 38.6% fromthe previous fiscal year due to such efforts as restraint of purchase in order to optimize the inventory
stock levels and sufficiently ensure cash reserves.

An outline of these business plans is shown below.

Since it is difficult at this time to specifically estimate the synergies expected to be realized as a resultof the implementation of the Transaction, the aforementioned business plans are not based on theassumption of the implementation of the Transaction.
(in millions of yen)c.

Fiscal Year Ending

Fiscal Year Ending

Fiscal Year Ending

March 2021

March 2022

March 2023

Net sales

234,496

162,627

148,913

Operating income

26,72816,401

14,309Advice from an Independent Law Firm Received by the Target Company

According to the Target Company’s Press Release, to ensure transparency and fairness in, among otherthings, the process of decision-making by the Target Company’s Board of Directors on the Transaction,
the Target Company has retained Nishimura & Asahi as a legal advisor independent from both theCompany, the Target Company, Pacific, and Mr. Shinobu Yamagishi, from which the Target Company
has received necessary legal advice on the approach and process of, and other points to note regarding,
decision-making by the Target Company’s Board of Directors on the Transaction.
d.

Unanimous Approval by All of the Non-interested Directors of the Target Company, including the
Audit and Supervisory Committee Members

According to the Target Company’s Press Release, the Target Company, at its Board of Directors
meeting held today where eight of its nine directors (including four outside directors and excluding Mr.
Kotaro Wakatabi who is concurrently a director of the Company) participated in the deliberation andvote, adopted a resolution expressing an opinion in support of: (i) the proposed execution of theAgreement with the Company; and (ii) the Tender Offer, which will be executed as part of theTransaction, as described in “b. Target Company’s Decision-Making Process Leading to Decision toConsent to Tender Offer and Reasons Therefor” under “(2) Background, Purpose and Decision-Making
Process Leading to Decision to Implement Tender Offer, and Management Policy After Tender Offer”
above, with the unanimous affirmative vote of all directors (including audit and supervisory committee
24members) who participated in the vote.
The Target Company believes that the Tender Offer Price is reasonable, since (i) it is above the upper
limit of the range of the valuation results produced by the market share price analysis described in thevaluation results of the Target Company’s Stock obtained from Plutus Consulting, which is a third-party
valuation institution, as described in “b. Obtaining of the Share Valuation Report from an Independent
Third-party Valuation Institution by the Target Company,” and (ii) it is within the range of the valuation
results produced by the DCF analysis described in the same valuation results.

However, considering

the fact that the Company has set a maximum number of shares to be purchased in the Tender Offer, andthat the Company plans to maintain the listing of the Target Company’s Stock after the Tender Offer,
the Target Company has decided to adopt a neutral position as to whether or not the Target Company’s
shareholders choose to tender their shares in the Tender Offer, and to leave this choice up to thediscretion of the shareholders. Accordingly, at the Board of Directors meeting held on the same day,the Target Company adopted a resolution to that effect with the unanimous affirmative vote of all
directors (including audit and supervisory committee members) who participated in the vote.
Please note that Mr. Kotaro Wakatabi, who is an outside director of the Target Company andconcurrently serves as a director of the Company, did not participate in the deliberation or vote at the
aforementioned Board of Directors meeting of the Target Company or in discussions or negotiations
with the Company in any capacity representing the Target Company, in order to avoid any suspicion of
conflict of interest.
(5) Plan for Acquisition of Share Certificates, etc. of Target Company’s Stock after Tender Offer
The Company will conduct the Transaction for the principal purpose of making the Target Company aconsolidated subsidiary of the Company and plans to have the Target Company’s Stock remain listed
after the Transaction. Therefore, if the Company acquires a majority of the voting rights of the Target
Company (in case that the Company holds 341,444 or more voting rights after the Transaction andacquires 10,014,528 or more shares of the Target Company’s Stock through the Tender Offer) throughthe Transaction, the Company, at this point in time, does not plan to additionally acquire the Target
Company’s Stock after the Transaction. On the other hand, (i) if the Company fails to make the Target
Company its consolidated subsidiary by acquiring a majority of the voting rights of the Target Company
through the Transaction (in case that the Company holds less than 341,444 voting rights after theTransaction and acquires less than 10,014,528 shares of the Target Company’s Stock through the Tender
Offer), or (ii) if the Company succeeds in making the Company its consolidated subsidiary by acquiring
a majority of the voting rights of the Target Company through the Transaction, but if the percentage ofvoting rights held by the Company decreases to 50% or less due to the exercise of stock acquisitionrights of the Target Company, or other reasons, the Company will additionally acquire the Target
Company’s Stock, in the number which is sufficient for the Company to acquire a majority of the voting
rights of the Target Company, for the purpose of making the Target Company its consolidated subsidiary,
and will discuss with the Target Company specific methods therefor, including acquisition in the market
and subscription to the Target Company’s capital increase through third-party allotment, taking into
25

consideration the market trends and capital needs of the Target Company.

Although the number ofshares to be purchased is planned to be a number of shares based on which the total number of voting
rights of the Target Company owned by the Company will be more than 50% of the number of voting
rights of the Target Company, so that the number of shares to be purchased would be sufficient for theCompany to acquire a majority of the voting rights of the Target Company, the Company plans to discusswith the Target Company the specific number of shares to be purchased.
In addition, according to the Target Company’s Securities Registration Statement, Etc., the Target
Company resolved, at the Board of Directors meeting of the Target Company held on November 13,
2020, to conduct the Capital Increase through Third-Party Allotment by making the Company ascheduled allottee and the Company plans to subscribe to all of the Target Company’s Stock to be issued
by the Capital Increase through Third-Party Allotment, subject to the satisfaction of certain conditions
precedent such as the completion of the Tender Offer.

Payment by the Company is scheduled to bemade three business days after the last day of the Tender Offer Period (or the extended Tender Offer
Period if the Tender Offer Period is extended) (January 19, 2021 if the Tender Offer Period ends as
originally scheduled).

If the Company completes the payment for the Capital Increase through Third-

Party Allotment and acquires all of the Prospective Tendered Shares (4,804,900 shares, number ofvoting rights: 48,049, shareholding percentage: 7.41%) through the Tender Offer, the Company’s
Shareholding Percentage after Dilution will be 42.35%.

In addition, according to the Target

Company’s Securities Registration Statement, Etc., with respect to the funds to be raised by the Target
Company through the Capital Increase through Third-Party Allotment, 4,965 million yen will beappropriated to the purchase of sites for condominiums and the payment period is scheduled to be fromJanuary 2021 to March 2022. The Company intends to hold, for a long term, the Target Company’s
Stock to be subscribed to via the Capital Increase through Third-Party Allotment and has notified theTarget Company of such intention.
(6) Possibility of Delisting and Reasons Therefor
As of today, the Target Company’s Stock are listed on the First Section of the Tokyo Stock Exchange.
The Company has no intention to delist the Target Company’s Stock through the Tender Offer and willconduct the Tender Offer by setting the maximum number of shares to be purchased at 19,881,500
shares (number of voting rights: 198,815, shareholding percentage: 30.68%).

