October 29, 2020
To whom it may concern:
Nitori Holdings Co., Ltd.
Announcement on"Notice Concerning Planned Commencement of Tender Offer for Shares Certificates of
Shimachu Co., Ltd. (Securities Code: 8184)"
and"Proposal to Shimachu Co., Ltd. for management integration and becoming a wholly-owned
subsidiary through the tender offer"

Nitori Holdings Co., Ltd. (the "Company") resolved today to make a proposal for management
integration to Shimachu Co., Ltd. ("Shimachu") and to commence a tender offer to acquire Shimachu(the "Tender Offer"). The commencement of the Tender Offer is subject to the satisfaction of certain
conditions. As of today, the Company aims to commence the Tender Offer in around mid-Novemberof 2020.
The Company publishes below (i) "Notice Concerning Planned Commencement of Tender Offer for
Shares Certificates of Shimachu Co., Ltd. (Securities Code: 8184)," which is disclosed on TDnet today,and (ii) "Proposal to Shimachu Co., Ltd. for management integration and becoming a wholly-owned
subsidiary through the tender offer," which is an explanatory material regarding the Company's
proposal to Shimachu.

Contact for this matter
For inquiries from shareholders and investors:
Nitori Holdings Co., Ltd.
Accounting and Finance Division (TEL: +81-3-6741-1204)
For inquiries from media outlets:
Nitori Holdings Public Relations Office(within VOX Global Japan K.K.)
TEL: +81-3-6204-4337 (Tanabe)+81-3-6204-4358 (Hisahara)[Translation]
October 29, 2020
To whom it may concern:
Company Name
Representative

Contact

Nitori Holdings Co., Ltd.
Toshiyuki Shirai
Representative Director & President (COO)(Securities code: 9843; First Section of theTokyo Stock Exchange, and the Sapporo
Securities Exchange)
Masaomi Zenji
General Manager, Accounting and Finance
Division
TEL: +81-3-6741-1204

Notice Concerning Planned Commencement of Tender Offer for
Shares Certificates of Shimachu Co., Ltd. (Securities Code: 8184)
Nitori Holdings Co., Ltd. (the "Company" or the "Tender Offeror") announces that it resolved
today to acquire shares of the common stock (the "Target Shares") of Shimachu Co., Ltd.
(securities code: 8184, First Section of Tokyo Stock Exchange, Inc. (the "Tokyo Stock
Exchange"); the "Target") through a tender offer (the "Tender Offer") under the Financial
Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended; the "Act"), as
described below.
The commencement of the Tender Offer is subject to the satisfaction of the Tender Offer
Conditions (as defined below) (or waiver by the Company of the Tender Offer Conditions (butlimited to the below-mentioned Conditions (II) and (III); hereinafter the same)). As of the dateof this Press Release, the Company aims to commence the Tender Offer in around midNovember of 2020 in consideration of the procedures required under the Act on Prohibition ofPrivate Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947, as amended; the"Antitrust Act") and the progress in such procedures with respect to the below-mentioned
Condition (I) of the Tender Offer Conditions.
Tender Offer Price
The tender offer price in the Tender Offer (the "Tender Offer Price") will be 5,500 yen per
share (This Tender Offer Price is premised on the assumption that the Target will not makea distribution of dividends of surplus with a record date preceding, or an acquisition oftreasury shares with the acquisition date being prior to, the commencement date of settlement
for the Tender Offer. If, on or before the business day preceding the commencement date of
the Tender Offer, a decision-making body for the execution of business of the Target resolves
to distribute dividends with a record date prior to the commencement date of settlement for
the Tender Offer, or resolves to submit to the Target's shareholders meeting a proposal forthe distribution of such dividends, the amount of dividend per share in such distribution may
1

