[Translation]

The share exchange described in this press release involves securities of a Japanese company. The offer
is subject to disclosure requirements of Japan that are different from those of the United States.
Financial information included in this document, if any, was excerpted from financial statements
prepared in accordance with non-U.S. accounting standards that may not be comparable to the financial
statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S.
federal securities laws, since the issuer is located in Japan and all of its officers and directors resideoutside of the United States. You may not be able to sue a Japanese company or its officers or directors
in a Japanese court for violations of the U.S. securities laws. It may be difficult to compel a Japanesecompany and its affiliates to subject themselves to a U.S. court’s judgment.
You should be aware that the issuer may purchase securities otherwise than under the share exchange,such as in open market or privately negotiated purchases.
This document has been translated from the Japanese-language original for reference purposes only.
While this English translation is believed to be generally accurate, it is subject to, and qualified by, in its
entirety, the Japanese-language original. Such Japanese-language original shall be the controlling
document for all purposes.
May 10, 2018
For immediate release
Company:
Representative:

Nisshinbo Holdings Inc.
Masaya Kawata,
President
Securities Code: 3105
TFS (First Section); NSE(First Section); SSE; FSE
Contact:
Investor Relations &Public Relations Group(Tel: 03-5695-8854)
Company:

New Japan Radio Co.,
Ltd.
Representative: Ryo Ogura, President andRepresentative Director
Securities Code: 6911, TFS (First Section)
Contact:
Masahiro Akimatsu,
Manager, General Affairs(Tel: 03-5642-8222)
Notice Regarding Execution of Share Exchange Agreement Concerning Nisshinbo Holdings Inc.
Making New Japan Radio Co., Ltd. a Wholly-Owned Subsidiary
We hereby announce as follows that Nisshinbo Holdings Inc. (“Nisshinbo Holdings”) and New Japan
Radio Co., Ltd. (“New JRC”) resolved at meetings of their respective Board of Directors held today toimplement a share exchange through which Nisshinbo Holdings will become a wholly-owning parent
company resulting from a share exchange and New JRC will become a wholly-owned subsidiary
resulting from a share exchange (the “Share Exchange”) and Nisshinbo Holdings and New JRC executed

1[Translation]a share exchange agreement (the “Share Exchange Agreement”). The Share Exchange will be
implemented, in the case of Nisshinbo Holdings, without approval by resolution of its generalshareholders’ meeting by way of a simplified share exchange as prescribed in Article 796, Paragraph 2of the Companies Act, and in the case of New JRC, with the Share Exchange Agreement being approved
at its annual general shareholders’ meeting to be held on June 25, 2018. The effective date of the Share
Exchange is scheduled to be September 1, 2018 (the “Share Exchange Effective Date”).
Prior to the Share Exchange Effective Date, New JRC plans to delist its shares of common stock (the“New JRC Shares”) from the First Section of the Tokyo Stock Exchange, Inc. (“TSE”) on August 29,
2018 (with a final trading date of August 28, 2018).
1.

Purposes of the Share Exchange

Nisshinbo Holdings originated in 1907 as Nisshin Cotton Spinning Co., Ltd., which was a cotton
spinning manufacturer, and following that, in addition to textiles, it proceeded with diversifying its
business into automobile brakes, precision instruments, chemicals, and electronics, and in recent years
Nisshinbo Holdings has offered solutions to challenges faced by human society such as environmental
destruction and global warming, and it strives every day to improve its corporate value as an
Environment and Energy Company group that contributes to people living in safety and peace.
In 2009 Nisshinbo Holdings transitioned to a holding company structure, and with the aim of achieving“sales of 1 trillion yen and a ROE of 12%,” which is its long-term business performance target for FY
2025, in addition to strengthening its existing businesses, Nisshinbo Holdings is working to convert its
earnings structure by combining technology throughout the entire group, creating new businesses, andchanging its portfolio through aggressive M&As.
Meanwhile, New JRC was established in 1959 as Saitama Japan Radio Co., Ltd., which is wholly owned
by Japan Radio Co., Ltd. (“JRC”), and in 1961 it changed its name to New Japan Radio Co., Ltd. Since
its establishment, New JRC has developed a business that focusses on electronic devices, particularly
microwave products and analog semiconductors, based on microwave technology and microelectronics
technology. In 2005, New JRC became a consolidated subsidiary of Nisshinbo Holdings, which was
expanding and strengthening its electronics business as its strategic core business, and New JRC has
steadily accumulated results such as improving its business performance and improving its cash flow byworking on fundamental organizational restructuring since 2011 and putting activities such as proactive
product development and sales promotion into practice.
New JRC manufactures and sells analog semiconductor products that are available in a broad range of
specifications such as audio, operational amplifiers for vehicles and industrial equipment, and power
management ICs, but by participating in joint development projects with the Nisshinbo Group, New JRC
has further deepened its relationships with automakers and major Tier 1 automotive parts suppliers by
utilizing the trust the Nisshinbo Group has built up through those business relationships, and New JRC
has also increased business involving automotive electronic devices for control systems. Further, inAugust 2016, a German company (Frankfurt) was established as a wholly-owned subsidiary of New JRC,
and it is expected New JRC will see further growth in automotive electronic devices considering it isalso committed to expanding into the European market on a full scale.
The Nisshinbo Group has a policy of focusing its management resources on automotive businesses andsuper smart society-related businesses*1 in its medium- to long-term strategy based on its corporate*1 A super smart society is defined as “a society where the various needs of society are finely differentiated and met byproviding the necessary products and services in the required amounts to the people who need them when they need them,2

