The business combination described in this press release involves securities of Japanese companies. The businesscombination 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 foreign
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 issuers are located in Japan and some or all of their officers and directors reside outside 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 Japanese company 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 business combination, such as in the
open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan
Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

[Translation]

October 16, 2023
Company
Representative

Contact

Company
Representative

Contact

Ryoyo Electro Corporation
Representative Director,
Moritaka Nakamura
President(Code number: 8068 TSE Prime)
Executive Officer, General
Manager of Administration Masayuki Takahashi
Division(Tel.: +81-3-3546-6331)
Ryosan Company, Limited
Representative Director,
Kazuhiko Inaba
President(Code number: 8140 TSE Prime)
Executive Officer, General
ManagerofPlanning Norihiko Takahashi
Division(Tel.: +81-3-3862-2831)

Notice of Execution of Definitive Agreement for Management Integration between Ryoyo Electro
Corporation and Ryosan Company, Limited through the Establishment of a Joint Holding Company(Share Transfer)
Ryoyo Electro Corporation (“Ryoyo Electro”) and Ryosan Company, Limited (“Ryosan”; Ryoyo Electro andRyosan are collectively referred to as the “Companies”) have been in discussions regarding the management integrationof the Companies (the “Management Integration”), as disclosed in the “Notice of Execution of a Memorandum ofUnderstanding for Management Integration between Ryoyo Electro Corporation and Ryosan Company, Limited”, dated
May 15, 2023, and hereby announce that they have reached an agreement concerning the establishment of Ryoyo Ryosan
Holdings, Inc. (the “Joint Holding Company”), which will become the wholly-owning parent company of the Companies,
on April 1, 2024 (scheduled) by way of a joint share transfer (kyoudou kabushiki iten) (the “Share Transfer”), and the terms
and conditions of the Management Integration, and in accordance with the resolutions of their respective boards of
directors held today, they have entered into a management integration agreement in the spirit of equality (the “Management
Integration Agreement”) and have jointly prepared a share transfer plan (the “Share Transfer Plan”).
The implementation of the Management Integration and the Share Transfer is subject to, among other things,

[Translation]

the Companies obtaining the approval of their general meetings of shareholders and the permission and authorization of
the relevant authorities required for the Management Integration and the Share Transfer.

1.

Background and purpose of the Management Integration(1)

Background of the Management Integration
Ryoyo Electro is an electronics trading company selling “semiconductors and devices” and offering “ICT andsolutions” in its business domain. Ryoyo Electro sells products and provides associated services to electronic equipment
manufacturers and users in Japan and overseas. It endeavors to realize its vision of becoming “a company that provides
the best solutions for our customers’ issues and problems in a faster and better manner than anyone else.” By leveraging
its wide range of upstream and downstream contacts in the supply chain and taking advantage of the market needs, asobtained from end users, Ryoyo Electro expands its relationships with upstream electronics manufacturers; also, by
creating unique solutions that combine product, technology and services, it is developing a business model that circulates
information and value throughout the supply chain.
Ryosan is a trading company specializing in the sale of semiconductor and electronic components in its device
business and IT equipment in its solutions business. It sells products, such as electronic equipment, to manufacturers inJapan and overseas. Ryosan aims to become a “company that creates confidence and the best fit for society in theelectronics domain.” It positioned the innovation of its business model, supplier networks and sales channels as pillars ofgrowth. Ryosan is proceeding with the “promotion of the diversification of its portfolio” through extensive commercial
rights acquisitions and channel reform, “deepening its local businesses in the Greater China” through collaboration withlocal investees, “benefiting from advanced investment products and new investment,” “investing in business
transformation”, such as entry into new businesses, including manufacturing based on customer needs, “streamlining
existing businesses” by utilizing various digital technologies and “developing business infrastructure”, such as
management information development, education, risk management and governance.
As described above, the Companies operate as trading companies in the electronics domain. The environment
surrounding the electronics trading industry is undergoing significant changes due to rapid increase in the use of newtechnologies, with the acceleration of IoT and digital transformation (DX) across society. In line with these changes in theindustry environment, the function and role of electronics trading companies is also changing. In addition, while
competition among trading companies is intensifying due to the alliances of electronic component manufacturers, such as
semiconductor and IT equipment manufacturers, external factors, such as changes in the supply-demand balance in thesemiconductor market, trends in the financial markets, rising resource and material prices, and geopolitical risks, arehaving a significant impact on the business environment and performance. As such, electronics trading companies, while
having low profitability, are vulnerable to changes in the external environment.
Based on this recognition, the Companies have aligned their understanding that, in order to achieve asustainable increase in corporate value and further contribute to all stakeholders, it is necessary not only to establish a solidmanagement base, but also to break through the growth limit of each company and pursue value enhancement across theentire value chain by integrating their respective strengths. The Companies have therefore reached a final agreement
regarding the Management Integration through the establishment of the Joint Holding Company.
(2)

Purpose of and initiatives for the Management Integration
Through the Share Transfer, the Companies, as a new core group of domestic electronics trading companies,

will promote the following initiatives that make maximum use of the management resources, such as good customer
relationships and excellent products and solutions, that each of the Companies has built up over the years, within a newframework, and strive to further enhance their corporate value.