be deducted from the above-mentioned price. In addition, if, on or before the business day
preceding the commencement date of the Tender Offer, a decision-making body for the
execution of business of the Target resolves to acquire treasury shares with the acquisition
date being prior to the commencement date of settlement for the Tender Offer or resolves tosubmit to the Target's shareholders meeting a proposal for acquisition of such treasury shares,
the amount obtained by dividing the total amount of consideration for acquisition of suchtreasury shares by the total number of issued shares of the Target (excluding the number oftreasury shares owned by the Target) may be deducted from the above-mentioned price.
Hereinafter the same applies. If the Company needs to change the Tender Offer Price upon
the occurrence of any of the above-mentioned events, such change will be effected before
the commencement of the Tender Offer.).
The Tender Offer Price (5,500 yen per share) is 1,300 yen per share higher than the purchaseprice (4,200 yen per share) in the tender offer by DCM Holdings Co., Ltd. ("DCM
Holdings") for the Target Shares ("DCM Holdings' Tender Offer") published in "NoticeConcerning Commencement of Tender Offer for the Common Shares of Shimachu Co., Ltd.
(Securities Code: 8184), and Execution of Management Integration Agreement with
Shimachu Co., Ltd." dated October 2, 2020 ("DCM Holdings' Tender Offer Commencement
Press Release").
Tender Offer Conditions
The commencement of the Tender Offer is conditioned upon the satisfaction of all of theconditions described below (the "Tender Offer Conditions") (or waiver by the Company of
the Tender Offer Conditions).
(I)

The implementation of the Tender Offer does not conflict, in any material respect,with any of the licenses and approvals under applicable laws and regulations or anyof the terms and conditions of such licenses and approvals (the "License andApproval"), or violate any of the procedures necessary for the License and Approval,
nor is any such conflict or violation reasonably expected to occur (With respect to the
expiration of the Non-acquisition Period and the Period for Measures (each as defined
below) under the Antitrust Act required for the implementation of the Tender Offer,
this condition will be deemed to have been satisfied if the Company determines thatthese periods are reasonably expected to expire on or before the day preceding the last
day of the tender offer period under the Tender Offer (the "Tender Offer Period").);(II)

There has occurred no event that would give rise to a material adverse effect on theTarget's financial status (which means any event justifying withdrawal of a tender
offer as provided in the proviso to Article 27-11, Paragraph 1 of the Act; hereinafter
the same); and(III) DCM Holdings' Tender Offer has not been successfully completed (including asituation where DCM Holdings' Tender Offer is continuing).
The Company's recognition on the Tender Offer Conditions(1) Condition (I)With respect to Condition (I) above, the Company has not consulted with the Target2

regarding the implementation of the Tender Offer as of the date of this Press Release, andaccordingly, considering that there may be any law or regulation other than the Antitrust
Act that must be complied with, the Company has included, to be on the safe side, theprocedures required under such law or regulation (if any) in those required under Condition(I) above. While the Company is to investigate into the existence of any further applicablelaws and regulations with the cooperation of the Target, as of the date of this Press Release,
the Company is not aware of any License and Approval required for the implementation of
the Tender Offer or any procedures necessary for the License and Approval other than the
expiration of the Non-acquisition Period and the Period for Measures under the Antitrust
Act. Therefore, the Company plans to commence the Tender Offer upon determining thatthese periods are reasonably expected to expire on or before the day preceding the last dayof the Tender Offer Period under the Tender Offer.
Under the Antitrust Act, the Company is required to file a plan for the acquisition of theTarget Shares through the Tender Offer (the "Share Acquisition") with the Fair Trade
Commission of Japan ("JFTC") in advance (such filing is hereinafter referred to as the"Prior Notification") and may not acquire the Target Shares until 30 days (or a shorter
period as allowed in certain cases) have passed from the date of acceptance of the Prior
Notification (such period during which the acquisition of shares is prohibited is hereinafterreferred to as the "Non-acquisition Period").
Furthermore, the Antitrust Act prohibits the acquisition of shares in another company thatwould substantially restrain competition in any particular field of trade (Article 10,
Paragraph 1 of the Antitrust Act). The JFTC may order any necessary measures to eliminate
acts in violation of such provision (the "Cease and Desist Order") or file with the court apetition for an urgent temporary suspension order (the "Urgent Temporary Suspension
Order"). If the JFTC is to issue a Cease and Desist Order upon receipt of a Prior Notification
as described above, the JFTC must hear from the intended addressee of the Cease andDesist Order and notify such addressee of the substance and other details of the intended
Cease and Desist Order (the "Prior Notice of Cease and Desist Order"). A Prior Notice ofCease and Desist Order relating to share acquisition must be given within a certain period(in principle, within 30 days of the date of receipt of the Prior Notification, but this period
may be extended or shortened; the "Period for Measures").
Therefore, the condition relating to the Antitrust Act as part of Condition (I) above will bedeemed to have been satisfied if the Company determines that all of the following arereasonably expected: (i) the expiration of the Non-acquisition Period and the Period for
Measures on or before the day preceding the last day of the Tender Offer Period under theTender Offer; (ii) no issuance of a Prior Notice of Cease and Desist Order; and (iii) non
receipt of any Urgent Temporary Suspension Order from the court.
The Company made a Prior Notification regarding the Share Acquisition to the JFTC as of
October 27, 2020 and the relevant Prior Notification was accepted on the same day.
Accordingly, the Non-acquisition Period and the Period for Measures will expire upon thepassage of November 26, 2020, in principle.
(2) Condition (II)3