[Translation]philosophy of Public Entity, Consistent Integrity, and Innovation, but as medium- to long-term measures,
it is particularly focused on areas involving self-driving vehicles such as ADAS (Advanced Driving
Assistance Systems).
Autonomous driving comprises three key areas of functionality ― recognition, decision-making andcontrol, but the goal at the Nisshinbo Group is to develop its business with a focus on the functional areaof “recognition” where there is a significant scope for technical differentiation. To that end, theNisshinbo Group is endeavoring to maximize synergy by utilizing resources within the Nisshinbo Groupthrough measures such as applying superior technology at JRC and New JRC such as sensor,
semiconductor, radar, and laser technologies and the trust with automakers and major Tier 1 automotive
parts suppliers it has built up through many years of business in the automotive break and the precision
instruments businesses.
Based on that business strategy, in the Nisshinbo Group’s electronic business, there are accelerated
efforts towards capitalizing on demand in super smart society-related markets such as the IoT in addition
to automotive parts, which are expected to see rapid growth in the future. As specific measures, theNisshinbo Group strengthened its business foundation in the semiconductor and electronic device fields
by making JRC a wholly-owned subsidiary in October 2017 and adding Ricoh Electronic Devices Co.,
Ltd. (“Ricoh Electronic Devices”), which is a global supplier of analog power management ICs, as a
new subsidiary of the group in March 2018.
Further, in April 2018, the Nisshinbo Group developed measures such as spinning off the mobility sector
within the Communications Products and Network Division of JRC into JRC Mobility Inc. with an aimof expanding its business areas from automotive to mobility by combining the Nisshinbo Group’s
wireless communication and electronic device technologies to develop business in automated driving,
electric vehicles, and connected car markets.
While New JRC previously provided electronic devices for many control systems as automotive parts
such as power supply control systems and drive motor systems for power control units to be used inelectric vehicles (EV), as a result of vehicles becoming more networked with the electrification ofvehicles such as ADAS or autonomous driving or the emergence of the IoT, markets are rapidly
emerging not only in conventional control areas of engines and brakes, but also in information andcommunications areas, in which New JRC excels, such as increased speeds and lower power
consumption in data communication, and it will become necessary to allocate even more resources to
respond to technical innovations that are expected to develop at a rapid pace. Under these circumstances,in New JRC, which will play a central role in future growth of the Nisshinbo Group, there are calls toeffectively invest management resources to rapidly respond to sudden changes in the businessenvironment, and there is a pressing need to establish a solid financial basis that will allow even fasterand more flexible decision making and investment decisions and will allow timely growth investments
including M&As. Further, to expand its business area towards automotive and industrial products,
which is New JRC’s goal, it will also be essential to create a system that will allow full utilization of theabundant human resources and knowledge possessed by the Nisshinbo Group in that area.
Based on the above awareness, Nisshinbo Holdings and New JRC have had discussions for some time
on a collaborative framework for both companies, and in December 2017, Nisshinbo Holdings made a
proposal to New JRC to have discussions on making New JRC a wholly-owned subsidiary through ashare exchange and the companies began considering the Share Exchange at that time. Following that,and in which all people can receive high-quality services and live a comfortable and active life that makes allowances fortheir various differences such as age, gender, region, or language.” (Science and Technology Basic Plan, Cabinet Decisionof January 22, 2016).

3

[Translation]

as a result of repeated and ongoing discussions between Nisshinbo Holdings and New JRC, the twocompanies reached a conclusion that the best course of action to improve the corporate value of
Nisshinbo Group as a whole would be that Nisshinbo Holdings makes New JRC, whose businessperformance and cash flow have improved as a result of fundamental organizational restructuring, awholly-owned subsidiary. Further, amid an increasingly severe competitive environment in the run-up
to a large-scale increase in demand in next-generation vehicle technology areas such as automateddriving, electric vehicles, and connected cars, the need for New JRC to strengthen its access to the
Nisshinbo Group’s business resources is increasing day by day, and New JRC reached a conclusion that
accelerating its growth strategy by becoming a wholly-owned subsidiary of Nisshinbo Holdings as soon
as possible will contribute to improving the corporate value of New JRC. Specifically, it is expected the
Nisshinbo Group will be able to enjoy the following advantages after New JRC becomes a whollyowned subsidiary of Nisshinbo Holdings.
(i)

Accelerated growth strategy
Nisshinbo Holdings has a policy in its medium- to long-term strategy of focusing its management
resources on automotive areas such as self-driving vehicles, electric vehicles, and connected carsand on super smart society-related businesses. In that context, it is anticipated that the electronic
device-related technology possessed by New JRC will be applied to a wide range of applications,and accordingly it is expected that Nisshinbo Group as a whole will see accelerated businessgrowth and become more competitive as a result of New JRC and the other business departmentsof Nisshinbo Holdings more actively accessing each other’s technology and knowledge.

(ii)

Promoting cost structure reform through integration
As a result of integrating and sharing in overlapping indirect sectors in Nisshinbo Holdings and
New JRC, it is expected there will be a lower burden and reduced costs in indirect services in the
Nisshinbo Group as a whole, and in addition to that, Nisshinbo Group will endeavor to reduce
manufacturing costs by promoting collaboration in terms of manufacturing processes with Ricoh
Electronic Devices, which has previously cooperated with New JRC in manufacturing electronic
devices, and it is expected that price competitiveness of electronic devices will continue toimprove in the entire group.

(iii)

Improved governance level in the entire group
By making New JRC a wholly-owned subsidiary, it will become possible at Nisshinbo Holdings
to have unified business operations that are in line with the growth strategy of the Nisshinbo
Group as a whole, and it is expected it will become possible to accelerate the growth strategy inline with the rapidly changing business environment.

At the same time, the following is specifically anticipated as advantages that New JRC will be able toenjoy as a result of becoming a wholly-owned subsidiary of Nisshinbo Holdings.
(i)

Expectation of investments utilizing Nisshinbo Holdings’ credibility and capital strength
Now that the results of organizational restructuring are paying off, for New JRC to further
develop by seizing the chance of changes to the business environment surrounding it such as
steady market expansion in the automotive and industrial device markets, it will be necessary to
make focused investments in the areas to be strengthened based on judgements on selection andconcentration of resources. It is expected New JRC will be able to make focused investments as a4

[Translation]

result of more effective fund procurement by utilizing Nisshinbo Holdings’ credibility and capitalstrength.
(ii)

Stabilization of business operations and management as a result of a long-term perspective
With the delisting of New JRC, it will become easier to conduct business operations that focus ona long-term perspective and to strategically and effectively invest management resources, and it isalso expected management will be conducted in an even more stable manner without being
impacted by short-term changes in business performance.

(iii)

Utilization of the global network built by Nisshinbo Holdings
While New JRC has had good business relationships with its existing overseas customers, as it
develops new fields and launches new products, it will need to find new customers in addition toits existing customers. By utilizing the business development knowhow and the global customer
network already possessed by Nisshinbo Holdings, it is expected New JRC will be able to quickly
and efficiently proceed with more global business development of its existing products andattracting customers with respect to new fields and new products.

(iv)

Utilization of human resources by rationalizing indirect services through unified business
operations and delisting
By promoting the rationalization of overlapping indirect departments in Nisshinbo Holdings and
New JRC and reducing administrative work upon the delisting, it will be possible to effectively
assign personnel, who are valuable management resources of New JRC, and it will be possible tofocus human resources on growth areas in an even more strategic manner. Also, by promoting
collaboration with Ricoh Electronic Devices in terms of manufacturing processes, it is expected
the manufacturing costs of electronic devices will be reduced and price competitiveness in the
global market will improve.

(v)

Utilization of the Nisshinbo Group’s abundant human resources and knowledge
The Nisshinbo Group has strengthened its business foundation in the entire electronics field by,among other measures, making JRC a wholly-owned subsidiary in 2017 and making Ricoh
Electronic Devices a wholly-owned subsidiary in March 2018, and after New JRC becomes awholly-owned subsidiary of Nisshinbo Holdings, it is expected it will be possible to even more
effectively utilize the Nisshinbo Group’s abundant human resources and knowledge.

(vi)

Rapid decision-making
As a result of Nisshinbo Holdings becoming New JRC’s single shareholder, which shares thepolicy with New JRC, it will become possible for New JRC to make quick decisions, and it isexpected that will contribute to speedy management decisions necessary in New JRC’s business.