-2-

[Translation](i)Expanding “quantity” by multiplying the management assets of the Companies
Given the limited overlap in customers and product lines, the Companies will rapidly expand their businessbase by offering new products to their existing customers and by offering existing products to new customers. By
expanding and enhancing new contact points with customers through these initiatives, the Companies will gain an accurate
and deep understanding of their customers’ needs. In addition, the Companies will further expand the scale of their businessby leveraging the needs identified as a result of these initiatives to offer new products and services.
(ii)

Improving “quality” by creating new value
The Companies will further acquire know-how to provide solutions by making the most of their accumulated

knowledge to meet the diverse needs of customers identified through the initiatives described in (i) above. The Companies
will not only sell products, but also promote the provision of added value that no other company can provide, in order tosolve problems and issues faced by customers and the market as a whole. By broadening the scope of the solution domain
through these initiatives, the Companies will seek to develop diverse business models and create a new image ofelectronics trading companies unlike any before.
(iii)

Creating an optimal structure and fostering a corporate culture to support the initiatives in (i) and (ii)
As an optimal structure to support the initiatives in (i) and (ii) above, the Companies will develop an

infrastructure for the unified management of the group and establish a system to realize the provision of new value tocustomers.
In addition, the Companies will further improve their organizational ability to meet customer needs by fosteringa corporate culture in which each and every employee can enhance their “individual” skills and experience both the joy ofcontributing to customers and personal growth through the active exchange of knowledge and technology among
employees of the Companies.
By combining the strengths of Ryosan, which has key semiconductor products and a solid customer base, withthose of Ryoyo Electro, which has extensive experience in ICT fields such as DX and AI, through the initiatives in (i) to(iii) above, the Companies will aim to become a company that customers continue to choose, creating a virtuous cycle bypursuing “quantity” and “quality,” helping solve not only the issues and problems of individual customers but also thecommon problems and issues of the market as a whole, and seeking to provide new value.
-3-

[Translation]

The Companies will promote the above initiatives to realize synergies from the Management Integration as
early as possible and aim to achieve a sales volume of JPY 500 billion and an operating profit of JPY 30 billion as thegroup management’s targets for the fiscal year ending March 31, 2029. In addition, the Companies will continue toconsider measures with a view to realize further growth opportunities beyond the scope of electronics trading companies
in order to pursue value enhancement throughout the entire value chain, with the ultimate goal of solving the problems of
end-users who are “customers of the Companies’ customers.”
2.

Outline of the Management Integration(1)

Method of the Management Integration
The Management Integration will take the form of a joint share transfer whereby the Companies will become

wholly-owned subsidiaries (kabushiki iten kanzen kogaisha), and the newly established Joint Holding Company will
become the wholly-owning parent company (kabushiki iten kanzen oyagaisha).

(2)

Status after the Management Integration(i) Overview of the Joint Holding Company (planned)
Trade name

Ryoyo Ryosan Holdings, Inc.

Location of the head

2-3-5 Higashi-Kanda, Chiyoda-ku, Tokyo, 101-0031, Japan

officeLocationofthe1-12-22 Tsukiji, Chuo-ku, Tokyo, 104-8408, Japan

headquarters
Organizational

A company with an audit and supervisory committee (kansa tou i’inkai setchi gaisha)structure
Representatives andRepresentative Director, President

officers who will

Representative Director, Vice President Kazuhiko Inabatake officeDirector

Shunya Endo

Director

Atuyuki Ohashi

Director

Norihiko Takahashi

Outside Director

Shinya Takada

Outside Director

Haruyoshi Kawabe

Outside Director

Masumi Shiraishi

Business line

Moritaka Nakamura

Director, Full-time Audit and Supervisory Committee Member

Kiyoshi Waki

Outside Director, Audit and Supervisory Committee Member

Mahito Ogawa

Outside Director, Audit and Supervisory Committee Member

Motomi Oi

Outside Director, Audit and Supervisory Committee Member

Sachiko Fukuda

Managing the business of companies principally engaged in the purchase and sale of-4-

[Translation]

devices and ICT products, and any business incidental or related thereto
CapitalJPY 15 billion

Fiscal year-end

March 31

Net asset

Not fixed at this time.

Total assets

Not fixed at this time.

