February 6th, 2018

Name of the Company :Oji Holdings Corporation

Representative:

Person to contact:

Susumu Yajima
Director of the Board, President(Code No. 3861, First Section of theTokyo Stock exchange)
Takashi Nakajima
General Manager, Corporate Planning
Department,
Corporate
Planning
Division of Oji Management Office Inc.
Phone: +81-3-3563-4385

Name of the Company :Mitsubishi Paper Mills Limited

Representative:

Kunio Suzuki
President and CEO(Code No. 3864, First Section of theTokyo Stock exchange)
Fumito Shirakawa
GeneralManager,
Corporate
Communications and IR Department
Phone: +81-3-5600-1485

Person to contact:

Announcement of Capital and Business Alliance ofOji Holdings Corporation and Mitsubishi Paper Mills LimitedOji Holdings Corporation (hereinafter "Oji Holdings") and Mitsubishi Paper Mills Limited (hereinafter "MitsubishiPaper") hereby announce that Oji Holdings and Mitsubishi Paper have resolved to enter into a capital allianceagreement on capital and business alliance between the two companies (hereinafter "the Alliance") and to issue newshares of Mitsubishi Paper to Oji Holdings through third party allocation of shares, at the Board of Directors’Meetings of the two companies held on February 6, 2018.
In addition, Oji Holdings hereby announces that Oji Holdings has agreed, with shareholders of Mitsubishi Paper, toacquire the shares of Mitsubishi Paper from the shareholders, as part of the Alliance.

1. Purpose of the Alliance(1) Environment surrounding Oji Holdings and Mitsubishi Paper
In the papermaking industry in Japan, the printing and communications paper field is strongly affected by thedeclining birthrate, aging of the population, utilization of Information and Communication Technology (ICT), andits demand has decreased by approximately 30% as compared with 10 years ago (as per “Report on EstimatedDomestic Demand on Paper/Paperboard, 2009” dated January 20, 2009 and “Report on Estimated Domestic
Demand on Paper/Paperboard, 2018” dated January 22, 2018, by the Japan Paper Association). Meanwhile,1

domestic printing and communications paper manufacturers have attempted to improve the cost structure, including
the disposal of surplus facilities and the reduction of personnel. On the other hand, overseas paper manufacturers,
mainly in Asia, have expanded production capacities by cutting-edge equipment, against the backdrop of expanding
demand in their countries due to economic growth, and have also acquired a certain presence in the Japanesemarket, which makes the competition with overseas paper manufacturers intensified. In addition, in the short run,with the price of papermaking raw material and fuel being rising in the rise of the price of the resource in general,the business environment for the domestic printing and communications paper manufacturers is becoming moreand more severe situation.
Under such circumstances, Oji Holdings and Mitsubishi Paper have been in a situation where they would not beable to continue the stable operation and growth of our businesses while competing with the other companies, if thetwo companies continued the existing management strategy.

(2) Past Circumstances of Oji Holdings and Mitsubishi PaperOji Holdings has set the basic policy of the group management strategy as "Expansion of Overseas Business","Concentration / Advancement of Domestic Businesses" and "Strengthening Financial Base", and has been working
on various measures under the Fiscal 2016-2018 Medium-term Management Plan. Specifically, on the one hand,
Oji Holdings has been actively pursuing acquisition of manufacturing and sales bases centered in Asia, Oceania andSouth America, but at the same time, it has been domestically striving to fundamentally strengthen the revenue baseof items such as household papers and corrugated boards, where the demand is stable, and striving to research anddevelop innovative materials that can be the next core business such as a Cellulose Nanofiber, in addition toworking on reduction of the production equipment for printing and communication papers which demand has long
been declining.
Meanwhile, Mitsubishi Paper has been developing various businesses such as printing & communication paper
business, digital imaging business, speciality materials business, pulp manufacturing outsourcing, power generation
business and so forth, in countries including Japan, Germany, North America and China. Most recently, Mitsubishi
Paper has formulated the Second Med-Term Management Plan (fiscal 2016-2018 year), having its emphasis on"Stabilization of Profit through Alliances", and has been implementing various measures aiming at realization andreinforcement of the profitable structure that would be insusceptible to the external environment.