Further, for New JRC’s minority shareholders to also enjoy the effects of the above improvement incorporate value that will be brought about as a result of New JRC becoming a wholly-owned subsidiaryof Nisshinbo Holdings, Nisshinbo Holdings and New JRC believe the best course of action would be forall of New JRC’s minority shareholders to become shareholders of Nisshinbo Holdings by way of ashare exchange in which Nisshinbo Holdings becomes the wholly-owning parent company resulting
from a share exchange and New JRC becomes the wholly-owned subsidiary resulting from a shareexchange. The Share Exchange will allow the optimal and efficient use of the Nisshinbo Group’s

5

[Translation]

management resources and both companies will continue to build a framework that will succeed inincreasingly intense global competition by strengthening profitability and competitiveness.
2.

Overview of the Share Exchange(1)

Schedule of the Share Exchange
Record date for annual general meeting ofMarch 31, 2018
shareholders (New JRC)
Resolution date of the meeting of the Boardof Directors (by each of Nisshinbo Holdings May 10, 2018
and New JRC)
Execution date of the Share Exchange
Agreement (by each of Nisshinbo Holdings May 10, 2018
and New JRC)
Date of annual general meeting ofJune 25, 2018 (scheduled)shareholders (New JRC)
Final trading date (New JRC)
August 28, 2018 (scheduled)
Date of delisting (New JRC)
August 29, 2018 (scheduled)
Effective date of the Share Exchange
September 1, 2018 (scheduled)(Note 1) Nisshinbo Holdings plans on implementing the Share Exchange without approval byresolution of its general shareholders’ meeting by way of a simplified shareexchange as prescribed in Article 796, Paragraph 2 of the Companies Act.
(Note 2)

(2)

The above schedule might be changed upon agreement by Nisshinbo Holdings and
New JRC if necessary for the performance of procedures for the Share Exchange orfor another reason.

Method of the Share Exchange
The Share Exchange is a share exchange in which Nisshinbo Holdings will become a whollyowning parent company resulting from a share exchange and New JRC will become a whollyowned subsidiary resulting from a share exchange. The Share Exchange will be implemented, inthe case of Nisshinbo Holdings, without approval by resolution of its general shareholders’meeting by way of a simplified share exchange as prescribed in Article 796, Paragraph 2 of theCompanies Act, and in the case of New JRC, with the Share Exchange Agreement being
approved at its annual general shareholders’ meeting to be held on June 25, 2018. The effective
date of the Share Exchange is scheduled to be September 1, 2018.

(3)

Allotments in Connection with the Share Exchange
Nisshinbo Holdings(wholly-owning parent
company resulting from ashare exchange)

New JRC(wholly-owned subsidiary
resulting from a shareexchange)1

0.65

Allotment Ratio in Connection with
the Share Exchange
Number of Shares to be Deliveredin the Share Exchange

9,253,440 shares of common stock of Nisshinbo Holdings(scheduled)

6

[Translation](Note 1)

Allotment ratio in connection with the Share Exchange (the “Share Exchange
Ratio”)
Nisshinbo Holdings will furnish 0.65 shares of common stock of Nisshinbo
Holdings (the “Nisshinbo Holdings Shares”) per New JRC Share. The Share
Exchange Ratio might be changed upon discussions and agreement between
Nisshinbo Holdings and New JRC if a significant change occurs in the terms andconditions that constitute the bases for the relevant calculations.

(Note 2)

Number of the Nisshinbo Holdings Shares to be delivered in the Share Exchange
Upon the Share Exchange, Nisshinbo Holdings will deliver to the shareholders of
New JRC (meaning shareholders after the cancellation of treasury shares as
described below, and excluding Nisshinbo Holdings) at the time (the “Record
Time”) immediately prior to its acquisition of all the issued shares of New JRC(excluding the New JRC Shares held by Nisshinbo Holdings (24,885,000 shares asof May 10, 2018)) the number of the Nisshinbo Holdings Shares calculated inaccordance with the Share Exchange Ratio described in the above table in exchange
for the New JRC Shares held by those shareholders.
Nisshinbo Holdings plans to allocate the treasury shares held by Nisshinbo Holdings(16,818,957 shares as of March 31, 2018) to all of the Nisshinbo Holdings Shares tobe delivered in the Share Exchange, and Nisshinbo Holdings will not issue any newshares.
New JRC plans to cancel all of its treasury shares (including shares acquired by
New JRC in response to a share purchase demand by a dissenting shareholder asprescribed in Article 785, Paragraph 1 of the Companies Act that may be exercisedin relation to the Share Exchange) at the Record Time by resolution at the meetingof its Board of Directors held before the day immediately prior to the Share
Exchange Effective Date. The number of shares to be delivered in the Share
Exchange might be changed due to the number of treasury shares New JRC comesto hold before the Record Time or another reason.

(Note 3)

Handling of shares less than one unit
As a result of the Share Exchange, it is expected that new shareholders who holdshares less than one unit (shares less than 100 shares) of Nisshinbo Holdings willarise. In particular, the shareholders of New JRC who hold less than 154 shares of
the New JRC Shares are expected to hold only shares less than one unit of Nisshinbo
Holdings, and shares less than one unit may not be sold on a financial instruments
exchange. All shareholders that come to hold shares less than one unit of Nisshinbo
Holdings may participate in either of the following programs.
(i)

Buyback program for shares less than one unit (sale of shares less than 100
shares)Under this program, any holder of shares less than one unit of Nisshinbo
Holdings may demand that Nisshinbo Holdings purchase the shares less than
one unit held by that shareholder in accordance with the provisions of Article
192, Paragraph 1 of the Companies Act.

7

[Translation](2)

Top-up purchase program for shares less than one unit (top-up purchase ofless than 100 shares)
Under this program, any holder of shares less than one unit of Nisshinbo
Holdings may, in accordance with the provisions of Article 194, Paragraph 1of the Companies Act, and the Articles of Incorporation of Nisshinbo
Holdings, demand that Nisshinbo Holdings sell the number of the Nisshinbo
Holdings Shares that will constitute one unit when combined with the sharesless than one unit held by that shareholder, and purchase those shares fromNisshinbo Holdings.

(Note 4)Treatment of fractions of less than a single share
Nisshinbo Holdings will pay an amount equal to fractional shares less than a single
Nisshinbo Holdings Share in cash to the shareholders of New JRC who come toreceive an allotment of fractional shares less than a single Nisshinbo Holdings Sharein association with the Share Exchange in accordance with the provisions of Article
234 of the Companies Act and other relevant laws and ordinances.

(4)

Treatment of Stock Acquisition Rights and Bonds with Stock Acquisition Rights in Connection
with the Share ExchangeThis is not applicable because New JRC, which will become a wholly-owned subsidiary of
Nisshinbo Holdings as a result of the Share Exchange, has not issued any stock acquisition rights
or bonds with stock acquisition rights.

3.