Accounting auditor

Deloitte Touche Tohmatsu LLC

Shareholder register

Mitsubishi UFJ Trust and Banking Corporation

administrator(ii) Other
Other matters related to the management structure of the Joint Holding Company will be determined by theeffective date of the Share Transfer through further discussions between the Companies.
(3)

Schedule of the Management Integration
Execution of a Memorandum of Understanding for the Management
Integration (the Companies)
A meeting of the board of directors to approve the Management Integration
Agreement and the Share Transfer Plan (the Companies)
Execution of the Management Integration Agreement and preparation of the
Share Transfer Plan (the Companies)
The date of public notice of the record date for the extraordinary general
meeting of shareholders (the Companies)
The record date for the extraordinary general meeting of shareholders (theCompanies)
The extraordinary general meeting of shareholders to approve the Share
Transfer Plan (the Companies)
The last trading day at Tokyo Stock Exchange, Inc. (“Tokyo Stock
Exchange”) (the Companies)
The date of delisting from the Tokyo Stock Exchange (the Companies)

May 15, 2023
October 16, 2023 (today)
October 16, 2023 (today)
October 16, 2023 (today)
October 31, 2023 (scheduled)
December 19, 2023 (scheduled)
March 27, 2024 (scheduled)
March 28, 2024 (scheduled)

The effective date of the Share Transfer (the date of registration of theestablishment of the Joint Holding Company)

April 1, 2024 (scheduled)

The date of listing of the shares of the Joint Holding Company(Note) The above is the current plan, and the schedule may be changed through consultation between the
Companies, if necessary, depending on the progress made with the Management Integration and with the
Share Transfer, or for other reasons.
(4)

Details of Allotment pertaining to the Share Transfer (Share Transfer Ratio)
Ryoyo Electro

Ryosan１

1.32

Share transfer ratio(Note 1) Share allotment ratio

One common share of the Joint Holding Company will be allotted to one common share of Ryoyo
Electro, and 1.32 common shares of the Joint Holding Company will be allotted to one common shareof Ryosan. However, the above share transfer ratio may be changed through consultation between the
Companies in the event of any material change in the terms and conditions which form the basis of thecalculation. If there is a fraction of less than one share in the number of common shares of the Joint
Holding Company to be delivered to shareholders of the Companies as a result of the Share Transfer, the-5-[Translation]amount corresponding to the fraction of less than one share will be paid to such shareholders inaccordance with Article 234 of the Companies Act and other related laws and regulations.
(Note 2) Share unit (tangen kabushiki sū) of the Joint Holding Company and treatment of fractional shares(tangen miman kabushiki)
The share unit of the Joint Holding Company is 100 shares.
Shareholders of the Companies who will receive an allotment of the Joint Holding Company’s sharesof less than one share unit (100 shares) as a result of the Share Transfer may not sell such shares on theTokyo Stock Exchange and other financial instruments exchanges (kin’yū shouhin torihikijo). However,shareholders who will hold such fractional shares may request the Joint Holding Company to purchasetheir fractional shares pursuant to Article 192, Paragraph 1 of the Companies Act. In addition, thoseshareholders may also request the Joint Holding Company to sell them the number of shares that, together
with the number of their fractional shares, will constitute one share unit pursuant to Article 194, Paragraph
1 of the Companies Act and the articles of incorporation of the Joint Holding Company.
(Note 3) Number of new shares to be delivered by the Joint Holding Company as a result of the Share Transfer(planned)
59,800,000 common shares
The above number is calculated based on the total number of issued shares of Ryoyo Electro(26,800,000 shares as of the end of July 2023) and the total number of issued shares of Ryosan(25,000,000 shares as of the end of September 2023).
(5)

Treatment of share options and bonds with share options in association with the Share Transfer
One unit of the first series share options of the Joint Holding Company will be allotted for each unit of the third

series share options already issued by Ryoyo Electro.
Ryosan has not issued any share options.
The Companies have not issued any bonds with share options.
(6)

Dividends from surplus of the Companies based on the record dates prior to the establishment of the Joint

Holding Company
While Ryoyo Electro plans to pay a dividend of JPY 80 per share with the record date of January 31, 2024,
Ryoyo Electro also plans to partially amend its Articles of Incorporation, including effecting a change in the fiscal year
end (the last day of a fiscal year), at the extraordinary general meeting of shareholders scheduled for December 19, 2023,
as stated in “Notice Concerning Revision of Dividend Forecast and Change in Shareholder Benefit Plan Due to Change
in Fiscal Year End (Last Day of a Fiscal Year)” separately released today. In such case, Ryoyo Electro plans to pay a
dividend of JPY 100 per share after changing the record date for the dividends from surplus to March 31, 2024.
Ryosan also plans to pay a dividend of JPY 60 yen per share with the record date of September 30, 2023 and adividend of JPY 90 yen per share with the record date of March 31, 2024, respectively. For details, please refer to the“Notice Concerning Upward Revision of Forecast of First-Half Business Results for the Consolidated Fiscal Year 2023”
and the “Notice Concerning Revision of Dividend Forecast (Interim Dividend Increase and Commemorative Dividend
for 40th Anniversary of Listing and 70th Anniversary of Foundation)” separately released as of October 16, 2023.
3.