The Company’s

Shareholding Percentage after Dilution will be 64.42% at a maximum after the payment for the Capital
Increase through Third-Party Allotment is made and the Tender Offer is completed. Therefore, theTarget Company’s Stock will remain listed on the First Section of the Tokyo Stock Exchange after thecompletion of the Tender Offer.
2.

Outline of Purchase, Etc.

(1) Outline of Target Company

26

(1)

Name

Pressance Corporation Co., Ltd.

(2)

Location
Name and Title ofRepresentative

2-27 Shiromi 1-chome, Chuo-ku, Osaka-shi, Osaka(3)

Yutaka Doi, President and Representative Director(4)

Contents of Business

Planning, development and sales of condominiums for investment andcondominiums for families(5)

Capital(As of end of September
2020)

4,380 million yen(6)Date of Incorporation

October 1, 1997
Open House Co., Ltd.
NOMURA PB NOMINEES TK1 LIMITED(Standing proxy: Nomura Securities Co., Ltd.)

31.83%

K.K. Pacific

7.13%

The Master Trust Bank of Japan, Ltd. (Trustee account)

3.46%

11.07%

NPBN-SHOKORO LIMITED

3.39%(Standing proxy: Nomura Securities Co., Ltd.)

Morgan Stanley MUFG Securities Co., Ltd.

(7)

Major Shareholders andShareholding Ratios(as of the end of
September 2020)

2.69%

MSIP CLIENT SECURITIES(Standing proxy: Morgan Stanley MUFG Securities Co.,

2.31%

Ltd.)
Custody Bank of Japan, Ltd. (Trustee account)
NORTHERN

TRUST

GLOBALSERVICES

2.17%
SE,

LUXEMBOURG RE LUDU RE: UCITS CLIENTS 15.
315 PCT NON TREATY ACCOUNT

1.42%(Standing proxy: The Hongkong and Shanghai Banking
Corporation Limited, Tokyo branch)
BNYM SA/NV FOR BNYM FOR BNY GCM
CLIENT ACCOUNTS M LSCB RD
1.32%(Standing proxy: MUFG Bank, Ltd.)The Company holds 20,621,100 shares of theCapitalTarget Company’s Stock (shareholding percentage:
Relationship31.83 %).
(8)

Relationship between
the Company and theTarget Company

Personnel
Relationship

The Company has dispatched one outside director
to the Target Company

Business
Relationship

The Target Company sells land to Open House
Development Co., Ltd., a consolidated subsidiary of27

the Company.

Status as Related
Party
(9)

Since the Company is an equity-method affiliate of
the Company, it is a related party.

Consolidated Operating Results and Consolidated Financial Position for the Previous Three Fiscal
Years of the Target Company

Fiscal Term

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31,2019

Fiscal year ended
March 31, 2020

Consolidated net assets

75,172 million yen

94,618 million yen

116,690 million yen

Consolidated total assets

245,399 million yen

301,942 million yen

310,779 million yen

1,221.10 yen

1,493.54 yen

1,791.63 yen

Consolidated net sales
Consolidated operating
profit134,059 million yen

160,580 million yen

224,011 million yen

20,362 million yen

27,118 million yen

32,609 million yen

Consolidated ordinary profit
Profit attributable to ownerof parent
Consolidated basic earnings
per share
Dividends per share

19,858 million yen

26,531 million yen

31,985 million yen

13,757 million yen

18,296 million yen

21,892 million yen

232.58 yen

296.43 yen

347.45 yen

29.40 yen

40.50 yen

39.00 yen

Consolidated net assets per
share(Note)The shareholding ratios stated in the “Major Shareholders and Shareholding Ratios” are citedfrom the “Status of Major Shareholders” in the Target Company’s Second Quarterly Report.

(2) Schedule, Etc.
a.

Schedule
a.

b.
c.

d.

Date of Resolution ofBoard of Directors
Meeting
Execution Date of theAgreement
Date of Notice ofCommencement of
Tender Offer

Filing Date of Tender
Offer Registration
Statement

November 13, 2020 (Friday)
November 13, 2020 (Friday)
November 16, 2020 (Monday)
Public disclosure will be made electronically, and a notice ofsuch disclosure will be published in the Nihon Keizai
Shimbun.
EDINET (electronic disclosure for investors’ network):(http://disclosure.edinet-fsa.go.jp/)
November 16, 2020 (Monday)

28

e.

Payment Period
The payment period for the Capital Increase through Third-Party
Allotment is from January 15, 2021 through January 19, 2021.
(Payment by the Company is scheduled to be made three businessdays after the last day of the Tender Offer Period (January 19, 2021
if the Tender Offer Period ends as originally scheduled).)b.

Period for Purchase, Etc. as of the Time of Filing of this Statement
From November 16, 2020 (Monday) through January 14, 2021 (Thursday) (38 business days)c.

Possible Extension of the Tender Offer Period based on the Target Company’s Request
Not applicabled.

Contact Information in case of Extension of the Tender Offer Period
Not applicable(3) Price for Purchase, Etc.
1,850 yen per share of common stock(4) Basis of Calculation, Etc. of Price for Purchase, Etc.
a.

Basis of Calculation

The Company requested SMBC Nikko Securities, a financial advisor, as a third-party valuation
institution that is independent from the Company, the Target Company, Pacific, and Mr. Shinobu
Yamagishi to evaluate the share value of the Target Company’s Stock for determining the Tender Offer
Price, and obtained the share valuation report concerning the share value of the Target Company’s Stockfrom SMBC Nikko Securities on November 12, 2020 (“Company’s Valuation Report”).

SMBC Nikko

Securities is not a related party of the Company or the Target Company, and has no material interest in
the Tender Offer. The Company has not obtained an opinion concerning the fairness of the Tender
Offer Price (a fairness opinion) from SMBC Nikko Securities.
After examining which methods of valuation analysis to be adopted for the valuation of the share valueof the Target Company’s Stock from among several methods of valuation analysis of share value, SMBC
Nikko Securities conducted the valuation of the share value of the Target Company’s Stock using thefollowing methods of analysis: (i) the market share price analysis, because the Target Company’s Stockis listed on the First Section of Tokyo Stock Exchange, and the market prices are available for the Target
29