(3) Purpose of the Alliance
Oji Holdings and Mitsubishi Paper have strengthened the alliance with each other since the business alliance in thecommunication paper business in 2007 and the third party allocation of shares by Mitsubishi to Oji Holdings.
Specifically, the two companies have expanded the scope of business alliances, through the business alliance incommunication paper field such as carbonless papers and thermal papers, as well as, in the fiscal year of March
2017, through the establishment of joint biomass electric power generation business (scheduled to commence thebusiness from July, 2019), and the launch of joint venture business of the household products business (scheduledto commence the operation from April, 2019). After that, as a result of continuous discussions and considerations
on the market circumstances and business strategies surrounding the two companies, we have reached the mutual2

recognition that it is essential for the both companies’ sustainable growth to develop further comprehensive andconstructive capital and business alliances, not limited to the scope of previous business alliances, and to make itpossible to strengthen collaborative relationships in multiple businesses, beyond one-off collaborative relationshipin a specific business so far, by way of making Mitsubishi Paper as a Oji Holdings’ affiliated company accounted
for by the equity-method.
In addition, regarding the Mitsubishi Paper’s business in Germany which has been discussed in parallel, OjiHoldings and Mitsubishi Paper have decided to proceed on restructuring, including transfer of all or a part of theshares of the German subsidiary between the two companies, because it has been found difficult for Mitsubishi
Paper alone to have a medium to long-term prospect.

2. Outline of the Alliance(1) Details of the Capital Alliance
Oji Holdings plans to own shares equivalent to 33.0% of the total number of voting rights of Mitsubishi Paper as aresult of completing the Alliance. The implementation of the Alliance is subject to a notification under the Financial
Instruments and Exchange Act becoming effective and the obtaining permits and approvals from the competition
authorities in Japan and overseas for the Alliance.
In order to realize the Alliance, Oji Holdings and Mitsubishi Paper plan to further proceed with discussions andconsideration for the details of the business alliance between the two companies, and once the discussions aresettled between the two companies and prior to the payment for the third party allocation of shares in respect of theAlliance, the two companies will execute a business alliance agreement.

(2) Details of Business AllianceOji Holdings and Mitsubishi Paper believe that the Alliance will be able to realize synergistic effects as below. Asof today, Oji Holdings expects over 2.5 billion Japanese yen in operating income and Mitsubishi Paper expects over2.5 billion Japanese yen in operating income, as an improvement effect, in the fiscal year of 2021. Oji Holdings andMitsubishi Paper will further consider the implementation of the details of the business alliance by jointly
establishing the "business alliance committee".

<Examples of Synergistic Effect>① Improvement of profits through new capital investment in joint ventures, etc.
② Reduction of purchase costs, such as the costs of raw materials, fuel and chemicals③ Reduction of supply and distribution costs through mutual OEM, and mutual use of warehouses and secondary
logistics④ Reduction of procurement logistics costs through joint operation of chip ships⑤ Improvements in production efficiency, and so forthThrough the Alliance, the two companies will strive to achieve sustainable growth and maximize med-term andlong-term corporate value, and will strive to earn higher evaluations from all stakeholders including shareholders,3

by accelerating and developing mutual cooperation as long-term partners while respecting the autonomy and its
relationship with existing business partners of Mitsubishi Paper as a listed company.

3. Schedule of the Alliance
(1)

(2)

The agreement date for the transfers of Mitsubishi Paper’s shares between Oji
Holdings andshareholders of Mitsubishi Paper

The date of the resolutions of the Boards of Directors of Oji Holdings andMitsubishi Paper(3)

Execution date of the Capital Alliance Agreement(4)

Execution date of the Business Alliance Agreement

(5)

(6)

(7)

February 6, 2018

February 6, 2018

February 6, 2018
To be executed uponagreement

The completion date of the share transfer in respect of shares in GermanJulysubsidiary of Mitsubishi Paper

December 2019

The payment for the third party allocation of shares in respect of the Alliance

July

2018

2018

––

December 2019

The completion date of the share transfers in respect of shares in Mitsubishi

July

2018

Paper between Oji Holdings and the shareholders of Mitsubishi Paper

December 2019–

4. Future Outlook
In order to realize the Alliance, Oji Holdings and Mitsubishi Paper, from now on, plan to further proceed with thediscussion and consideration in accordance with the Capital Alliance Agreement, and once the discussions aresettled between the two companies and prior to the payment for the third party allocation of shares in respect of theAlliance, the two companies plan to execute the business alliance agreement.
Although there will not be an impact on the Oji Holdings' consolidated financial results for the fiscal year ending
March, 2018, it will contribute to the improvement of medium to long-term business performance.
The impacts of the Alliance and the third party allocation of shares in respect of the Alliance on Mitsubishi Papers’
financial results for the fiscal year of March 2018 are currently being reviewed. If matters to be publicized arise in
the future, Mitsubishi Paper will promptly disclose such matters.

-END-4