Grounds for Details of Allotment pertaining to the Share Transfer(1)

Grounds and reasons for details of allotment
In order to ensure the fairness of the determination of the share transfer ratio as described in “2. Outline of theManagement Integration, (4) Details of allotment pertaining to the Share Transfer (share transfer ratio)” above, Ryoyo
Electro has appointed Daiwa Securities Co. Ltd. (“Daiwa Securities”) and Ryosan appointed Mitsubishi UFJ Morgan
Stanley Securities Co., Ltd. (“Mitsubishi UFJ Morgan Stanley Securities”) respectively, as financial advisors and thirdparty calculation agents independent of the Companies, and the Companies have received a report on the calculation of
the share transfer ratio as of October 13, 2023.
-6-

[Translation]

By reference to the advice and results of the calculations by the financial advisors and third-party calculation
agents, as well as the legal advice from the legal advisors of the respective Companies as described in “3. Grounds for
Details of Allotment pertaining to the Share Transfer, (4) Measures for securing fairness, (ii) Advice from independent law
firms” below, based on the results of the due diligence conducted by each of the Companies on the other party, and after
comprehensive consideration of factors such as the financial conditions, status of assets, future prospects and stock pricefluctuations of the Companies, the Companies have, after a series of careful negotiations and deliberations between the
Companies in respect of the share transfer ratio, finally determined that the share transfer ratio stated in “2. Outline of theManagement Integration, (4) Details of allotment pertaining to the Share Transfer (share transfer ratio)” above isreasonable, and the share transfer ratio for the Share Transfer has been determined and agreed upon at the meetings of theboards of directors of both Companies held today.
(2)

Matters relating to calculation(i) Name of calculation agents and relationship with the Companies
Neither Daiwa Securities, the third-party calculation agent of Ryoyo Electro, nor Mitsubishi UFJ Morgan
Stanley Securities, the third-party calculation agent of Ryosan, is a related party of the Companies, and neither ofthem has a material interest in the Share Transfer that should be stated herein.
(ii) Outline of calculation
Daiwa Securities has adopted and made calculations using: (a) the market stock price method on the grounds
that the shares of the Companies are listed on a financial instruments exchange and their market stock prices areavailable; and (b) the discounted cash flow method (“DCF Method”) in order to reflect the status of future businessactivities to the assessment.
For the market stock price method, the closing price of the share price on the calculation base date on the Tokyo
Stock Exchange and the simple average of the closing prices for the respective periods of one (1) month prior tothe calculation base date, three (3) months prior to the calculation base date and six (6) months prior to thecalculation base date on the Tokyo Stock Exchange have been adopted with the calculation base date of October
13, 2023.
Under the DCF Method, the corporate value is evaluated by discounting future cash flows, etc. based on
financial prospects prepared by the Companies to the present value using a certain discount rate. For the avoidanceof doubt, the financial prospects of the Companies on which the calculations are based do not include those forfiscal years in which significant increases or decreases in profits are expected.
The results of the calculations under each of the above methods are as follows. The results of the calculations of
the share transfer ratio below represent the results of the calculations of the number of common shares of the Joint
Holding Company to be allotted for one common share of Ryosan where one common share of the Joint Holding
Company is allotted for one common share of Ryoyo Electro.
Adopted method

Calculation results of share transfer ratio

Market stock price method

1.27 to 1.40

DCF Method

0.99 to 1.43

On the other hand, in respect of Ryoyo Electro and Ryosan, Mitsubishi UFJ Morgan Stanley Securities has
adopted and made calculations using: (a) the market stock price analysis on the grounds that the shares of theCompanies are listed on a financial instruments exchange and their market stock prices are available; (b) thecomparable peer company multiple analysis on the grounds that there exist multiple comparable listed peer
companies with respect to both Companies and that the stock price is available for comparable peer company
multiple analysis; and (c) the discounted cash flow analysis (“DCF Analysis”) in order to reflect the status of futurebusiness activities to the assessment.
-7-

[Translation]

For the market stock price analysis, the closing price of the share price on the calculation base date on the Tokyo
Stock Exchange and the simple average of the closing prices on the respective transaction dates for the respective
periods of one (1) month prior to the calculation base date, three (3) months prior to the calculation base date andsix (6) months prior to the calculation base date on the Tokyo Stock Exchange have been adopted with thecalculation base date of October 13, 2023.
The calculation of prices using the DCF Analysis is based on various factors, such as the profits in the financial
prospects and investment plans provided by the management of Ryoyo Electro and Ryosan, all of which have been
acknowledged by both Companies to be used for the purpose of the calculation, results of the due diligence
conducted on Ryoyo Electro and Ryosan and other information generally made available to the public. For the
avoidance of doubt, the financial prospects of the Companies on which the calculations are based do not include
those for fiscal years in which significant increases or decreases in profits are expected.
The results of the calculations under each of the above methods are as follows. The results of the calculations of
the share transfer ratio below represent the results of the calculations of the number of common shares of the Joint
Holding Company to be allotted for one common share of Ryosan where one common share of the Joint Holding
Company is allotted for one common share of Ryoyo Electro.
Adopted method