With respect to Condition (II) above, as of the date of this Press Release, the Company is
not aware of any event that would give rise to a material adverse effect on the Target's
financial status.
From among the events justifying withdrawal of a tender offer as provided in the proviso
to Article 27-11, Paragraph 1 of the Act, "the matters equivalent to those listed in a throughr" as provided in Article 14, Paragraph 1, item 1-s of the Order for Enforcement of the
Financial Instruments and Exchange Act (Cabinet Order No. 321 of 1965, as amended; the"Enforcement Order") refer to (i) the case where a decision-making body for the executionof business of the Target (a) has resolved to distribute dividends of surplus with a record
date preceding the commencement date of settlement for the Tender Offer (except where
the amount of money or other properties to be distributed to shareholders is estimated tobe less than the amount equivalent to 10% of the book value of net assets of the Target on
its non-consolidated balance sheet as of the end of the most recent business year (18,158
million yen (Note))) or has resolved to submit to the Target's shareholders meeting a
proposal to make such a distribution of surplus, or (b) has resolved to distribute dividendsof surplus with a record date preceding the commencement date of settlement for theTender Offer without showing the specific amount of dividends of surplus, leaving a
possibility of making a distribution of dividends in an amount exceeding 10% of the bookvalue of net assets of the Target on its non-consolidated balance sheet as of the end of themost recent business year and (ii) the case where a decision-making body for the executionof business of the Target has resolved to acquire treasury shares (except where the amountof money or other properties to be delivered in exchange for the acquisition of the sharesis estimated to be less than the amount equivalent to 10% of the book value of net assets of
the Target on its non-consolidated balance sheet as of the end of the most recent businessyear (18,158 million yen)) or has resolved to submit to the Target's shareholders meeting a
proposal for such acquisition of treasury shares. In addition, from among the events
justifying withdrawal of a tender offer as provided in the proviso to Article 27-11,
Paragraph 1 of the Act, "the facts equivalent to those listed in a through i" as provided in
Article 14, Paragraph 1, item 3-j of the Enforcement Order refer to the case where any of
the statutory disclosure documents filed by the Target in the past is found to contain any
false statement with respect to any material matter or omit to state any material matter
required to be stated.
It should be noted that even in the case where (i) or (ii) above applies, the Company is towaive the above-mentioned Condition (II) if it changes the Tender Offer Price as stated in"Tender Offer Price" above.
(Note) Assuming that there has been no change in the total number of issued shares andthe number of treasury shares, this threshold is equivalent to a dividend per shareof 467 yen (Specifically, this amount has been calculated by dividing (x) 18,158
million yen, or 10% of the net assets of 181,584 million yen (any fraction less than
1 million yen being rounded down) as of August 31, 2020 as stated in "Summaryof Non-consolidated Financial Results for the Year Ended August 31, 2020 (Basedon Japanese GAAP)" published by the Target on October 2, 2020 (the "Earnings
Briefing") by (y) the number of shares (38,955,287 shares) obtained by deducting
the number of treasury shares owned by the Target as of August 31, 2020
(3,653,817 shares) from the total number of issued shares of the Target as ofAugust 31, 2020 (42,609,104 shares), both as stated in the Earnings Briefing, withfractions of 1 yen in the calculation result rounded up to the nearest yen.).
4(3) Condition (III)
Condition (III) above will be satisfied if (i) the number of share certificates tendered in
DCM Holdings' Tender Offer falls short of the minimum planned purchase quantity under
DCM Holdings' Tender Offer (19,477,700 shares), or the non-successful completion of
DCM Holdings' Tender Offer is otherwise confirmed, or (ii) the last day of the tender offer
period for DCM Holdings' Tender Offer has not passed and DCM Holdings' Tender Offeris continuing. For the background to the above-mentioned Condition (III), see "DCM
Holdings' Tender Offer" below.
The Company plans to launch the Tender Offer within five business days of the satisfactionof the Tender Offer Conditions (or waiver by the Company of the Tender Offer Conditions),
and aims to commence the Tender Offer in around mid-November of 2020 given that theCompany filed a Prior Notification regarding the Share Acquisition with the JFTC on
October 27, 2020 and the relevant Prior Notification was accepted on the same date. We