Basis for Allotments in Connection with the Share Exchange(1)

Basis and Reason for Allotments
As explained in “1. Purposes of the Share Exchange” above, Nisshinbo Holdings proposed theShare Exchange to New JRC in December 2017, and as a result of repeated discussions andnegotiations in good faith between Nisshinbo Holdings and New JRC, Nisshinbo Holdings and
New JRC determined that the best decision to improve the corporate value of New JRC and theentire Nisshinbo Group would be to make New JRC a wholly-owned subsidiary of Nisshinbo
Holdings.
As stated in “(4) Measures to Ensure Fairness” below, to ensure that the Share Exchange Ratio to
be used in the Share Exchange described in “(3) Allotments in Connection with the Share
Exchange” in “2. Overview of the Share Exchange” above is fair and appropriate, and to ensurethat the Share Exchange is otherwise fair and appropriate, Nisshinbo Holdings appointed SMBC
Nikko Securities Inc. (“SMBC Nikko Securities”), and New JRC appointed Mizuho Securities
Co., Ltd. (“Mizuho Securities”), as their respective third-party valuation agents, and Nisshinbo
Holdings appointed Mori Hamada & Matsumoto, and New JRC appointed Citi-Yuwa Partners, as
their respective legal advisers, after which they began seriously considering the Share Exchange.
As a result of careful deliberation and examination taking into consideration the share exchange
ratio valuation report received from SMBC Nikko Securities that Nisshinbo Holdings requested to
calculate the share exchange ratio to be used in the Share Exchange, advice from Mori Hamada &Matsumoto, and the results of due diligence conducted by Nisshinbo Holdings on New JRC,

8

[Translation]

Nisshinbo Holdings determined that the Share Exchange Ratio is appropriate for the shareholdersof both companies.
As explained in “(4) Measures to Ensure Fairness” and “(5) Measures to Avoid Conflicts ofInterest” below, New JRC carefully discussed and examined the Share Exchange using the Share
Exchange Ratio while taking into consideration the share exchange ratio valuation report received
on May 9, 2018 from Mizuho Securities that New JRC requested to calculate the share exchange
ratio to be used in the Share Exchange, advice from Citi-Yuwa Partners, a written opinion
received on May 10, 2018 from Messrs. Kenichiro Tanaka and Kazuo Toyama, who are outside
directors of New JRC and who have no interest in Nisshinbo Holdings, which is a controllingshareholder of New JRC, and who are registered as independent officers with TSE, that they do
not believe the implementation of the Share Exchange will be disadvantageous to the minority
shareholders of New JRC, and the results of due diligence conducted on Nisshinbo Holdings.
Further, as stated in “(ii) Outline of Calculation” in “(2) Matters Relating to Calculation” below,
New JRC determined that the implementation of the Share Exchange using the Share Exchange
Ratio is appropriate because the level of the Share Exchange Ratio is reasonable because it iswithin the calculation range of the discounted cash flow method (the “DCF Analysis”) and it
exceeds the upside of the calculation range of the average market price analysis among the
calculation results of the share exchange ratio received from Mizuho Securities, and the Share
Exchange Ratio is not disadvantageous to the minority shareholders of New JRC.
As such, because Nisshinbo Holdings and New JRC determined that the Share Exchange Ratio is
appropriate for their respective shareholders as a result of repeated thorough negotiations on theshare exchange ratio after carefully examining the Share Exchange Ratio based on the results ofdue diligence conducted by Nisshinbo Holdings and New JRC on each other while referring to thecalculation results of the share exchange ratio and advice obtained from their third-party valuation
agents, and advice from their legal advisers, and by comprehensively taking into account factors
such as the financial condition, performance trends, and stock price performance of bothcompanies, Nisshinbo Holdings and New JRC decided to implement the Share Exchange using
the Share Exchange Ratio, and on this day they resolved at respective meetings of their Boards of
Directors to execute the Share Exchange Agreement.
(2)

Matters Relating to the Calculation(i)Names of the Valuation Agents and Relationships with Nisshinbo Holdings and New JRC
Neither SMBC Nikko Securities, which is a third-party valuation agent of Nisshinbo
Holdings, nor Mizuho Securities, which is a third-party valuation agent of New JRC, is arelated party of Nisshinbo Holdings or New JRC or has a material interest that must be
stated in relation to the Share Exchange.

(ii)

Outline of Calculation
To ensure fairness in calculating the share exchange ratio to be used in the Share Exchange,
Nisshinbo Holdings appointed SMBC Nikko Securities, and New JRC appointed Mizuho
Securities, as their respective third-party valuation agents, and Nisshinbo Holdings and
New JRC requested SMBC Nikko Securities and Mizuho Securities to calculate the shareexchange ratio to be used in the Share Exchange and obtained share exchange ratio
valuation reports that included the following details.

9[Translation]

With respect to Nisshinbo Holdings and New JRC, because the shares of common stock ofNisshinbo Holdings and New JRC are listed on the First Section of TSE and are quoted, SMBC
Nikko Securities used the market price analysis (setting May 9, 2018 as the calculation base date,and based on the average daily closing price of the shares of each company for the one-month,three-month and six-month periods up to and including the calculation base date), and the DCF
Analysis in order to reflect the status of future business activities in the calculation.
The share exchange ratio valuation report by SMBC Nikko Securities was prepared as reference
information to be used when the Board of Directors of Nisshinbo Holdings determines the shareexchange ratio, and SMBC Nikko Securities does not express an opinion on the fairness of theshare exchange ratio agreed to and determined between Nisshinbo Holdings and New JRC.
The calculation ranges using each of those valuation methods where the share value per share of
Nisshinbo Holdings Shares is one are as follows.
Method Used
Market price analysis
DCF Analysis

Calculation Range for the Share Exchange Ratio
0.545 – 0.598
0.456 – 0.773

In calculating the share exchange ratios, SMBC Nikko Securities has, in principle, used suchthings as information provided to it by Nisshinbo Holdings and New JRC and publicly available
information as presented, and assumed that this data, information and the like it has used isentirely accurate and complete. It has not made an independent study of the accuracy orcompleteness thereof. Also, SMBC Nikko Securities has not made an independent assessment,
appraisal or evaluation and has not requested an appraisal or evaluation from any independent
institution in connection with any relevant assets or liabilities (including contingent liabilities) of
Nisshinbo Holdings, New JRC or any of their affiliates. In addition, SMBC Nikko Securities
assumed that the financial forecasts of Nisshinbo Holdings and New JRC have been reasonably
prepared based on the best forecasts and judgements obtained from the management of Nisshinbo
Holdings and New JRC at that time. The calculation of the share exchange ratio by SMBC Nikko
Securities is subject to information and economic conditions as of May 9 2018.
In the future financial outlook of Nisshinbo Holdings used by SMBC Nikko Securities as thepremises for the calculation using the DCF Analysis, Nisshinbo Holdings expects a substantial
increase in operating profits in the coming fiscal years with the operating profits for the fiscal year
ending December 2018 forecast to be 3.56 billion yen, the operating profits for the fiscal year
ending December 2019 forecast to be 24.56 billion yen, and the operating profits for the fiscal
year ending December 2020 forecast to be 42.48 billion yen (subject to the approval of the agenda
item regarding a change to the end of the fiscal period to be proposed to the general shareholders’meeting to be held on June 28, 2018), mainly as a result of taking into account factors forincreases in profits due to the recovery of the sea transportation industry, the incorporation ofdemand for the replacement of equipment, and an increase in demand for small- and mediumsized vessels in JRC’s marine systems business, as well as an increase in domestic private-sector
demand and overseas demand for disaster prevention in JRC’s solution and specialized equipment
businesses. One other factor is the consolidation of Ricoh Electronic Devices, which became asubsidiary in March 2018. Further, even in its automotive break business, Nisshinbo Holdings
expects an increase of profits due to the strengthening of the production and sales system for
frictional materials to comply with copper regulations for which it is expected there will be global