Company’s Stock, (ii) the comparable listed company analysis, because an analogical inference of theshare value of the Target Company’s Stock is possible through the comparison with listed companies
similar to the Target Company, and (iii) the DCF analysis, so as to reflect the future business activities
in the evaluation.
The ranges of the share value per share of the Target Company’s Stock calculated using the above
methods is as follows:
Market share price analysis:
1,341 yen to 1,513 yen
Comparable listed company analysis: 703 yen to 1,746 yen
DCF analysis:
1,686 yen to 2,853 yen
Under the market share price analysis, with November 12, 2020, set as the record date for valuation, therange of the share value per share of the Target Company’s Stock was analyzed to be from 1,341 yen to
1,513 yen, based on the simple average of the closing price for the most recent one (1) month period up
to the record date for valuation (from October 13, 2020 to November 12, 2020) of the Target Company’s
Stock on the First Section of Tokyo Stock Exchange which was1,513 yen, the simple average of theclosing price for the most recent three (3) month period (from August 13, 2020 to November 12, 2020)
which was 1,439 yen and the simple average of the closing price for the most recent six (6) month period(from May 13, 2020 to November 12, 2020) which was 1,341 yen.
Under the comparable listed company analysis, the share value of the Target Company’s Stock was
calculated by comparing the market share prices and financial indicators showing profitability of somelisted companies engaged in a business similar to that conducted by the Target Company, and the sharevalue per share of the Target Company’s Stock was analyzed to be in the range of 703 yen to 1,746 yen.
Under the DCF analysis, the share value per share of the Target Company’s Stock was analyzed to be in
the range of 1,686 yen to 2,853 yen as a result of analyzing the corporate value and the share value of
the Target Company by discounting the free cash flow that is expected to be created by the Target
Company in and after the 2nd quarter of the fiscal year ending March 2021 to the present value using acertain discount rate, based on the future earning forecasts of the Target Company in and after the 3rdquarter of the fiscal year ending March 2021, taking into account various factors, such as the businessplans for the fiscal year ending March 2021 through the fiscal year ending March 2023 that were
provided by the Target Company, interviews with the Target Company’s personnel and publicly
available information.

It should be noted that, the business plans of the Target Company based on

which the DCF analysis above was performed include a fiscal year in which a large increase or decrease
in income or profit is expected is included.

Specifically, under uncertainties in the outlook of themarket condition due to the influence of the spread of COVID-19 during the period from the fiscal year
ended March 2020 to the fiscal year ending March 2021, the operating income for the fiscal year ending
March 2022 is expected to result in a decrease of 38.6% compared with the previous period because ofrestraint of purchase in order to optimize the inventory stock levels and sufficiently ensure cash reserves.
30

The aforementioned business plan is outlined below, and is not based on the assumption of theimplementation of the Transaction as it is difficult at this point in time to specifically estimate thesynergies that are expected to be realized through the implementation of the Transaction.

Net sales
Operating income

Fiscal year ending
March 2021
234,496
26,728

Fiscal year ending
March 2022
162,627
16,401(in millions of yen)
Fiscal year ending
March 2023
148,913
14,309Referring to the valuation results indicated in the Company’s Valuation Report provided by SMBC
Nikko Securities, the Company comprehensively reviewed several factors, such as the results of the due
diligence on the Target Company conducted from the middle of September 2020 to the middle of
October 2020, the premiums added in tender offers conducted in the past by any parties other than anissuer, aiming to make the issuer a consolidated subsidiary, whether or not the Target Company’s Boardof Directors would support the Tender Offer, and the prospect of shares being tendered in the Tender
Offer; and took into consideration the result of the discussions and negotiations with Pacific, Mr.
Shinobu Yamagishi and the Target Company.

As a result, the Company set the Tender Offer Price at

1,850 yen today.
The Tender Offer Price of 1,850 yen represents (a) a premium of 16.87% on 1,583 yen, which is theclosing price of the Target Company’s Stock on the First Section of Tokyo Stock Exchange on November
12, 2020, the business day immediately preceding the announcement date of implementation of theTender Offer; (b) a premium of 22.27% on 1,513 yen, which is the simple average closing price of theTarget Company’s Stock for the past one (1) month up to the same date; (c) a premium of 28.56% on
1,439 yen, which is the simple average closing price of the Target Company’s Stock for the past three(3) months up to the same date; and (d) a premium of 37.96% on 1,341 yen, which is the simple averageclosing price of the Target Company’s Stock for the past six (6) months up to the same date. On May
8, 2020, the Company acquired 20,621,100 shares of the Target Company’s Stock (number of voting
rights: 206,211; shareholding percentage: 31.82%) at 1,100 yen per share through off-market trading.
The reason for the difference in the amount of 750 yen between such purchase price and the Tender
Offer Price is that the former is the price determined based on the market price of the Target Company’s
Stock at the time of the off-market trading, while the latter is the price including a premium added on
the market price of the Target Company’s Stock based on the aforementioned examinations.
b.

Background of Calculation(Background to the Determination of the Tender Offer Price)
In the beginning of September 2020, the Company exchanged a broad range of views with the Target
Company on prospects of the current business climate and financial condition of the Target Company
31

and its relationship with its financial institution partners, including financing, etc., in light of thesignificant changes in the external environment caused by the COVID-19 pandemic. As a result, amid
uncertainties in the outlook of the market condition due to the COVID-19 pandemic, the Target
Company acknowledged that its current business environment is still affected by the arrest of the Target
Company’s former President and Representative Director in December 2019, causing the Target
Company’s financial institutions to keep taking a cautious attitude towards providing finance to theTarget Company, and that there is a possibility that a further spread of the infection in the future may
aggravate the effect of the COVID-19 pandemic.

In addition, the Company and the Target Company

came to an understanding that , in order to ensure the sustainability of the Target Company’s business
operations, the acquisition of land for the smooth resumption of new projects and commencement of
new business activities by the Target Company is necessary, and in order to assure stability of financing
required thereby, credit enhancement through the strengthening of the capital relationship with theCompany is important.

The Company and the Target Company have come to hold a common

understanding that, upon strengthening the capital relationship between the two companies, it would be
extremely important to maintain to a certain extent the unique corporate culture and management
autonomy that the Target Company had thus far cultivated as an independent condominium developerin order to continuously improve corporate value and shareholder value through the sustainable
development of the Target Company; and that it was desirable to maintain the Target Company’s listed
status by making the Target Company a consolidated subsidiary of the Company instead of its whollyowned subsidiary, in order to allow the two companies to deepen the cooperation between them while
respecting the Target Company’s autonomous management would be effective with respect to enhancing
the corporate value of the Company and the Target Company.

In addition, since the Company and theTarget Company had previously recognized the necessity of further promoting the capital and businessalliance between the Company and the Target Company, and the necessity of further enhancing thecapital relation therefor, the Company and the Target Company had begun specific examinations anddiscussions regarding the consolidation of the Target Company by the Company and further promotionof the Current Capital and Business Alliance from the beginning of September 2020.

Thereafter, while the Company conducted the due diligence on the Target Company from the middle ofSeptember 2020 (such due diligence was completed in the middle of October 2020), the Company hasrepeatedly conducted verification of methods for the consolidation of the Target Company and of thesynergies between the two companies.

During such verification, the Company reconfirmed the current

business climate of the Target Company, and in the middle of October 2020, the Company recognizedthat making the Target Company a consolidated subsidiary of the Company by acquiring the Target
Company’s Stock is necessary and effective (i) to enhance the credit and stabilize the financing of theTarget Company, and (ii) to further enhance the feasibility of the synergies contemplated under theCurrent Capital and Business Alliance.