Calculation results of share transfer ratio

Market stock price analysis

1.27 to 1.40

Comparable peer company multiple

0.80 to 1.88

analysis
DCF Analysis

1.20 to 2.23

(Note) The analysis by Mitsubishi UFJ Morgan Stanley Securities and the analysis of the underlying sharetransfer ratio are provided to the board of directors of Ryosan for its reference only. Such analysis does notconstitute a financial opinion or recommendation of Mitsubishi UFJ Morgan Stanley Securities or its affiliates, nordoes it provide its approval of the Share Transfer, or an opinion or recommendation to the shareholders of Ryoyo
Electro or Ryosan regarding the transfer and acquisition of shares and the exercise of the shareholder rights,
including the exercise of voting rights, or their consent to the Share Transfer or any other related matters. Mitsubishi
UFJ Morgan Stanley Securities relies on the information that is already publicly available or any information
provided by Ryoyo Electro or Ryosan or otherwise obtained for the analysis and calculation of the share transfer
ratio, assuming that such information is accurate and complete, and has not independently verified the accuracy
and completeness thereof. Also, Mitsubishi UFJ Morgan Stanley Securities assume that the financial prospects
reflect the best prospects and judgement currently available with respect to the future financial condition of Ryoyo
Electro and Ryosan and has been reasonably prepared and provided by the management of Ryoyo Electro andRyosan. Mitsubishi UFJ Morgan Stanley Securities has not made or obtained any independent assessment orappraisal of the assets and liabilities (including off-balance sheet assets and liabilities and other contingent
liabilities) of Ryoyo Electro, Ryosan or their affiliates, nor has it requested any third-party institution to value orappraise them. Mitsubishi UFJ Morgan Stanley Securities’ analysis is based on economic, financial, market, andother conditions as of the calculation base date of the share transfer ratio calculation report and on information
available to Mitsubishi UFJ Morgan Stanley Securities as of such date. Although there is a possibility that an event
occurring on or after the date may affect the basis on which the Mitsubishi UFJ Morgan Stanley Securities’ analysis
and the share transfer ratio calculation report have been prepared, Mitsubishi UFJ Morgan Stanley Securities is not
obligated to update, revise or reconfirm the share transfer ratio calculation report or its analysis. In addition, thepreparation of the share transfer ratio calculation report and the underlying analysis therefor was a complex process
and is not necessarily suitable for partial analysis or summary description. The valuation ranges based on thespecific analysis described herein may not be considered as Mitsubishi UFJ Morgan Stanley Securities’ assessmentof the actual value of Ryoyo Electro or Ryosan.

-8-[Translation](3)

Matters related to application for listing, etc. of the Joint Holding Company
The Companies plan to apply for an initial listing (technical listing) of the shares of the newly established Joint

Holding Company on the Prime Market of the Tokyo Stock Exchange. The listing date is expected to be April 1, 2024,
the date of registration of the establishment of the Joint Holding Company. The Companies will be delisted from the Tokyo
Stock Exchange on March 28, 2024, prior to the listing of the Joint Holding Company, as the Companies will become
wholly-owned subsidiaries of the Joint Holding Company through the Share Transfer.
The listing date of the shares of the Joint Holding Company and the delisting date of the Companies will be
determined in accordance with the respective rules of the Tokyo Stock Exchange.
(4)

Measures for securing fairness
Ryoyo Electro has taken the following measures to ensure the fairness of the Share Transfer.
(i) Obtaining a share transfer ratio calculation report from an independent third-party calculation agent
As stated in “3. Grounds for Details of Allotment pertaining to the Share Transfer, (1) Grounds and reasons fordetails of allotment” above, in order to ensure the fairness and reasonableness of the Share Transfer, Ryoyo Electro
has appointed Daiwa Securities as an independent third-party calculation agent and obtained a share transfer ratio
calculation report as a basis for agreeing on the share transfer ratio for the Share Transfer. Ryoyo Electro has also
negotiated and discussed with Ryosan by reference to the analysis and advice of Daiwa Securities, its financial
advisor and third-party calculation agent, and resolved at a meeting of its board of directors held today, toimplement the Share Transfer based on the share transfer ratio described in “2. Outline of the Management
Integration, (4) Details of allotment pertaining to the Share Transfer (share transfer ratio)” above.
(ii) Advice from an independent law firm
In order to ensure the fairness and appropriateness of the decision-making by its board of directors, Ryoyo
Electro has received legal advice from TMI Associates, a legal advisor independent of the Companies, regarding
the procedures for the Share Transfer and the method and process of decision-making by Ryoyo Electro. TMIAssociates is not a related party to the Companies and does not have a material interest in the Management
Integration that should be stated herein.
On the other hand, Ryosan has taken the following measures to ensure the fairness of the Share Transfer.
(i) Obtaining a share transfer ratio calculation report from an independent third-party calculation agent
As stated in “3. Grounds for Details of Allotment pertaining to the Share Transfer, (1) Grounds and reasons fordetails of allotment” above, in order to ensure the fairness and reasonableness of the Share Transfer, Ryosan has
appointed Mitsubishi UFJ Morgan Stanley Securities as an independent third-party calculation agent and obtained
a share transfer ratio calculation report as a basis for agreeing on the share transfer ratio for the Share Transfer.
Ryosan also negotiated and discussed with Ryoyo Electro by reference to the analysis and advice of Mitsubishi
UFJ Morgan Stanley Securities, its financial advisor and third-party calculation agent, and resolved at a meetingof its board of directors held today, to implement the Share Transfer based on the share transfer ratio described in“2. Outline of the Management Integration, (4) Details of allotment pertaining to the Share Transfer (share transfer
ratio)” above.
(ii) Advice from an independent law firm
In order to ensure the fairness and appropriateness of the decision-making by its board of directors, Ryosan has
obtained legal advice from Anderson Mori and Tomotsune, a legal advisor independent of the Companies,
regarding the procedures for the Share Transfer and the method and process of decision-making by Ryosan.
Anderson Mori and Tomotsune is not a related party to the Companies and does not have a material interest in theManagement Integration that should be stated herein.
-9-