10[Translation]

demand and further improvement of the earning structure of TMD Friction, which became asubsidiary.
Further, in the future financial outlook of New JRC, New JRC expects a substantial increase inoperating profits in the coming fiscal years with the operating profits for the fiscal year ending
December 2018 forecast to be 2.1 billion yen, the operating profit for the fiscal year ending
December 2019 forecast to be 3.9 billion yen, and the operating profit for the fiscal year ending
December 2020 forecast to be 4.8 billion yen (subject to the approval of the agenda item
regarding a change to the end of the fiscal period to be proposed to the general shareholders’meeting to be held on June 25, 2018), mainly due to increased profitability in association with anincrease in sales such as increased sales of highly profitable products for automotive andindustrial equipment and lower fixed costs.
Meanwhile, Mizuho Securities made its calculations regarding the share exchange ratio of thecommon stock of Nisshinbo Holdings and New JRC using the average market price analysis
because the common stock of both companies are listed on TSE and are quoted, and Mizuho
Securities calculated the share exchange ratio using the DCF Analysis for the purpose ofreflecting the status of future business activities of both companies in the calculation.
In the average market price analysis, May 9, 2018 was set as the calculation base date, and theclosing price of the common stock of each company on TSE on the calculation base date and thesimple average daily closing price of those shares for the one-month, three-month and six-month
periods up to and including the calculation base date were used in the average market priceanalysis.
In the DCF Analysis, Mizuho Securities evaluated Nisshinbo Holdings’ future cash flow based on
financial forecasts from the fiscal year ending December 2018 until the fiscal year ending
December 2020 prepared by Nisshinbo Holdings and it evaluated Nisshinbo Holdings’ corporate
value and share value by discounting the present value at a certain discount rate. The discountrate was in a range of 5.65 – 6.15%, and the perpetual growth method was used in calculating
Nisshinbo Holdings’ going concern value, and a range of -0.25 – 0.25% was used as the perpetual
growth rate in the perpetual growth method. At the same time, Mizuho Securities evaluated New
JRC’s future cash flow based on financial forecasts from the fiscal year ending December 2018
until the fiscal year ending December 2020 prepared by New JRC and it evaluated New JRC’s
corporate value and share value by discounting the present value at a certain discount rate. The
discount rate was in a range of 6.45 – 6.95%, and the perpetual growth method was used in
calculating New JRC’s going concern value, and a range of -0.25 – 0.25% was used as theperpetual growth rate in the perpetual growth method. The financial forecasts of both companies
that served as the basis for the calculations made using the DCF Analysis did not anticipate theimplementation of the Share Exchange.
The calculation ranges using each of those valuation methods where the share value per share of
Nisshinbo Holdings Shares is one are as follows.
Method Used
Average market price analysis
DCF Analysis

Calculation Range for the Share Exchange Ratio
0.545 – 0.598
0.401 – 0.656

When calculating the above share exchange ratios, Mizuho Securities used such things as
information provided to it by Nisshinbo Holdings and New JRC and publicly available

11

[Translation]

information, and assumed that this data, information and the like it has used is entirely accurate
and complete and that there are no facts that might have a significant impact on the calculation of
the share exchange ratios that have not been disclosed to Mizuho Securities, and Mizuho
Securities has not made an independent study of the accuracy or completeness thereof. Also,
Mizuho Securities has not made an independent assessment or evaluation and has not requested
an appraisal or evaluation from any independent institution in connection with any relevant assets
or liabilities (including contingent liabilities) of Nisshinbo Holdings, New JRC or any of theirsubsidiaries or affiliates. In addition, Mizuho Securities assumed that the business forecasts andthe financial forecasts of Nisshinbo Holdings and New JRC have been reasonably prepared andcreated based on the best forecasts and judgements obtained from the management of Nisshinbo
Holdings and New JRC at that time.
Further, in the future financial outlook of Nisshinbo Holdings used by Mizuho Securities as thepremises for the calculation using the DCF Analysis, Nisshinbo Holdings expects a substantial
increase in operating profits in the coming fiscal years with the operating profits for the fiscal year
ending December 2018 forecast to be 3.56 billion yen, the operating profits for the fiscal year
ending December 2019 forecast to be 24.56 billion yen, and the operating profits for the fiscal
year ending December 2020 forecast to be 42.48 billion yen (subject to the approval of the agenda
item regarding a change to the end of the fiscal period to be proposed to the general shareholders’meeting to be held on June 28, 2018), mainly as a result of taking into account factors forincreases in profits due to the recovery of the sea transportation industry, the incorporation ofdemand for the replacement of equipment, and an increase in demand for small- and mediumsized vessels in JRC’s marine systems business, as well as an increase in domestic private-sector
demand and overseas demand for disaster prevention in JRC’s solution and specialized equipment
businesses. One other factor is the consolidation of Ricoh Electronic Devices, which became asubsidiary in March 2018. Further, even in its automotive break business, Nisshinbo Holdings
expects an increase of profits due to the strengthening of the production and sales system for
frictional materials to comply with copper regulations for which it is expected there will be global
demand and further improvement of the earning structure of TMD Friction, which became asubsidiary.
Further, in the future financial outlook of New JRC, New JRC expects a substantial increase inoperating profits in the coming fiscal years with the operating profits for the fiscal year ending
December 2018 forecast to be 2.1 billion yen, the operating profit for the fiscal year ending
December 2019 forecast to be 3.9 billion yen, and the operating profit for the fiscal year ending
December 2020 forecast to be 4.8 billion yen (subject to the approval of the agenda item
regarding a change to the end of the fiscal period to be proposed to the general shareholders’meeting to be held on June 25, 2018), mainly due to increased profitability in association with anincrease in sales such as increased sales of highly profitable products for automotive andindustrial equipment and lower fixed costs.
(3)

Prospects of the Delisting and Reasons for the Delisting
As a result of the Share Exchange, New JRC will become a wholly-owned subsidiary of
Nisshinbo Holdings on September 1, 2018, which is the effective date of the Share Exchange.
Prior to that, the shares of New JRC issued by New JRC, which is to become a wholly-owned
subsidiary, are scheduled to be delisted on August 29, 2018 (with August 28, 2018 as the final
trading date) through prescribed procedures in accordance with the delisting criteria of TSE.
Following the delisting, it will no longer be possible to trade shares of New JRC on the First
Section of TSE, but the Nisshinbo Holdings Shares will be allotted to the shareholders of New

12[Translation]