As the specific method for acquiring the Target Company’s
32

Stock, it would be desirable to conduct the Capital Increase through Third-Party Allotment together with
the Tender Offer, and strengthen the financial base of the Target Company by the Company subscribing
thereto because the Company believed that a method by way of a tender offer that provides the generalshareholders of the Target Company with the opportunity to sell shares and that does not dilute theTarget Company’s Stock was mainly considered; in light of the current business climate of the Target
Company, it is also important to conduct capital financing in order to expand the income scale andrealize the continuous business growth of the Target Company; and that the Company is able to support
the Target Company’s financing and show that the Company is committed to strongly promoting the
New Capital and Business Alliance by directly investing funds.

Accordingly, in the middle of October

2020, the Company conveyed to the Target Company that it is desirable to make the Target Company aconsolidated subsidiary of the Company, and that, as a specific method to acquire the Target Company’s
Stock, it is desirable to combine the capital increase through third-party allotment with the tender offer,and commenced to review and discuss the Transaction.
Subsequently, the Company and the Target Company continued to review and discuss the Transaction,and in the middle of October 2020, reaffirmed their understanding that ensuring the Target Company’s
credit enhancement and stabilization of financing by making the Target Company a consolidated
subsidiary of the Company through the Transaction, and at the same time, deepening the cooperation
between both companies while respecting the independence of the Target Company’s management,
promote the capital and business alliance between the two companies and contribute to the enhancementof the corporate value of both companies.
With respect to the total subscription price of the Capital Increase through Third-Party Allotment, theCompany has reviewed the amount that is expected to be applied to the acquisition of land by the Target
Company, while avoiding significant dilution of the Target Company’s Stock, and with respect to the
maximum number of shares to be purchased through the Tender Offer, to the extent that (i) the ratio ofshare certificates, etc. that may be held by the Company after the Tender Offer will be less than twothirds so as to protect the Company from the statutory obligation to purchase all tendered shares or tooffer to purchase all classes of shares, and that (ii) setting such maximum number is permissible, theCompany set a policy that the percentage of voting rights held by the Company after the Transaction
will be around 65% at maximum, from the perspective of providing as many of the Target Company’s
shareholders as possible with opportunities to sell their shares, while respecting the Target Company’s
independent management.

In the middle of October 2020, the Company proposed to the Target

Company that (i) the aggregate amount to subscribe in the Capital Increase through Third-Party
Allotment be 5 billion yen, (ii) the percentage of voting rights of the Target Company held by theCompany after the implementation of the Capital Increase through Third-Party Allotment and theTender Offer be around 65%, (iii) the Tender Offer Price be set at 1,750 yen, and (iv) the issue price of
the Capital Increase through Third-Party Allotment be the price discounted by 10% against the closing
price of the Target Company’s Stock on the First Section of the Tokyo Stock Exchange on the business33

day prior to the date of announcement of the Transaction.

In response, in late October 2020, theCompany was requested by the Target Company to reexamine such proposal for the reason that it wasdifficult to determine whether or not setting the Tender Offer Price at 1,750 yen would be appropriate
as an amount which was the result of the addition of a reasonable premium, as compared to the level ofpremiums in tender offer cases where the target company is intended to remain listed. Thereafter,
following discussions with the Target Company, the Company made a final proposal and reached anagreement in early November 2020 providing that the Tender Offer Price will be set at 1,850 yen andthe issue price of the Capital Increase through Third-Party Allotment will be the price discounted by
10% against the closing price of the Target Company’s Stock on the First Section of the Tokyo Stock
Exchange on the business day prior to the date of announcement of the Transaction. The Company
also approached Pacific and Mr. Shinobu Yamagishi in late September 2020 regarding the sale of theTarget Company’s Stock, and made a proposal to them in early November 2020 to set the Tender Offer
Price at 1,750 yen. Thereafter, as part of continuing discussions, the Company made a subsequent
proposal to set the Tender Offer Price at 1,850 yen, and reached an agreement at such price in the middleof November 2020, and executed the Application Agreements on November 13.
Following such discussions and negotiations, the Company resolved, at the Board of Directors meeting
held on November 13, 2020, to implement the Transaction mainly in order to make the Target Company
a consolidated subsidiary of the Company, and determined to set the Tender Offer Price at 1,850 yen.
(i) Name of the Third Party Who Provided an Opinion in Valuation
In determining the Tender Offer Price, the Company referred to the Company’s Valuation
Report obtained from SMBC Nikko Securities, a third-party valuation institution that is
independent from the Company and the Target Company.

SMBC Nikko Securities is not a

related party of the Company or the Target Company and has no material interest in the Tender
Offer. The Company has not obtained an opinion concerning the fairness of the Tender Offer
Price (a fairness opinion) from SMBC Nikko Securities.
(ii) Outline of Opinion from SMBC Nikko Securities
According to the Company’s Valuation Report, each adopted analysis method and the rangesof the share value per share of the Target Company’s Stock calculated using such analysis
method, are as follows:
Market share price analysis:
Comparable company analysis:
DCF analysis:

1,341 yen to1,513 yen
703 yen to1,746 yen
1,686 yen to2,853 yen(iii) Background to Determination of the Tender Offer Price based on the Opinion
Referring to the valuation results indicated in the Company’s Valuation Report provided by
SMBC Nikko Securities, the Company comprehensively reviewed several factors, such as theresults of the due diligence on the Target Company conducted from the middle of September34

2020 to the middle of October 2020, the premiums added in tender offers conducted in thepast by any parties other than an issuer, aiming to make the issuer a consolidated subsidiary,
the likelihood that the Target Company’s Board of Directors would support the Tender Offer,and the prospect of shares being tendered in the Tender Offer; and took into consideration the
result of the discussions and negotiations with Pacific, Mr. Shinobu Yamagishi and the Target
Company.
c.

As a result, the Company set the Tender Offer Price at 1,850 yen today.

Relationship with Third-Party Valuation Institution

SMBC Nikko Securities is not a related party of the Company or the Target Company, and has nomaterial interest in the Tender Offer.
(5) Number of Share Certificates, Etc. to Be Purchased
Number of shares to be

Minimum number of shares to

Maximum number of shares topurchased

be purchased

be purchased

19,881,500 (shares)− (shares)

19,881,500 (shares)(Note 1) If the aggregate number of the Tendered Share Certificates, Etc. is less than or equal to the
maximum number of shares to be purchased (19,881,500 shares), the Company will purchaseall of the Tendered Share Certificates, Etc. In the event that the total number of the Tendered
Share Certificates, Etc. exceeds the maximum number of shares to be purchased (19,881,500
shares), the Company shall not purchase, etc. such exceeding portion, in its entirety or in part,and shall deliver and conduct other settlement relating to the purchase, etc. of sharecertificates, etc. in accordance with the pro rata method stipulated in Paragraph 5, Article 2713 of the Act and Article 32 of TOB Order.
(Note 2) Shares constituting less than a unit will also be subject to the Tender Offer. The Target
Company may purchase its shares in accordance with procedures stipulated in the laws andregulations during the Tender Offer Period from any shareholders who exercise the right torequire the Target Company to purchase shares constituting less than a unit under theCompanies Act.
(Note 3) The Company does not intend to acquire, through the Tender Offer, any treasury shares heldby the Target Company.
(6) Change in Ownership Percentage of Share Certificates, Etc. Due to Purchase, Etc.
Number of Voting Rights
Represented by Share Certificates,
Etc. Owned by Tender Offeror prior
to Purchase, Etc.