believe that the Tender Offer will have a limited impact on competition in the relevantmarkets because the Company, with its core business being sale of furniture and interior
goods, is not operating the home improvement retail business in which the Target is primarily
engaged, as stated in "(III) Reasons why the Company is implementing the Tender Offer"
under "(2) Background and reasons to the decision to implement the Tender Offer" under "1.
Purpose of Tender Offer" below. As this is the case, as of the date of this Press Release, theCompany is not aware of any fact constituting a material obstacle to the expiration of the
Non-acquisition Period and the Period for Measures under the Antitrust Act, and believes
that the Tender Offer Conditions will be satisfied in around mid-November of 2020.
However, the Share Acquisition is under examination by the JFTC, and it is difficult toprecisely estimate the time needed for the Company to determine that the Non-acquisition
Period and the Period for Measures are reasonably expected to expire on or before the day
preceding the last day of the Tender Offer Period under the Tender Offer. The Company will
announce the details of the schedule for the Tender Offer as soon as they are finalized.
In DCM Holdings' Tender Offer Commencement Press Release, the tender offer period of
DCM Holdings' Tender Offer is stated as the period starting from October 5, 2020 (Monday)
and ending on November 16, 2020 (Monday). In order to avoid a situation where DCM
Holdings' Tender Offer is completed before the commencement of the Tender Offer, theCompany has resolved to announce the planned commencement of the Tender Offer today.
The subject of this Press Release is the "planned commencement," instead of"commencement," of the Tender Offer because the Company has determined that it is too
early to determine that the above-mentioned Condition (I) of the Tender Offer Conditions
has been satisfied, as a result of careful consideration in light of the procedures required
under the Antitrust Act and the progress in such procedures as of the date of this Press
Release. Under such circumstances, the Company considered announcing the"commencement" of the Tender Offer on the date of this Press Release and immediately
commencing the Tender Offer from the following day. However, considering that nonexpiration of the Non-acquisition Period and the Period for Measures under the Antitrust Act
on or before the day preceding the last day of the Tender Offer Period, though unlikely, could
lead to a withdrawal of the Tender Offer and this could cause confusion to related parties,
including the Target's shareholders and the Target, and could disrupt the stock market, theCompany has decided to announce today the "planned commencement" of the Tender Offer5through this Press Release.
DCM Holdings' Tender Offer
According to the Target's "Announcement of Opinion Regarding Tender Offer for theCompany's Shares by DCM Holdings Co., Ltd., and Execution of Management Integration
Agreement with DCM Holdings Co., Ltd." dated October 2, 2020 (the "Target's
Announcement Press Release"), the board of directors of the Target resolved to express an
opinion in support of DCM Holdings' Tender Offer and to recommend that the Target's
shareholders tender their shares in DCM Holdings' Tender Offer.
According to the Target's Announcement Press Release, the board of directors of the Target
has resolved to make decisions regarding DCM Holdings' Tender Offer, including approvalor disapproval thereof, in utmost respect of the judgment of the special committee composedof the independent outside directors of the Target (the "Target Special Committee"). The
board of directors of the Target has also resolved that if the Target Special Committee
determines that the implementation of DCM Holdings' Tender Offer or the terms andconditions of the transaction are not appropriate, it shall not accept DCM Holdings' Tender
Offer. In addition, according to the Target's Announcement Press Release, the Target has notentered into any agreement containing a transaction protection clause that prohibits theTarget from contacting tender offerors other than DCM Holdings (the "Competitive
Offerors"), or any other agreement that restricts contacts with Competitive Offerors. Thus,
Competitive Offerors, including the Company, are not prevented from having opportunities
to make offers. Furthermore, DCM Holdings set the tender offer period at 30 business days,
instead of 20 business days, or the shortest period required by law, thereby ensuring
opportunities for Competitive Offerors to make offers.
The Company believes that management integration between the Company and the Target
may result in synergies for both of the Company and the Target and maximization of theirrespective corporate values. The Company believes that the Tender Offer is a more attractive