JRC (excluding Nisshinbo Holdings) in accordance with the Share Exchange Agreement as
described above in “(3) Allotments in Connection with the Share Exchange” in “2. Overview of
the Share Exchange.”
Given that the Nisshinbo Holdings Shares to be delivered as consideration for the Share Exchange
are listed on the First Section of TSE, shareholders that are allotted one unit (100 shares) or moreof the Nisshinbo Holdings Shares as a result of the Share Exchange will be able to continue totrade those shares on TSE with single units (100 shares) as transaction units, so we believe theliquidity of the shares will be secured.
At the same time, the shareholders holding shares of New JRC that are less than 154 shares willbe allotted a share unit number of the Nisshinbo Holdings Shares of less than 100 Nisshinbo
Holdings Shares as a result of the Share Exchange. Those shares less than one unit cannot be soldon TSE, but as explained in Note 3 (Handling of shares less than one unit) in Section 2(3) above,
those shareholders may demand that Nisshinbo Holdings purchase the shares less than one unit
they hold. Alternatively, a shareholder holding shares less than one unit may demand that
Nisshinbo Holdings sell the number of the Nisshinbo Holdings Shares that will constitute one unit
when combined with the shares less than one unit held by that shareholder, and then purchasethose shares from Nisshinbo Holdings.
For details on the handling of fractional shares less than a single Nisshinbo Holdings Share thatarise in association with the Share Exchange, see Note 4 (Treatment of fractions of less than asingle share) in Section 2(3) above.
(4)

Measures to Ensure Fairness
Since Nisshinbo Holdings is already a parent company of New JRC and holds 63.61%(24,885,000 shares) of the total number of issued shares of New JRC, for New JRC, the Share
Exchange constitutes an important transaction, etc. with a controlling shareholder, so Nisshinbo
Holdings and New JRC determined that it is necessary to ensure fairness in the Share Exchange,
and they have taken the following measures to ensure fairness.
(i)

Obtaining a Valuation Report from an Independent Third-Party Valuation AgentTo ensure fairness in calculating the share exchange ratio to be used in the Share Exchange,
Nisshinbo Holdings appointed SMBC Nikko Securities, and New JRC appointed Mizuho
Securities, as their respective third-party valuation agents, and Nisshinbo Holdings and
New JRC requested SMBC Nikko Securities and Mizuho Securities to calculate the shareexchange ratio to be used in the Share Exchange and obtained share exchange ratio
valuation reports. See “(ii) Outline of Calculation” in “(2) Matters Relating to Calculation”
for an outline of those valuation reports.
Neither company has obtained from either of those third-party valuation agents an opinion
stating that the Share Exchange Ratio is appropriate from a financial perspective (a socalled fairness opinion).

(ii)

Advice from Independent Law Firms
Nisshinbo Holdings appointed Mori Hamada & Matsumoto as its legal advisor for the
Share Exchange, and obtained from Mori Hamada & Matsumoto legal advice concerning
various procedures for the Share Exchange and the decision-making method and processes

13[Translation]

to be carried out by Nisshinbo Holdings. Mori Hamada & Matsumoto has no materialinterests in Nisshinbo Holdings or New JRC.
At the same time, New JRC appointed Citi-Yuwa Partners as its legal advisor for the Share
Exchange, and obtained from Citi-Yuwa Partners legal advice concerning various
procedures for the Share Exchange and the decision-making method and processes to be
carried out by New JRC. Citi-Yuwa Partners has no material interests in Nisshinbo
Holdings or New JRC.
(5)

Measures to Avoid Conflicts of Interest
Since Nisshinbo Holdings is already a parent company of New JRC and holds 63.61%(24,885,000 shares) of the total number of issued shares of New JRC, for New JRC, the Share
Exchange constitutes an important transaction, etc. with a controlling shareholder, so New JRC
has taken the following measures to avoid conflicts of interest in addition to the measures toensure fairness described in (4) above.
(i)

Obtaining an opinion from independent disinterested officers of New JRC
In examining the Share Exchange, the Board of Directors of New JRC requested Messrs.
Kenichiro Tanaka and Kazuo Toyama, who are outside directors of New JRC and who
have no interest in Nisshinbo Holdings, and who are registered as independent officers
with TSE, to examine whether the decision to implement the Share Exchange at themeeting of the Board of Directors of New JRC held today is considered to bedisadvantageous to the minority shareholders of New JRC based on rules prescribed by
TSE.
After carefully examining the Share Exchange while taking into account the shareexchange ratio valuation report prepared by Mizuho Securities and other materials relating
to the Share Exchange, and the details of explanations of, and interviews with, related
persons, Messrs. Kenichiro Tanaka and Kazuo Toyama provided a written opinion to theBoard of Directors of New JRC on May 10, 2018 stating that (a) the purposes of the Share
Exchange are considered fair because, given that New JRC becoming a wholly-owned
subsidiary of Nisshinbo Holdings will contribute to the strengthening of New JRC’s
financial base and stabilization of its management, strengthening of the integrated business
operations of both parties, savings resulting from a reduction in indirect services, andprompt decision-making, the Share Exchange is considered reasonable in terms of the
management of New JRC, and because no unreasonable issue has been specifically foundin determining that the Share Exchange will contribute to improving the corporate value of
New JRC, (b) there is no specific event which will give rise to a suspicion on the fairnessof the procedures of the Share Exchange because New JRC has taken measures to avoid
conflicts of interests by, for example, obtaining a share exchange ratio valuation reportfrom Mizuho Securities, its independent third-party valuation agent, receiving advice from
Citi-Yuwa Partners, its legal adviser, regarding the decision-making method and process of
the Share Exchange, ensuring that the directors of New JRC who have, or are likely to have,conflicts of interest in the Share Exchange will not participate in the deliberation andvoting on any proposal related to the Share Exchange at the meeting of the Board of
Directors of New JRC held today, and did not participate in discussions and negotiations
on the Share Exchange on behalf of New JRC, (c) no unreasonable issue has been found in
the method and process of the calculations by Mizuho Securities, and the terms andconditions of the Share Exchange are considered to be appropriate and determined in a fair14

[Translation]manner because no unreasonable issue has been found in the method and process of thecalculations by Mizuho Securities and New JRC set the share exchange ratio after having
discussions and negotiations with Nisshinbo Holdings over several occasions while taking
into account the results of those calculations, (d) the terms and conditions of the Share
Exchange are considered to be appropriate and determined in a fair manner because theshare exchange ratio (1 of Nisshinbo Holdings to 0.65 of New JRC) agreed upon with New
JRC is considered appropriate because, among other things, it exceeds the calculation
range of the average market share price analysis (0.545 – 0.598) which is the calculation
range for the share exchange ratio calculated by Mizuho Securities, and is at a higher
position in the calculation range of the DCF Analysis (0.401 – 0.656), and it is judged that
the Share Exchange is not disadvantageous to the minority shareholders of New JRC after
comprehensively taking into account the above matters.
(ii)

Approval of all directors excluding directors of New JRC who have an Interest in
Nisshinbo Holdings and opinion to the effect that all audit and supervisory board members
have no objection
At the meeting of the Board of Directors of New JRC held today, five directors out of eight
directors of New JRC (excluding Messrs. Ryo Ogura, Masaya Kawata and Kenji Ara)deliberated on the proposal related to the Share Exchange, and unanimously resolved toapprove that proposal, and all three audit and supervisory board members of New JRC
participated in that deliberation and expressed an opinion to the effect that they have no
objection to the implementation of the Share Exchange.
To avoid any conflict of interest, Mr. Ryo Ogura, who is a director of New JRC and also
serves as a director and executive managing officer of Nisshinbo Holdings, Mr. Masaya
Kawata, who is a director of New JRC and also serves as a president and representative
director of Nisshinbo Holdings, and Mr. Kenji Ara, who is a director of New JRC and also
serves as a director and senior executive managing officer of Nisshinbo Holdings, did notparticipate in any deliberations or voting on the proposal related to the Share Exchange at
the meeting of the Board of Directors of New JRC held today and they did not participate
in any discussions or negotiations on the Share Exchange on behalf of New JRC.