206,211 units(Ownership Percentage of Share
Certificates, Etc. prior to Purchase, Etc.:
31.82%)

Number of Voting Rights
Represented by Share Certificates,
Etc. Owned by Special Related
Parties prior to Purchase, Etc.

3,959 units(Ownership Percentage of Share
Certificates, Etc. prior to Purchase, Etc.:
0.61%)

35

Number of Voting Rights
Represented by Share Certificates,
Etc. Owned by Tender Offeror after
Purchase, Etc.

405,026 units

Number of Voting Rights
Represented by Share Certificates,
Etc. Owned by Special Related
Parties after Purchase, Etc.

3,959 units

Total Number of Voting Rights of
All Shareholders, Etc. of the Target
Company647,724 units(Ownership Percentage of Share
Certificates, Etc. after Purchase, Etc.:
62.49%)(Ownership Percentage of Share
Certificates, Etc. after Purchase, Etc.:
0.61%)(Note 1) The “Number of Voting Rights Represented by Share Certificates, Etc. Owned by Special
Related Parties prior to Purchase, Etc.” and “Number of Voting Rights Represented by Share
Certificates, Etc. Owned by Special Related Parties after Purchase, Etc.” are the total numberof the voting rights represented by the share certificates, etc. held by each of the special
related parties.
(Note 2) The “Total Number of Voting Rights of All Shareholders, Etc. of the Target Company”
represents the total number of voting rights of all shareholders, etc. as of September 30, 2020,
as indicated in the Target Company’s Second Quarterly Report. However, as sharesconstituting less than a unit are also subject to purchase, etc. through the Tender Offer, incalculating the “Ownership Percentage of Share Certificates, Etc. prior to Purchase, Etc.” and“Ownership Percentage of Share Certificates, Etc. after Purchase, Etc.,” the number (648,100
units) obtained by adding the number of voting rights (647,800 units) represented by the
number of shares (64,780,005 shares) obtained by deducting the number of treasury shares
held by the Target Company as of September 30, 2020 (556,734 shares), as indicated in theTarget Company’s Second Quarterly Financial Results, from the total number of issued
shares as of September 30, 2020 (65,336,739 shares), as indicated in the aforementioned
report, to the number of voting rights (300 in total) relating to the Target Company’s Stocksubject to stock acquisition rights held by the special related parties (300 in total), is used as
the denominator.
(Note 3) Since share certificates, etc. held by each of the special related parties (excluding treasury
shares held by the Target Company) are also subject to purchase, etc., if each of the special
related parties applies for the Tender Offer, the share certificates, etc. for which such special
related party applies shall be purchased in its entirety or in part. If such share certificates,etc. is so purchased, “Number of Voting Rights Represented by Share Certificates, Etc.
Owned by Special Related Parties after Purchase, Etc.” shall fall below 3,959 units.
(Note 4) The “Ownership Percentage of Share Certificates, Etc. prior to Purchase, Etc.” and the“Ownership Percentage of Share Certificates, Etc. after Purchase, Etc.” are rounded to second
decimal place.
(Note 5) According to the Target Company’s Securities Registration Statement, etc., the Target
Company has resolved on implementation of the Capital Increase through Third-Party
Allotment in which the Tender Offeror is the scheduled allottee at the Target Company’s
Board of Directors’ meeting held today. The Tender Offeror plans to subscribe to all of theoffered shares, subject to the satisfaction of certain conditions precedent including thecompletion of the Tender Offer. Considering that the number of shares of the Target
Company’s Stock to be held by the Tender Offeror and the total number of issued shares of
the Target Company’s Stock will increase by 3,508,772 shares through the Capital Increase36

through Third-Party Allotment, if 35,087 is added to the denominator and the numerator,“Ownership Percentage of Share Certificates, Etc. after Purchase, Etc.” shall be 64.42%.
(7) Aggregate Tender Offer Price(Note)

36,780,775,000 yen

The aggregate tender offer price is calculated by multiplying the number of shares intended
to be purchased in the Tender Offer (19,881,500 shares) by the Tender Offer Price per share(1,850 yen).

(8) Method of Settlementa.

Name and Address of Head Office of Financial Instruments Business Operators / Banks in Chargeof Settlement for Purchase, Etc.
SMBC Nikko Securities Inc.

b.

3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo, Japan

Settlement Commencement Date
January 20, 2021 (Wednesday)c.

Method of Settlement

A notice of purchase by way of the Tender Offer will be mailed to the address or location of each
Tendering Shareholders, Etc. (or the Standing Proxy in the case of Foreign Shareholders, Etc.) promptly
after the end of the Tender Offer Period.

In the case where application is made through Nikko Easy

Trade, a notice of purchase by way of the Tender Offer will be delivered by electronic method.
Payment of the consideration will be made in cash. The proceeds from the sale of the purchased sharecertificates, etc. shall be transferred from the Tender Offer Agent to the location designated by theTendering Shareholders, Etc. (or the Standing Proxy in the case of Foreign Shareholders) promptly after
the settlement commencement date in the manner designated by the Tendering Shareholders, Etc. (orthe Standing Proxy in the case of Foreign Shareholders).
d.

Method for Returning Share Certificates, Etc.

In the event that the Tendered Share Certificates, Etc. are not purchased in their entirety or in part inaccordance with the conditions set forth in “a. Conditions Set Forth in Each Item of Article 27-13,
Paragraph 4 of Act and Details thereof” or “b. Conditions for Withdrawal, Etc. of Tender Offer, Details
thereof and Method for Disclosure of Withdrawal, Etc.” under “(9) Other Conditions and Methods ofPurchase, Etc.” below, the Tendered Share Certificates, Etc. that are required to be returned will be
returned to the Tendering Shareholders, Etc. by the Tender Offer Agent promptly after two (2) businessdays following the last day of the Tender Offer Period (on the day of the withdrawal, etc., if the tender
offer is withdrawn, etc.) by restoring the record of the shares in the Tendering Shareholders’ Account of
the Tender Offer Agent to the status at the time of the relevant tender. (The “status at the time of the37relevant tender” means the status which execution of the order to apply for the Tender Offer wascancelled).
In the case where the Tendering Shareholders, Etc. wish that their share certificates, etc. that are required
to be returned be transferred to their accounts with financial instruments business operators other than
the Tender Offer Agent, please check the transfer date which may differ depending on the type of accountmanaging the share certificates, etc. with the head office or local branch office of the Tender Offer Agentat which the relevant tender was accepted.
(9) Other Conditions and Methods of Purchase, Etc.
a.