[Translation](5)

Measures to avoid conflict of interest
No special measures have been taken because no particular conflict of interest arises between Ryoyo Electro

and Ryosan with respect to the Share Transfer.
4.

Overview of the Parties to the Management Integration(1) Name

Ryoyo Electro Corporation

Ryosan Company, Limited(2) Address

1-12-22 Tsukiji, Chuo-ku, Tokyo, 104-

2-3-5

8408, JapanTokyo, 101-0031, Japan(3) Name and position ofMoritaka Nakamura,

Kazuhiko Inaba,

representative

Representative Director, President

Representative Director, President(4) Description of business

1) Sale of semiconductors/devices

1) Sale of devices

2) Sale of ICT products2) Delivery of solutions

Higashi-Kanda,

Chiyoda-ku,

3) Sale of embedded devices4) Design, development, and technologicalsupport concerning the above5) Services concerning the above(5) Capital

JPY 13,672,000,000

JPY 17,690,000,000(As of July 31, 2023)(As of September 30, 2023)(6) Date of incorporation

February 27, 1961

November 18, 1953

(7) Outstanding shares

26,800,000 shares

25,000,000 shares(As of July 31, 2023)(As of September 30, 2023)(8) Fiscal term

January 31

March 31

(9) Number of employees

Consolidated: 713 Singular: 537

Consolidated: 952 Singular: 603(As of July 31, 2023)(As of September 30, 2023)(10) Major customers

TCL ELECTRONICS (HK) LIMITED

Mitsubishi Electric Corporation(11) Major trading bank

MUFG Bank, Ltd.

Sumitomo Mitsui Banking Corporation(12) Major shareholders and

The Master Trust Bank ofshareholding ratio

Japan, Ltd. (trust account)

12.54%

Ryoyo Electro Corporation

20.07%The Master Trust Bank of

14.17%SHC Corporation

10.48%

Japan, Ltd. (trust account)

Mitsubishi Electric

7.80%

City Index Eleventh Co., Ltd

9.98%

Sumitomo Mitsui Banking

4.33%

Corporation
Custody Bank of Japan, Ltd.

2.89%

(trust account)

Corporation
SUMITOMO LIFE

Sheep Shokai Co.

2.59%

INSURANCE COMPANY

Nippon Life Insurance

2.03%

Nippon Life Insurance

Company

3.67%
3.14%

Company

Ryoyo Electro Employee

1.54%

Stockholder Association
STATE STREET BANK

Custody Bank of Japan, Ltd.

3.10%

(trust account)
1.07%

MUFG Bank, Ltd.

2.78%

WEST CLIENT – TREATY

NEC Corporation

2.58%

505234

Yoshiko Yamashima

1.39%

Yoshihisa Shimada

1.04%

Yoichiro Ohashi

1.02%(As of July 31, 2023)(As of September 30, 2023)(13) Relationship between

As of September 30, 2023, Ryoyo Electro owns 20.07% of the total number of

the Companies

Ryosan’s outstanding shares (excluding treasury shares (1,557,771 shares)) and is its- 10 -

[Translation]

largest major shareholder. Ryosan is an equity-method affiliate of Ryoyo Electro anda related party of Ryoyo Electro.
There are no significant personal or business relationships.
(14) Financial position and operating results for the last three fiscal years (Units: JPY 1 million, except as otherwise
noted.)
Ryoyo Electro Corporation

Ryosan Company, Limited(Consolidated)(Consolidated)

January

January

January

March

March

March

2021

2022

2023

2021

2022

2023

Net assets

37,99242,30944,72589,60994,724

102,731

Gross assets

59,33672,652

88,409148,087

190,548

188,188

2,188.90

2,130.47

2,213.66

3,824.82

4,043.20

4,383.09

Sales volume

95,792

112,099

129,912219,884

272,647

325,657

Operating profit

1,266

2,258

4,693

4,628

8,857

15,423Current profit

905

2,400

4,477

5,122

8,085

13,361

806

1,873

3,056

4,586

5,359

9,224

Net profit per share (JPY)

35.19

103.94151.46

195.78228.75393.70

Dividend per share (JPY)

180

120

110

100

120

165

Fiscal period

Net assets per share(JPY)

Current

net

profitattributable to owners of
the parent company

5.