4.

Outline of the Companies that are Parties to the Share Exchange (as of May 10, 2018)

(1)
(2)

Name
Address(3)

Name and title ofrepresentative
Descriptionofbusiness(4)(5)

Stated capital

Nisshinbo Holdings(wholly-owning parent company
resulting from a share exchange)
Nisshinbo Holdings Inc.
2-31-11, Ningyo-cho, Nihonbashi,
Chuo-ku, Tokyo
Masaya Kawata, President andRepresentative Director
Manufacturing
andselling
electronics, automobile brakes,
precision instruments, chemicals,
textiles and other similar products,
and selling, purchasing and leasing
real estate
27.587 billion yen

15

New JRC(wholly-owned subsidiary resulting
from a share exchange)
New Japan Radio Co., Ltd.
3-10, Nihonbashi Yokoyama-cho,
Chuo-ku, Tokyo
Ryo
Ogura,
President
andRepresentative Director
Manufacturing,
selling,andresearchinganddeveloping
electronic parts (microwave products
and electronic devices) and othersimilar products
5.22 billion yen

[Translation]

(6)
(7)
(8)
(9)
(10)

Date
of
incorporation
Number of sharesissuedEnd of fiscal period
Numberofemployees
Majorbusiness
partners(11)

Major banks(12)

Major shareholders
andshareholding
ratiosFebruary 5, 1907

September 8, 1959

178,798,939 shares

39,131,000 shares

March 31
23,104 employees(as of March 31, 2018; consolidated)Toyota Motor Corporation, Hino
Motors, Ltd. and Ministry of Land,
Infrastructure,
Transport
andTourism
Mizuho Bank, Ltd. and MUFG
Bank, Ltd.
The Master Trust Bank of 16.26
Japan, Ltd.
Japan
Trustee
Services 13.18
Bank, Ltd.

March 312,804 employees(as of March 31, 2018; consolidated)

FukokuMutualInsurance Company
Teijin LimitedLife 7.41

3.72

Trust & Custody Services 2.90
Bank, Ltd.
Shikoku
Chemicals 1.61
Corporation
Mizuho Bank, Ltd.
1.45
Japan Wool Textile Co., Ltd. 1.41

JPMorgan
385151Chase

Bank 1.13

Nisshin Cotton Spinning 1.08
Clients’
Shareholding
Association(as of March 31, 2018)(13)

Relationships
betweenCompanies

Mizuho Bank, Ltd. and MUFG
Bank, Ltd.
Nisshinbo Holdings Inc.
63.61
BNP Paribas Securities
Services
Luxembourg/JASDEC/FI
M/Luxembourg
Funds/UCITS Assets
Japan Trustee Services
Bank,
Ltd.
(TrustAccount)
UBS AG London A/C
IPB Segregated Client
Account
The Master Trust Bank ofJapan,
Ltd.
(TrustAccount)
New JRC Employees’
Shareholding Association
New
JRC
Clients’
Shareholding Association
Chase Manhattan BankGTS Clients AccountEscrow
Japan Trustee Services
Bank, Ltd. (Trust Account1)
Japan Trustee Services
Bank, Ltd. (Trust Account5)(as of March 31, 2018)

4.86

4.40

3.25

2.32

1.57
1.30
0.68

0.60

0.59

the

Capital relationship
Personnel

Mitsubishi Electric Corporation and
WISOL Co., Ltd.

Nisshinbo Holdings owns 63.61% (24,885,000 shares) of the total number ofissued shares of New JRC, and is a parent company of New JRC.
Three directors of Nisshinbo Holdings also serve as directors of New JRC.

16

[Translation]

relationship
New JRC participates in CMS (cash management system) transactions ofNisshinbo Holdings, and conducts loan transactions (New JRC’s outstanding
Business
short-term loan balance as of March 31, 2018 is 59.98 billion yen). New
relationship
JRC sells certain products to and purchases certain products fromsubsidiaries of Nisshinbo Holdings.
Status as related New JRC is a consolidated subsidiary of Nisshinbo Holdings, and Nisshinbo
parties
Holdings and New JRC are related parties.
Operating results and financial position for the past three years(14)(unit: million yen, except where otherwise noted)
Nisshinbo Holdings (consolidated)
New JRC (consolidated)
FY ended FY ended FY ended FY ended FY ended FY ended
Fiscal period
March
March
March
March
March
March
2016
2017
2018
2016
2017
2018
Consolidated net assets
284,471
275,753
290,434
10,666
11,192
14,056
Consolidated total assets
651,793646,288654,227
40,25440,40944,999Consolidated net assets per
1,472.26
1,444.94
1,659.29
272.67286.09359.30share (yen)Consolidated sales
533,989
527,274
512,047
47,816
48,86551,665
Consolidated operating profit
12,617
4,890
15,085
3,126
1,792
2,138
Consolidated current profit
17,034
10,556
19,700
3,095
1,859
2,058
Net profit attributable to10,775
3,574
26,352
2,496
616
2,520
shareholders of the parent
company
Consolidated net profit per
67.93
22.52
160.59
63.81
15.75
64.44
share (yen)Dividend per share (yen)
30.00
30.00
30.00
0.00
0.00
0.00
(Note 1)“(12) Major shareholders and shareholding ratios” of Nisshinbo Holdings does notinclude its treasury shares (16,818,957 shares). The shareholding ratios are thenumber of shares owned as a percentage of the total number of issued shares
excluding treasury shares.
(Note 2)

5.
(1)
(2)
(3)
(4)

(5)
(6)

“(12) Major shareholders and shareholding ratios” of New JRC does not include
treasury shares (9,938 shares). The shareholding ratios are the number of shares
owned as a percentage of the total number of issued shares excluding treasury shares.

Status after the Share Exchange
Name
Address
Name and title ofrepresentative
Description
businessStated capitalEnd of fiscal periodofWholly-owning parent company resulting from a share exchange
Nisshinbo Holdings Inc.
2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku, Tokyo
Masaya Kawata, President and Representative Director
Manufacturing and selling electronics, automobile brakes, precision
instruments, chemicals, textiles and other similar products, and selling,purchasing and leasing real estate
27.587 billion yen (as of March 31, 2018)
March 31 (to be changed to December 31 effective as of the fiscal year
ending December 2018)17

[Translation]

(7)
(8)

Net assets
Total assets

6.

Summary of Accounting

Not determined at this time.
Not determined at this time.

It is expected the Share Exchange will be a common control transaction, etc. that constitutes atransaction with a non-controlling shareholder.
7.