Conditions Set Forth in Each Item of Article 27-13, Paragraph 4 of Act and Details thereof

If the aggregate number of the Tendered Share Certificates, Etc. is equal to or less than the maximum
number of shares to be purchased (19,881,500 shares), the Company will purchase all of the Tendered
Share Certificates, Etc.

If the aggregate number of the Tendered Share Certificates, Etc. exceeds the

maximum number of shares to be purchased (19,881,500 shares), the Company shall not purchase, etc.
such exceeding portion, in its entirety or in part, and shall deliver and conduct other settlement relating
to the purchase, etc. of share certificates, etc. in accordance with the pro rata method stipulated in
Paragraph 5, Article 27-13 of the Act and Article 32 of TOB Order. (If any Tendered Share Certificates,
Etc. contain fractional shares of less than one unit (100 shares), the number of shares to be purchasedfrom each of the Tendering Shareholders, Etc. obtained by calculation on a pro rata basis will be limited
to the number of the Tendered Share Certificates, Etc.)
If the aggregate number of shares to be purchased from each of the Tendering Shareholders, Etc., which
is obtained by rounding off amounts of less than one unit resulting from the calculation on a pro rata
basis, is less than the maximum number of shares to be purchased, one additional unit of the Tendered
Share Certificates, Etc. (or, in the case where purchasing one unit would cause an excess of the numberof the Tendered Share Certificates, Etc., up to the number of the Tendered Share Certificates, Etc.) will
be purchased from each of the Tendering Shareholders, Etc., in descending order beginning with the one
Tendering Shareholders, Etc. who own the largest number of rounded-down shares until the total numberof shares purchased is equal to or greater than the maximum number of shares to be purchased.
However, if, by this method, purchasing from all the Tendering Shareholders, Etc. who own an equal
number of rounded-down shares causes an excess of the maximum number of shares to be purchased, alottery system will be used to decide shareholders of which the shares will be purchased among therelevant Tendering Shareholders, Etc., to the extent where the resultant total number of shares purchased
is equal to or greater than the maximum number of shares to be purchased.
If the total number of shares to be purchased from each of the Tendering Shareholders, Etc., which is
obtained by rounding off amounts of less than one unit resulting from the calculation on a pro rata basis,
exceeds the maximum number of shares to be purchased, one unit of the Tendered Share Certificates,38

Etc. (if the number of shares to be purchased obtained by the calculation on a pro rata basis includes a
portion of shares of less than one unit, then such portion) will be decreased from the number of shares
to be purchased from each of the Tendering Shareholders, Etc., in descending order beginning with theTendering Shareholders, Etc. who own the largest number of rounded-up shares until the total numberof shares to be purchased is equal to or greater than the maximum number of shares to be purchased.
However, if, by this method, decreasing from all the Tendering Shareholders, Etc. who own an equal
number of rounded-up shares causes the number to fall below the maximum number of shares to bepurchased, a lottery system will be used to decide shareholders of which the number of shares to bepurchased will be decreased among the relevant Tendering Shareholders, Etc., to the extent where theresultant total number of shares purchased is equal to or greater than the maximum number of shares tobe purchased.
b.

Conditions for Withdrawal, Etc. of Tender Offer, Details thereof and Method for Disclosure ofWithdrawal, Etc.

The Tender Offer may be withdrawn upon the occurrence of any event listed in Article 14, Paragraph 1,
Items 1.1 through 1.9 and Items 1.12 through 1.18, Items 3.1 through 3.8 and Item 3.10, and Item 4 ofthe same Paragraph as well as Article 14, Paragraph 2, Items 3 through 6 of the Order for Enforcementof the Financial Instruments and Exchange Act (Cabinet Order No. 321 of 1965, as amended; the“Enforcement Order”).

In the Tender Offer, the “matters equivalent to the matters listed in Items 1.1

through 1.9” in Article 14, Paragraph 1, Item 3.10 of the Enforcement Order means (i) the cases where
it is found that there is a false statement or omission regarding a material matter to be stated in thestatutory disclosure documents that the Target Company previously submitted or (ii) where the matterslisted in Items 1.1 through 1.7 of the same paragraph occur with respect to a material subsidiary of theTarget Company.
In the event that the Company intends to withdraw the Tender Offer, it will provide public notice thereofthrough electronic disclosure as well as in the Nihon Keizai Shimbun.

However, if it is difficult toprovide such notice within the Tender Offer Period, the Company will make an official announcement
pursuant to Article 20 of the TOB Order and provide public notice promptly thereafter.
c.

Conditions for Reduction of Purchase Price, Details thereof and Method for Disclosure of
Reduction

Pursuant to Article 27-6, Paragraph 1, Item 1 of the Act, if the Target Company takes any action set forthin Article 13, Paragraph 1 of the Enforcement Order during the Tender Offer Period, the Company may
reduce the Tender Offer Price pursuant to the standards set forth in Article 19, Paragraph 1 of the TOB
Order.
Should the Company intend to reduce the Tender Offer Price, it will provide public notice thereofthrough electronic disclosure as well as in the Nihon Keizai Shimbun.
39

However, if it is difficult toprovide such notice within the Tender Offer Period, the Company will provide an official announcement
pursuant to Article 20 of the TOB Order and provide public notice promptly thereafter.
If the Tender Offer Price is reduced, the Company will purchase the tendered share certificates, etc. thatare tendered even on or prior to the public notice at the reduced Tender Offer Price.
d.

Matters Concerning Right of Cancellation of Contract of Tendering Shareholders, Etc.

Tendering Shareholders, Etc. may cancel the contract related to the Tender Offer at any time during theTender Offer Period.
In order to cancel the contract, Tendering Shareholders, Etc. must personally deliver or mail (by post) a
written request for the cancellation of the contract related to the Tender Offer (the “Cancellation
Documents”) to the entity designated below by 15:30 on the last day of the Tender Offer Period.
(Please note that business hours may differ from office to office. Therefore please check the businesshours, etc. of the office you intend to use before proceeding with the procedures.)If cancellation ismade by postal mail, the cancellation will not be effective unless the Cancellation Documents aredelivered to the entity designated below by 15:30 on the last day of the Tender Offer Period. (Please
note that business hours may differ from office to office.

Therefore, please check beforehand thebusiness hours, etc. of the office you intend to use before proceeding with the procedures.)
A contract executed via the Nikko Easy Trade can be canceled by logging onto the Nikko Easy Trade
website and completing the cancellation procedures in the manner prescribed on such website by 15:30
on the last day of the Tender Offer Period.
Entity authorized to receive the Cancellation Documents:
SMBC Nikko Securities Inc.

3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo, Japan(and branch offices of SMBC Nikko Securities Inc. located in Japan)
No compensation for damages or penalty payment will be claimed against any Tendering Shareholders,Etc. by the Company related to any cancellations of contract by the Tendering Shareholder, Etc. The
cost of returning the Tendered Share Certificates, Etc. will be borne by the Company.
e.