Outline of the Accounting for the Share Transfer
The outline of accounting for the Share Transfer falls under an “acquisition” under the accounting standards

for business combinations, and the Share Transfer is expected to be accounted for using the purchase method. Goodwill(or negative goodwill) is expected to be recorded in the consolidated accounts of the Joint Holding Company, but theamount cannot be estimated at this time, and will be announced once it is determined.
6.

Future Outlook
The management policies, plans and performance outlook, etc. of the Joint Holding Company to be establishedby the Share Transfer will be discussed by the Companies and will be announced once they are finalized.
End- 11 -

[Translation](Reference)
Consolidated performance forecast for the current fiscal year (announced on August 31, 2023) and consolidated results
for the previous fiscal year of Ryoyo Electro(Units: JPY 1 million)
Current net profit
Consolidated sales

Consolidated

Consolidated

attributable tovolumeoperating profit

current profit

owners of the parent
company

Forecast for the current
fiscal year (January

128,000

4,300

8,900

7,500

129,912

4,693

4,477

3,056

2024)
Results for theprevious fiscal year
(January 2023)
Consolidated performance forecast for the current fiscal year (announced on July 31, 2023) and consolidated results forthe previous fiscal year of Ryosan(Units: JPY 1 million)
Current net profit
Consolidated sales

Consolidated

Consolidated

attributable tovolumeoperating profit

current profit

owners of the parent
company

Forecast for the current
fiscal year (March 2024)

270,000

8,000

7,000

5,000

325,657

15,423

13,361

9,224

Results for theprevious fiscal year
(March 2023)- 12 -

<Supplementary Material>
Notice of Execution of Definitive Agreement for Management Integration
between Ryoyo Electro and Ryosan through the Establishment of a Joint
Holding Company

Ryoyo Electro
Corporation

Ryosan Company,
Limited

October 16, 2023

1. Background and Objectives of the Management Integration
Against the backdrop of the changing functions and roles required of electronics trading
companies, we, as a new core group in the industry, will seek to add value to the entire value
chain by joining the forces of two companies with different strengths.

Challenges as a new core group
Objectives

Generationof synergy

 Strengths in solution
business combining ICT andservices Strengths in device
business with strong
customer base

Changing functions and roles required of electronics trading companies

Background

Customers

Suppliers

Incentives to improve operational
efficiency in light of the impact of
the Covid-19 pandemic, etc.

 Expansion of scale throughmergers and acquisitions

Changes in the external environmentSoftening supply and demand in thesemiconductor market

Conflict between the U.S. andChina and a tightening ofsemiconductor regulations



Changes in interest rates andforeign exchange rates

Accelerating IoT and DX acrosssocietyRising prices of resources andmaterials

Changing and diversified
customer needs

Increasing geopolitical risks

 Review of distribution
policies, including agency
and commercial rights

22. [Synergy] Initiatives to Generate Synergies[Group management targets for the fiscal year ending March 31, 2029]
Sales Volume: JPY 500 billion; Operating Profit: JPY 30 billion
Improving
quality

Expandingquantity Strengthening the customer baseand product lines Acquiring know-how to meet needs
 Pursuing uniqueness to respond toneeds Expanding new contact points withcustomers

 Expanding business models forcustomers Increasing products that match
needs
Synergy effects by
pursuing quantityand quality

 Grasping customer needs
 Promoting understanding ofcommon market needs

Creating an optimal structure and fostering a
corporate culture(Structure) Accelerating harmony and integration for the unified management of the
group



(Structure) Establishing a system to realize the provision of new value to customers

(Corporate culture) Individual growth and improvement of organizational capabilities
3

2. [Synergy] Expanding Quantity and Improving
Quality

We will help our customers to solve their problems by combining ourcontact points with customers, product lines and know-how developed by
Ryoyo Electro and Ryosan.
Improving quality

Expanding quantity
Expanding contact
points with customers
Strengthening
information
dissemination tocustomers
Promoting cross-selling

Increasing productsthat match needsStrengthening theanalysis of customer
needs
Providing products andservices that meetcustomer requests

Diversified business models
Enhancing service business
Enhancing consulting functions

Strengthening the customer base and productlines
Approaching and providing a wide variety of products
to the customers of the Companies
Upgradinghardware・ Semiconductors
・ Electronic parts
・ Materials
・ Boards
・ ICT devices
・ Manufacturing equipment

Upgradingsoftware・Embedded software modules
・Cloud software

Operating business by leveraging the products andservices, know-how and expertise of theCompanies

Expandingknow-how

Expanding businessmodels byaccumulating andacquiring know-how

Creating uniquevalue

Creating uniquevalue in line withcustomer needs

42. [Synergy] Creating an optimal structure andfostering a corporate culture
Fostering a corporate culture
Improving the ability to meet customer needs throughindividual growth and improvement of organizational
capabilities
 Fostering a corporate culture in which each and every employee canenhance their "individual" skills and experience the joy of contributing tocustomers and personal growth

