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 theopen 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]

May 15, 2023
Dear Sirs,
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 TakahashiDivision(Telephone number: 03-3543-7711)
Ryosan Company, Limited
Representative Director,Kazuhiko Inaba
President(Code number: 8140 TSE Prime)
Executive Officer, General
ManagerofPlanning Norihiko Takahashi
Division(Telephone number: 03-3862-3816)

Notice of Execution of a Memorandum of Understanding for Management Integration between
Ryoyo Electro Corporation and Ryosan Company, Limited
Ryoyo Electro Corporation (“Ryoyo Electro”) and Ryosan Company, Limited (“Ryosan”; Ryoyo Electro andRyosan are, collectively, referred to as the “Companies”) hereby announce that their respective boards of directors adopted
resolutions to reach a basic agreement in order to realize the integration of their management (“Management Integration”)
at their respective board of directors’ meetings held today, and the Companies entered into a memorandum ofunderstanding (“MOU”) in connection therewith.

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, as[Translation]

obtained 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, “streamliningexisting 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, thefunction 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 the impact of COVID-19, the supply shortage of semiconductors andother components, geopolitical risk and trends in the financial markets are having a significant impact on the businessenvironment and performance. Electronics trading companies, while having low profitability, are vulnerable to changes
in the external environment.
Within this business environment, each of the Companies has considered and implemented various measures,
including alliances with other companies, in order to further grow and develop in the future. As part of this process, sinceapproximately the spring of 2022, the Companies have been discussing the possibility of creating business synergies
between them, sharing and deepening the understanding of their respective situations and the direction they should befollowing. As a result, the Companies concluded that building strong partnerships and combining their respective strengths
and characteristics would lead to the creation and realization of new growth opportunities for them. In February and Marchof 2023, Ryoyo Electro acquired some of Ryosan’s shares and currently owns 20.08% of the latter’s voting shares.
Since the acquisition of Ryosan’s shares by Ryoyo Electro, the Companies have worked to vitalize exchanges
between them, holding discussions aimed at realizing a wide range of alliances and business synergies. As a result, theCompanies have concluded that, in order to improve profitability and operational efficiency to the maximum extent, rather
than making separate efforts, it is necessary to aim for the integration of the Companies’ management under the spirit ofequality. Hence, the Companies reached an agreement on an MOU.
(2)

Purpose of the Management Integration
Against this background, the Companies will strive to further enhance their corporate values as a new coregroup of domestic electronics trading companies, maximizing the use of management resources, such as good customer
relations and excellent products and solutions that each of the Companies has built up over the years, within a newframework. In light of the fact that there is only a limited overlap between the products handled by the Companies andtheir customers, the Companies will not only establish a solid management base and improve productivity andmanagement efficiency through expansion of scale, but also promote cross-sales of their respective products and build
business models that lead to the creation of new value. The Companies will aim to realize a new vision for electronics
trading companies that create solutions and lead to solving problems and concerns their customers and the entire market
are facing.
-2-[Translation]

2.

Method of the Management Integration and the Post-Integration Management Framework
Assuming the approval of the Companies’ general meeting of shareholders and that the permissions andapprovals of the relevant authorities necessary for the Management Integration are obtained, the Companies are expectedto effectuate the Management Integration on or about April 1, 2024. The specific method of the Management Integrationand post-integration management framework will be determined before entering into a final agreement on theManagement Integration based on the results of discussions and considerations conducted between the Companies as well
as future due diligence.

3.

Schedule of Management Integration
Resolution of the board of directors

May 15, 2023 (today)

Entering into the MOU regarding Management

May 15, 2023 (today)

Integration
Entering into a final agreement regarding

October 2023 (scheduled)Management Integration
Extraordinary meeting of shareholders (theDecember 2023 (scheduled)Companies)
Effective date of the Management Integration
4.

April 1, 2024 (scheduled)

Overview of the Companies(1) Name

Ryoyo Electro Corporation

Ryosan Company, Limited(2) Address

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

2-3-5 Higashikanda, Chiyoda-ku, Tokyo(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 solutions3) 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, 000,000-3-[Translation](As of January 31, 2023)(As of March 31, 2023)(6) Date of incorporation

February 27, 1961

November 18, 1953

(7) Outstanding shares

26,800,000 shares

25,000,000 shares(As of January 31, 2023)(As of March 31, 2023)(8) Fiscal term

January 31

March 31

(9) Number of employees

Consolidated: 714 Singular: 537

Consolidated: 954 Singular: 598(As of January 31, 2023)(As of March 31, 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

SHC Corporation

10.49%

Ryoyo Electro Corporation

20.08%

shareholding ratio

The Master Trust Bank of

10.27%The Master Trust Bank of

12.46%

Japan, Ltd. (trust account)
Mitsubishi

Japan, Ltd. (trust account)

Electric

7.81%

Corporation
2.59%

SUMITOMO

INSURANCE COMPANY

LifeInsurance

2.03%

ElectroEmployee

1.53%

Company
Ryoyo

4.33%

Corporation

Sheep Shokai Co.
NipponSumitomo Mitsui Banking
LIFE

3.67%

Custody Bank of Japan, Ltd.

Stockholder Association

3.51%(trust account)
NipponLifeInsurance

3.14%

Yoshihisa Shimada

1.05%

Company

Yoichiro Ohashi

1.02%

MUFG Bank, Ltd.

2.78%

Ken System Co., Ltd.

0.99%

NEC Corporation

2.58%

0.99%

NORTHERN TRUST CO.

2.42%

Mars

GroupHoldingsCorporation(AVFC) RE NONTREATY CLIENTSACCOUNTCity Index 11 Co., Ltd.

(As of January 31, 2023)

2.24%(As of March 31, 2023)(13) Relationship between

As of today, Ryoyo Electro owns 20.08% of the total number of Ryosan’s outstanding

the Companies

shares (excluding treasury stock) and is its largest major shareholder. Ryosan is anequity-method affiliate of Ryoyo Electro and a related party.
There are no significant personal or business relationships.

(14) Financial position and operating results for the last three fiscal years (Units: 1 million yen, except as otherwisenoted.)
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

Fiscal period

Net assets per share(JPY)

Current

net

profitattributable to owners of-4-

[Translation]

the parent company

5.

Net profit per share (JPY)

35.19

103.94151.46

195.78228.75393.70

Dividend per share (JPY)

180

120

110

100

120

165

Future Outlook
The Management Integration is expected to have a minor impact on Ryoyo Electro’s and Ryosan’s consolidated

results for the fiscal year ending January 2024 and March 2024, respectively. The Companies will promptly inform youof any matters that should be disclosed in the future.

End-5-