Method for Disclosure if Conditions or Other Terms of Tender Offer Are Changed

The Company may change the conditions, etc. of the Tender Offer during the Tender Offer Period, except
where it is prohibited pursuant to Article 27-6, Paragraph 1 of the Act and Article 13 of the Enforcement
Order.
Should any terms or conditions of the Tender Offer be changed, the Company will provide public notice
thereof through electronic disclosure as well as in the Nihon Keizai Shimbun. However, if it is difficult40

to provide notice within the tender offer period, the Company will provide an official announcement
pursuant to Article 20 of the TOB Order and provide public notice promptly thereafter.
Should any of the terms or conditions of the Tender Offer be changed, the purchase of the tendered sharecertificates, etc. tendered on or prior to the date of such public notice will also be made in accordancewith the changed terms and conditions.
f.

Method for Disclosure if Amended Statement Is Submitted

If the Company submits an amendment to the Tender Offer Registration Statement to the DirectorGeneral of the Kanto Local Finance Bureau (except in the case prescribed in the proviso to Article 278, Paragraph 11 of the Act), the Company will promptly make an official announcement of the detailsof such amended statement to the extent relevant to the contents of the public notice of the start of theTender Offer, pursuant to the method set forth in Article 20 of the TOB Order. The Company will also
promptly amend the tender offer explanatory statement and provide the amended explanatory statement
to the Tendering Shareholders, Etc. who received the tender offer explanatory statement.

However, if

the extent of the amendments is limited, the Company will convey the changes to the Tendering
Shareholders, Etc. by way of preparing and delivering to the Tendering Shareholders, Etc. a document
stating the reason for the amendments, the matters amended and the details thereof.
g.

Method for Disclosure of Results of Tender Offer

The Company will announce the results of the Tender Offer in accordance with the methods stipulated
in Article 9-4 of the Enforcement Order and Article 30-2 of the TOB Order on the day following the last
day of the Tender Offer Period.
(10) Date of Notice of Commencement of Tender Offer
November 16, 2020 (Monday)(11) Tender Offer AgentSMBC Nikko Securities Inc.
3.

3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo

Policy after Tender Offer and Future Prospects(1) Policy after Tender Offer
For the policy, etc. after the Tender Offer and future prospects, please refer to “c. Management Policy
after the Tender Offer” in “(2) Background, Purpose and Decision-Making Process Leading to Decision
to Implement Tender Offer, and Management Policy After Tender Offer” under “1. Purpose of Purchase,
Etc.” above.
41

(2) Impact on and Prospects for Company’s Future Consolidated Financial Results
The Company is currently reviewing the impact the Tender Offer will have on the Company’s financial
results and if any revision to the financial results forecast becomes necessary or any matters that should
be disclosed come to light in the future, the Company will promptly report the same.
4.

Others(1) Agreements between Company and Target Company or its Officers, and Details Thereofa.

Support for Tender Offer

According to the Target Company’s Press Release, the Target Company resolved, at the Board of
Directors meeting of the Target Company held today, (i) to execute the Agreement with the Company
and (ii) to express its opinion to support the Tender Offer, which will be conducted as part of theTransaction.

In addition, although the Target Company believes that the Tender Offer Price isreasonable in light of the valuation results of share valuation for the Target Company’s Stock obtained
from Plutus Consulting, the Target Company decided, by a resolution, to take a neutral stance and let
the Target Company’s shareholders decide whether they would tender their shares in the Tender Offer
because the maximum number of shares to be purchased to be acquired is set in the Tender Offer andthe plan is for the Target Company’s Stock to continue being listed after the Tender Offer.
For further information on the decision-making process of the Target Company’s Board of Directors,
please refer to the Target Company’s Press Release and “d. Unanimous Approval by All of the Noninterested Directors of the Target Company, including the Audit and Supervisory Committee Members”
in “(4) Measures to Ensure Fairness of Tender Offer such as Measures to Ensure Fairness of Tender
Offer Price and to Avoid Conflicts of Interest” under “1. Purpose of Purchase, Etc.” above.
b.

Current Capital and Business Alliance Agreement

The Company has executed the Current Capital and Business Alliance Agreement with the Target
Company.

An outline of the agreement under the Current Capital and Business Alliance Agreement is

as follows:(i) Business Alliance
The business alliance under the Current Capital and Business Alliance Agreement is broken
down into the business alliance concerning (a) regional complementarity, (b) productcomplementarity, (c) management and administration of lease properties and properties for
sale, and (d) cost reduction, and the specific measures therefor will be facilitated upon goodfaith consultation and agreement between the Company and the Target Company.

For further

information, please refer to “Synergies Contemplated under the Current Capital and Business
Alliance” in “a. Background, Purpose and Decision-Making Process Leading to Decision to
Implement Tender Offer” in “(2) Background, Purpose and Decision-Making Process Leading42

to Decision to Implement Tender Offer, and Management Policy After Tender Offer” under“1. Purpose of Purchase, Etc.” above.
(ii) Dispatch of Directors
In the Current Capital and Business Alliance Agreement, the Company and the Target
Company agreed that the Company shall have the right to nominate one candidate for non-fulltime director of the Target Company (or two if both companies agree).

Based on suchagreement, the Target Company submitted to the ordinary general meeting of shareholders
held in June 2020 a proposal for the election of directors, including Mr. Kotaro Wakatabi as a
candidate for director nominated by the Company, and the proposal was approved at the sameordinary general meeting of shareholders.
c.

Execution of Agreement

The Company executed the Agreement with the Target Company.

For an outline of the Agreement,

please refer to “a. Agreement” in “(3) Matters Concerning Material Agreements Related to Tender Offer”
under “1. Purpose of Purchase, Etc.” above.
d.

Capital Increase through Third-Party Allotment

According to the Target Company’s Securities Registration Statement, Etc., the Target Company has
resolved, at the Board of Directors meeting of the Target Company held today, to issue shares to beoffered (3,508,772 shares of common stock, issue price of 1,425 yen per share, and total issue price ofapproximately 5,000 million yen) through a third-party allotment of shares by making the Company ascheduled allottee, and with the payment period from January 15, 2021, which is after the completionof the Tender Offer Period, to January 19, 2021, and the Company plans to subscribe to all of the offeredshares, subject to the satisfaction of certain conditions precedent, including the completion of the Tender
Offer. Payment by the Company is scheduled to be made three business days after the last day of theTender Offer Period (or the extended Tender Offer Period if the Tender Offer Period is extended)(January 19, 2021 if the Tender Offer Period ends as originally scheduled). For further information on
the Capital Increase through Third-Party Allotment, please refer to the Target Company’s Securities
Registration Statement, Etc., “(ii) Matters concerning the Capital Increase through Third-Party
Allotment” in “a. Agreement” in “(3) Matters Concerning Material Agreements Related to Tender Offer”
and “(5) Plan for Acquisition of Share Certificates, etc. of Target Company’s Stock after Tender Offer”
under “1. Purpose of Purchase, Etc.” above.