Creating an optimal structure
Personnel
affairsIT
system

Accounting

Technology

Publicity

Sales

Operation

Establishing a system to realize theprovision of new value to customers

Developing an infrastructure for theunified management of the groupBoosting productivity and efficiency by integratingcore systems and promoting DXEstablishing a structure to share and utilize
information

Optimizing various plansDeveloping technical/know-how collaboration

Improving sales capabilities, and operational
efficiency and accuracy by standardizing
processes

5

3. Summary of Management Integration
Method of management integration, etc.
Method ofmanagement
integration
Share transfer
ratio



A joint share transfer whereby Ryoyo Electro and Ryosan will become wholly-owned subsidiaries(kabushiki iten kanzen kogaisha) and the newly established Joint Holding Company (Ryoyo Ryosan
Holdings) will become the wholly-owning parent company (kabushiki iten kanzen oyagaisha)One common share of Ryoyo Ryosan Holdings will be issued for one common share of Ryoyo Electro.
1.32 common shares of Ryoyo Ryosan Holdings will be issued for one common share of Ryosan.

Ryoyo Electro︓Ryosan ＝ １︓1.32

Schedule of management integration (planned)

Capital relationship after management integration(from April 1, 2024)

Ryoyo Ryosan Holdings(listed company)
100%

Ryoyo Electro(unlistedcompany)

100%

20
23

October

December

Ryosan (unlistedcompany)

16

Execution of Management Integration Agreement andpreparation of the Share Transfer Plan
The date of public notice of the record date for the
extraordinary general meeting of shareholders

31

The record date for the extraordinary general meeting ofshareholders

19

The date of the extraordinary general meeting ofshareholders

27

The last trading day of the shares of Ryoyo Electro andRyosan on the TSE28

The date of delisting the shares of Ryoyo Electro andRyosan from the TSE1

The effective date of management integration(the date of the initial listing of the shares of Ryoyo Ryosan
Holdings)

March

Ryoyo Electro
Other
companies

RyosanOther
companies

20
24
April

6

4. Overview of the Joint Holding Company (Planned)
Trade name

Ryoyo Ryosan Holdings, Inc.

Location of the head
officeLocation of theheadquarters
Organizational
structure

2-3-5 Higashi-Kanda, Chiyoda-ku, Tokyo, 101-0031, Japan

Representatives andofficers who willtake office

Capital

1-12-22 Tsukiji, Chuo-ku, Tokyo, 104-8408, Japan
A company with an audit and supervisory committee (kansa tou i’inkai setchi gaisha)
Representative Director, President
Moritaka Nakamura
Representative Director, Vice President Kazuhiko Inaba
Director
Shunya Endo
Director
Atuyuki Ohashi
Director
Norihiko Takahashi
Outside Director
Shinya Takada
Outside Director
Haruyoshi Kawabe
Outside Director
Masumi Shiraishi
Director, Full-time Audit and Supervisory Committee Member Kiyoshi Waki
Outside Director, Audit and Supervisory Committee Member
Mahito Ogawa
Outside Director, Audit and Supervisory Committee Member
Motomi Oi
Outside Director, Audit and Supervisory Committee Member
Sachiko Fukuda
JPY 15 billion

Scheduled date ofestablishment

April 1, 2024

Fiscal year-end

March 31

Stock exchange on
which the company
will be listed

Prime Market of the Tokyo Stock Exchange

7

5. Outline of Ryoyo Electro and Ryosan
Name

Ryoyo Electro Corporation

Ryosan Company, Limited

Address

1-12-22 Tsukiji, Chuo-ku, Tokyo,104-8408, Japan

2-3-5 Higashi-Kanda, Chiyoda-ku, Tokyo,
101-0031, Japan

Name and positionof representative

Moritaka Nakamura,
Representative Director, President

Kazuhiko Inaba,
Representative Director, President

Description ofbusiness

1) Sale of devices
1) Sale of semiconductors/devices2) Delivery of solutions
2) Sale of ICT products3) Sale of embedded devices4) Design, development, and technological support
concerning the above5) Services concerning the above

CapitalJPY 13,672,000,000

JPY 17,690,000,000

Date ofincorporation

February 27, 1961

November 18, 1953

Outstanding shares

26,800,000 shares

25,000,000 sharesFiscal term

January 31

March 31

Number of
employees

Consolidated: 713 Singular: 537(As of July 31, 2023)

Consolidated: 952 Singular: 603(As of September 30, 2023)

Major customers

TCL ELECTRONICS (HK) LIMITED

Mitsubishi Electric Corporation

Major trading bank

MUFG Bank, Ltd.

Sumitomo Mitsui Banking Corporation
8

Contact information:
Ryoyo Electro Corporation
Public Relations Dept.
Corporate Planning Div.
TEL: +81-3-3546-6331
E-mail : irmanager@ryoyo.co.jp

Ryosan Company, Limited
Corporate Planning Office
Corporate Planning Headquarters
TEL: +81-3-3862-2831
E-mail: ir@rsn.ryosan.co.jp

9