proposal for the Target and the shareholders of the Target in light of the following: (i) the
Company is not aware of any fact that would materially impair or prevent the satisfaction of
the Tender Offer Conditions as of the date of this Press Release, and believes that it will beable to commence the Tender Offer in around mid-November of 2020 upon the satisfactionof the Tender Offer Conditions, (ii) the Tender Offer Price (5,500 yen per share) has been set
at a higher level than the tender offer price under DCM Holdings' Tender Offer (4,200 yen
per share) (For the process of determination of the Tender Offer Price, see "(II) Details ofvaluation" under " (4) Basis for valuation of Tender Offer Price, etc." under "2. Outline of
Tender Offer" below.), and (iii) while the Company plans to apply the money borrowed from
Mizuho Bank, Ltd. and its own funds to the settlement related to the Tender Offer, it has
obtained a loan certificate dated October 28, 2020 from Mizuho Bank, Ltd. and has alreadysecured funding for the settlement. Therefore, in view of the announcement of the board of
directors of the Target and the Target Special Committee that they are prepared to accept
competitive offers, as described above, the Company has decided to make, following theprocess therefor, a proposal for management integration between the Company and theTarget through the Tender Offer. As of the date of this Press Release, the Company has not
specifically consulted with the Target regarding the management integration, as stated in"(III) Reasons why the Company is implementing the Tender Offer" under "(2) Background6and reasons to the decision to implement the Tender Offer" under "1. Purpose of Tender
Offer" below. As such, the date and time of consultation with the Target or the date and timeof explanation to the Target's board of directors and the Target Special Committee have notbeen determined. However, the Company hopes to provide explanations to the Target's boardof directors and the Target Special Committee as soon as possible so that they will properly
understand the substance of the Company's proposal and approve the Tender Offer.
The Company is to provide explanations in good faith to the Target's board of directors andthe Target Special Committee so that they will approve the Tender Offer. However, even if
the Target's board of directors and the Target Special Committee do not approve the Tender
Offer, the Company will have no choice but to commence the Tender Offer upon thesatisfaction of the Tender Offer Conditions (or waiver by the Company of the Tender Offer
Conditions) given the manifestation of the Target's board of directors and the Target Special
Committee that they are prepared to accept competitive offers, as described above, and also
because of our belief that the pros and cons of an offer from a Competitive Offeror should
be ultimately judged by shareholders of the Target.
For the background to the publication by the Company of its plan to commence the Tender
Offer, see "(III) Reasons why the Company is implementing the Tender Offer" under "(2)Background and reasons to the decision to implement the Tender Offer" under "1. Purposeof Tender Offer" below.
1. Purpose of Tender Offer(1) Outline of the Tender Offer
The Company resolved, at its board of directors meeting held today, to launch the Tender Offer
for all of the Target Shares listed on the First Section of the Tokyo Stock Exchange (excluding
the Target Shares owned by the Company and the treasury shares owned by the Target) for the
purpose of making the Target a wholly-owned subsidiary of the Company subject to thesatisfaction of the Tender Offer Conditions (or waiver by the Company of the Tender Offer
Conditions).
As of the date of this Press Release, the Company owns 100 shares of the Target Shares(ownership ratio (Note 1): 0.00%). In the Tender Offer, the Company sets the minimum plannedpurchase quantity at 19,477,600 shares (ownership ratio: 50.00%), and if the total number ofshare certificates, etc. tendered in the Tender Offer (the "Tendered Share Certificates") falls
short of 19,477,600 shares, the Company will purchase none of the Tendered Share Certificates(Note 2). Such minimum planned purchase quantity satisfies the majority-of-minority condition(the majority of the number of the Target Shares (excluding treasury shares of the Target) heldby shareholders with no interest in the Company). Meanwhile, given that the purpose of theTender Offer is to obtain all of the Target Shares (excluding the Target Shares owned by theCompany and the treasury shares owned by the Target), the Company has not set any maximum
planned purchase quantity. The Company will purchase all of the Tendered Share Certificates,
if the total number of the Tendered Share Certificates is no less than the minimum plannedpurchase quantity (19,477,600 shares).