Future Outlook
It is expected that the Share Exchange will have a minor effect on the results of Nisshinbo
Holdings and New JRC, since New JRC is already a consolidated subsidiary of Nisshinbo
Holdings.

8.

Matters Relating to Transactions, Etc. with Controlling Shareholders(1)

Applicability to Transactions, Etc. with Controlling Shareholders, and Status ofCompliance with the Policy to Protect Minority Shareholders
Since Nisshinbo Holdings is a controlling shareholder that owns 63.61% (24,885,000
shares) of the total number of issued shares of New JRC, for New JRC, the Share
Exchange constitutes a transaction with a controlling shareholder.
The “Guidelines in Connection with Programs to Protect Minority Shareholders at theTime of Transactions, Etc. with a Controlling Shareholder” set out in the Corporate
Governance Report disclosed by New JRC on June 29, 2017 prescribe that New JRC
conducts transactions with its parent company and business companies of the parent
company on the same conditions as those with other clients, and takes appropriate
measures not to cause any disadvantage to its minority shareholders.
As stated in “(4) Measures to Ensure Fairness,” and “(i) Obtaining an opinion fromindependent disinterested officers of New JRC” and “(ii) Approval of all directors
excluding directors of New JRC who have an Interest in Nisshinbo Holdings and opinion
to the effect that all audit and supervisory board members have no objection” in “(5)Measures to Avoid Conflicts of Interest” under “3. Basis for Allotments in Connection
with the Share Exchange” above, New JRC plans on setting the Share Exchange Ratio andimplementing the Share Exchange after taking measures to ensure that fairness and avoid
conflicts of interest in relation to the Share Exchange. It is therefore believed that the
Share Exchange complies with the terms of New JRC’s “Guidelines in Connection with
Programs to Protect Minority Shareholders at the Time of Transactions, Etc. with aControlling Shareholder.”(2)Matters Relating to Measures to Ensure Fairness and Measures to Avoid Conflicts ofInterest
As stated in “(1) Applicability to Transactions, Etc. with Controlling Shareholders, andStatus of Compliance with the Policy to Protect Minority Shareholders” above, since theShare Exchange constitutes a transaction, etc. with a controlling shareholder for New JRC,New JRC has determined that it is necessary to take measures to ensure fairness andmeasures to avoid conflicts of interest, and it has, at the meeting of its Board of Directors

18[Translation]

held today, carefully discussed and examined the Share Exchange, and it has made adecision on the Share Exchange after ensuring the fairness and avoiding conflicts ofinterest by taking the measures described in “(4) Measures to Ensure Fairness” and “(5)Measures to Avoid Conflicts of Interest” under “3. Basis for Allotments in Connection
with the Share Exchange” above.
(3)

Outline of Opinion Obtained from Persons Who Have No Relationship of Interest with aControlling Shareholder Stating That the Transactions, Etc. are not Contrary to theInterests of Minority Shareholders
As stated in “(i) Obtaining an opinion from independent disinterested officers of New JRC”
in “(5) Measures to Avoid Conflicts of Interest” under “3. Basis for Allotments inConnection with the Share Exchange” above, in examining the Share Exchange, the Boardof Directors of New JRC requested Messrs. Kenichiro Tanaka and Kazuo Toyama, who are
outside directors of New JRC and who have no interest in Nisshinbo Holdings, and who
are registered as independent officers with TSE, to examine whether the decision to
implement the Share Exchange at the meeting of the Board of Directors of New JRC held
today is considered to be disadvantageous to the minority shareholders of New JRC basedon rules prescribed by TSE.
After carefully examining the Share Exchange while taking into account the shareexchange ratio valuation report prepared by Mizuho Securities and other materials relating
to the Share Exchange, and the details of explanations of, and interviews with, related
persons, Messrs. Kenichiro Tanaka and Kazuo Toyama provided a written opinion with thecontents set out in Section 3(5)(i) above to the Board of Directors of New JRC on May 10,
2018.
End.

Reference: Consolidated earnings forecast for the current period (portion announced on May 10, 2018)
and consolidated results for the previous period of Nisshinbo Holdings
Consolidated
sales
435 billion yen

Consolidated
operating profit
3.5 billion yen

Consolidated
current profit
7.5 billion yen

Consolidated net
profit5 billion yen

Earnings forecast forthe current period(Fiscal year ended
December 2018)
Consolidated
546 billion yen
15.5 billion yen
20 billion yen
13.5 billion yen
earnings forecast
Results for the512.047 billion 15.085
billion 19.7 billion yen
26.352billionprevious period
yen
yen
yen
(Fiscal year ended
March 2018)
Note: Nisshinbo Holdings plans to change the end of its fiscal period from March 31 to December 31
effective from FY 2018 on the condition that the agenda item regarding “Partial Amendment to
Articles of Incorporation” is approved at the 175th annual general shareholders’ meeting to beheld on June 28, 2018. Therefore, for the fiscal year ending December 2018, which is atransitional period, the period of nine months from April 1, 2018 to December 31, 2018 will
constitute the consolidated period in relation to Nisshinbo Holdings and the subsidiaries whose19[Translation]

fiscal periods end in March, the period of ten months from March 1, 2018 to December 31, 2018
will constitute the consolidated period in relation to the subsidiaries whose fiscal periods end in
February, and the period of twelve months from January 1, 2018 to December 31, 2018 will (asis conventional) constitute the consolidated period in relation to the subsidiaries whose fiscal
periods end in December, subject to that change to the end of the fiscal period. For reference, theconsolidated earnings forecasts for the 12-month consolidated period from April 1, 2018 toMarch 31, 2019, adjusted on the assumption that the end of the fiscal period will not be changed,
are indicated in “Consolidated earnings forecast.”
Consolidated earnings forecast for the current period (portion announced on April 24, 2018) andconsolidated results for the previous period of New JRC
Consolidated
sales
40.5 billion yen

Consolidated
operating profit
2.1 billion yen

Consolidated
current profit
2.2 billion yen

Consolidated net
profit2 billion yen

Earnings forecast forthe current period(Fiscal year ending
December 2018)
Earnings forecast for 54.5 billion yen
3.3 billion yen
3.4 billion yen
3 billion yen
the current period(after adjustment)(Fiscal year ending
March 2019)
Results for the
51.665 billion yen 2.138 billion yen
2.058 billion yen
2.52 billion yen
previous period(Fiscal year ending
March 2018)
Note: New JRC plans to change the end of its fiscal period from March 31 to December 31 effectivefrom FY 2018 on the condition that the agenda item regarding “Partial Amendment to Articles ofIncorporation” is approved at the 83rd annual general shareholders’ meeting to be held on June25, 2018. Therefore, for the fiscal year ending December 2018, which is a transitional period, aperiod of nine months from April 1, 2018 to December 31, 2018 will constitute the consolidated
period subject to that change to the end of the fiscal period. For reference, the consolidated
earnings forecasts for the 12-month consolidated period from April 1, 2018 to March 31, 2019are indicated in “Earnings forecast for the current period (after adjustment) (Fiscal year ending
March 2019).”20