(2) Other Information Deemed Necessary for Investors to Decide Whether to Tender Their Shares in
the Offer, Etc.
a.

Disclosure of “ Consolidated Second Quarterly Financial Results for the Fiscal Year Ending March43

2021 <under J-GAAP>”The Target Company disclosed the “Consolidated Second Quarterly Financial Results for the Fiscal
Year Ending March 2021 <under J-GAAP>” today. The outline of the disclosure is as stated below.
The statements in the disclosed report have not been reviewed by an audit firm in accordance with
Article 193-2, Paragraph 1 of the Act.

For details, please refer to the disclosed report.

(a) Profit & Loss (consolidated)
Cumulative second quarter period of the
fiscal year ending March 2021

Fiscal Period
Net sales

135,411 million yen

Cost of sales

107,767 million yen

Selling, general and administrative expenses

9,329 million yen

Non-operating income

737 million yen

Non-operating expenses

635 million yen

Profit attributable to owners of parent

12,769 million yen(b) Per Share Information (consolidated)
Cumulative second quarter period of the
fiscal year ending March 2021

Fiscal Periodb.

Basic earnings per share

198 yen 33 sen

Dividends per share

13 yen 00 sen

Implementation of the Capital Increase through Third-Party Allotment

According to the Target Company’s Securities Registration Statement, Etc., the Target Company
resolved, at the Board of Directors meeting of the Target Company held today, to issue shares to beoffered (3,508,772 shares of common stock, issue price of 1,425 yen per share, and total issue price ofapproximately 5,000 million yen) through a third-party allotment of shares by making the Company ascheduled allottee, and with the payment period from January 15, 2021, which is after the completionof the Tender Offer Period, to January 19, 2021, and the Company plans to subscribe to all of the offeredshares, subject to the satisfaction of certain conditions precedent, including the completion of the Tender
Offer. For further information on the Capital Increase through Third-Party Allotment, please refer tothe Target Company’s Securities Registration Statement, Etc., “(ii) Matters concerning the Capital
Increase through Third-Party Allotment” in “a. Agreement” in “(3) Matters Concerning Material
Agreements Related to Tender Offer” and “(5) Plan for Acquisition of Share Certificates, etc. of Target
Company’s Stock after Tender Offer” under “1. Purpose of Purchase, Etc.” above.

The Company

intends to hold, for a long term, the Target Company’s Stock to be subscribed to via the Capital Increase
through Third-Party Allotment and has notified the Target Company of such intention.
44

c.

Disclosure of the “Notice regarding Differences Between (Consolidated and Non-Consolidated)
Results Forecasts and Financial Results for Cumulative Second Quarter Period of Fiscal YearEnding March 2021 and Revision of (Consolidated and Non-Consolidated) Results Forecasts for
Fiscal Year Ending March 2021 and Regarding Decision on (Interim) Dividend of Surplus andRevision of Fiscal Year-End Dividend Forecast”

As disclosed in the “Notice regarding Differences Between (Consolidated and Non-Consolidated)
Results Forecasts and Financial Results for Cumulative Second Quarter Period of Fiscal Year Ending
March 2021 and Revision of (Consolidated and Non-Consolidated) Results Forecasts for Fiscal YearEnding March 2021 and Regarding Decision on (Interim) Dividend of Surplus and Revision of Fiscal
Year-End Dividend Forecast” published today, the Target Company experienced differences between
the (consolidated and non-consolidated) results forecasts for the cumulative second quarter period of the
fiscal year ending March 2021 and the financial results announced on the same day, as well as revising
the (consolidated and non-consolidated) results forecasts for the fiscal year ending March 2021.

In

addition, at its Board of Directors meeting held today, the Target Company adopted a resolution to pay
an (interim) dividend of surplus with September 30, 2020, as the record date, as well as revising theyear-end dividend forecast. For details, please refer to the Target Company’s relevant notice.
End of document45

Unless otherwise specified, all procedures relating to the Tender Offer will be conducted entirely in Japanese. While some or
all of the documentation relating to the Tender Offer will be prepared in English, if there is any inconsistency between the
English documentation and the Japanese documentation, the Japanese documentation will prevail.
The Tender Offer relates to the common shares of the Target Company, a company incorporated in Japan.

The Tender

Offer will be conducted in accordance with the procedures and information disclosure standards prescribed under Japaneselaws and these procedures and standards may differ from the procedures and information disclosure standards in the UnitedStates.

In particular, Sections 13(e) and 14(d) of the U.S. Securities Exchange Act of 1934 (as amended), and the rules

prescribed thereunder, do not apply to the Tender Offer, and the Tender Offer does not conform to those procedures andstandards, and thus may not be comparable to the financial statements of U.S. companies.

The financial information

contained or referred to in this press release is prepared in accordance with accounting principles generally accepted in Japanand such accounting principles may be considerably different from accounting principles generally accepted in the U.S. orother countries.

It may be difficult to enforce any right or claim arising under U.S. federal securities laws because theTender Offeror is incorporated outside the United States and some or all of its directors are non-U.S. residents.
Shareholders may not be able to sue a company outside the United States and its directors in a non-U.S. court for violationsof the U.S. securities laws.

Furthermore, there is no guarantee that shareholders will be able to compel a company outside

the United States or its subsidiaries and affiliates to subject themselves to the jurisdiction of a U.S. court.
The information provided in this press release and the documents referenced herein contains “forward-looking statements” asdefined in Section 27A of the Securities Act of 1933 (as amended) and Section 21E of the Securities Exchange Act of 1934.
Actual results may differ substantially from the projections or similar statements implicitly or explicitly made in the forwardlooking statements due to known or unknown risks, uncertainties or other factors.

No promises are made by the Tender

Offeror or its affiliates that the projections or similar statements implicitly or explicitly made in the “forward-looking
statements” will ultimately be accurate. The forward-looking statements in this press release and the documents referenced
herein have been prepared based on the information available to the Tender Offeror at the date of this press release and unlessrequired by laws, regulations or financial instruments exchange rules, neither the Tender Offeror nor its affiliates are
obligated to update or revise the forward-looking statements to reflect any future events and conditions.
The Tender Offeror, the financial advisors of the Tender Offeror and the Target Company and the tender offer agent(including their respective affiliates) may, in the ordinary course of its business, engage in the purchase or any trade leading
to the purchase of the common shares of the Target Company outside the Tender Offer for its own or its customer’s accountbefore commencement of, or during the period for purchases, etc. that is specified under, the Tender Offer, in accordancewith the requirements of Rule 14e-5(b) of the U.S. Securities Exchange Act of 1934 (as amended) and to the extent permitted
under Japanese financial instruments transaction-related laws and regulations.

If any information regarding such purchase isdisclosed in Japan, such information will also be disclosed in English on a website of such person who has conducted such
purchase (or by other means of disclosure).

46