7

As stated in "(4) Policy regarding reorganization following completion of the Tender Offer (socalled "two-step acquisition")" below, the Company plans to follow the series of necessary
procedures to make the Company the sole shareholder of the Target upon the successful
completion of the Tender Offer.
(Note 1) "Ownership ratio" refers to the ratio (rounded to the nearest hundredth; hereinafter
the same unless otherwise provided with respect to the description of the ownership
ratio) to the number of shares (38,955,287 shares) obtained by deducting the numberof treasury shares owned by the Target as of August 31, 2020 (3,653,817 shares) fromthe total number of issued shares of the Target as of August 31, 2020 (42,609,104
shares), both as stated in the Earnings Briefing. Hereinafter the same applies. It
should be noted that the numbers of shares mentioned above are subject to change
before the commencement of the Tender Offer.
(Note 2) The minimum planned purchase quantity is calculated by deducting (X) the numberof Target Shares owned by the Company as of the date of this Press Release (100shares) from (Y) 19,477,700 shares, which is the product of (x) the majority(194,777) of the number of voting rights (389,552) pertaining to the number of shares(38,955,287 shares) obtained by deducting the number of treasury shares owned by
the Target as of August 31, 2020 (3,653,817 shares) from the total number of issued
shares of the Target as of August 31, 2020 (42,609,104 shares), both as stated in the
Earnings Briefing, multiplied by (y) 100, which is the number of shares constituting
a unit of the Target's stock.
As stated above, in the Tender Offer, the Company sets the minimum planned purchase quantity
at 19,477,600 shares (ownership ratio: 50.00%). Although the Company aims to make theTarget a wholly-owned subsidiary of the Company in the Tender Offer, the Company has
considered that (i) the minimum planned purchase quantity is set at 19,477,700 shares(ownership ratio: 50.00%) in DCM Holdings' Tender Offer (Note 3) and (ii) if the Company
sets the minimum planned purchase quantity higher than that of DCM Holdings' Tender Offer,
the Target's shareholders may assume that the Tender Offer is less likely to be consummatedcompared to DCM Holdings' Tender Offer. Therefore, the Company set the minimum plannedpurchase quantity for the Tender Offer by deducting the number of the Target Shares owned by
the Company as of the date of this Press Release (100 shares) from 19,477,700 shares which is
the minimum planned purchase quantity in DCM Holdings' Tender Offer.
Accordingly, after consummation of the Tender Offer, the number of voting rights pertaining to
the number of the Target Shares owned by the Company could fall below two-thirds of thevoting rights of the Target's total shareholders. As a result of this, it could be difficult to obtainapproval for the agenda regarding the Share Consolidation (as defined below) at theExtraordinary Shareholders' Meeting (as defined below) as stated in "(4) Policy regarding
reorganization following completion of the Tender Offer (so-called two-step acquisition)"
below. However, even if such approval is not obtained, as the Company aims to acquire all of
the Target Shares (excluding the Target Shares held by the Company and treasury shares of theTarget), the Company plans to acquire additional shares of the Target Shares until it has acquired
the number of shares equivalent to two-thirds of the voting rights pertaining to the total number
of issued shares of the Target less the number of treasury shares held by the Target. As of the8date of this Press Release, nothing has been determined with respect to the specific timing andmethod of additional acquisition of the Target Shares by the Company (For details, please see"(5) Possibility of delisting and reasons thereof" below).
The Company has obtained the loan certificate dated October 28, 2020 from Mizuho Bank, Ltd.
in order to finance the funds for settlement of the Tender Offer. The Company plans to use theborrowing from Mizuho Bank, Ltd. and its own funds for settlement of the Tender Offer.
(Note 3) According to DCM Holdings' Tender Offer Commencement Press Release, DCM
Holdings has set the minimum planned purchase quantity at 19,477,700 shares(ownership ratio: 50.00%), because it has taken into consideration the possibility ofthe existence of a certain number of passive index funds among the Target's
shareholders who refrains, as a matter of policy, from tendering their shares in
response to a tender offer regardless of the appropriateness of the transaction terms.
Specifically, DCM Holdings has received a preliminary finding from SMBC Nikko
Securities Inc. that in terms of ownership ratio, approximately 25% of the Target
Shares are held by Japanese and overseas passive index funds although SMBC Nikko
Securities Inc. was unable to make a precise assessment and stringent estimation. For
this reason, DCM Holdings recognizes that the ownership ratio of the Target's
shareholders who will decide on whether or not to respond to the tender based on theappropriateness of the transaction terms may be no more than around 75%, after
subtracting the aforesaid 25% ownership ratio of passive index funds from 100%
shareholding. Under such circumstances, if the minimum planned purchase quantityof DCM Holdings' Tender Offer is set to around two-thirds of total shareholding(ownership ratio: approximately 66.67%), DCM Holdings' Tender Offer will fail tobe consummated if among the shareholders who will be responding to the tender
based on the appropriateness of the transaction terms, those holding more than 8.33%
of the Target Shares refrain from tendering their shares. This means that even if many
shareholders respond to DCM Holdings' Tender Offer upon determining that theterms are appropriate, DCM Holdings will not be able to provide such shareholders
with a reasonable opportunity to sell their shares. Therefore, DCM Holdings has set
the minimum planned purchase quantity at 19,477,700 shares (ownership ratio:
50.00%), which is the minimum number that satisfies the majority-of-minority
condition (the majority of the number of the Target Shares (excluding treasury sharesof the Target) held by shareholders with no interest in DCM Holdings). The Company
has not verified the ownership ratio of passive index funds described above. As ofthe date of this Press Release, as the Company holds 100 shares (ownership ratio:
0.00%) of the Target Shares, the minimum planned purchase quantity of the Tender
Offer (19,477,600 shares) satisfies the majority-of-minority condition (the majorityof the number of the Target Shares (excluding treasury shares of the Target) held byshareholders with no interest in the Company). According to DCM Holdings' Tender
Offer Commencement Press Release, a passive index fund is "a fund that aims tomatch its investment performance with a benchmark index to provide returns similar
to that of stock or other investment asset market." The Company uses the term as
having the same meaning.

9(2) Background and reasons to the decision to implement the Tender Offer(I) Outline of Tender Offeror
The Company was established in March 1972 as Nitori Furniture Wholesale Center Co., Ltd.
in order to sell furniture. Then, the Company changed its trade name to Nitori Furniture Co.,
Ltd. (in June 1978) and Nitori Co., Ltd. (in July 1986), and its common shares became listedon the Sapporo Securities Exchange (the "Sapporo Securities Exchange") in September 1989
and the First Section of the Tokyo Stock Exchange in October 2002.
Then, the Company changed its trade name to Nitori Holdings Co., Ltd., the current trade name,in August 2010 as it switched to a holding company system. As of the date of this Press Release,
the Company's shares are listed on the First Section of the Tokyo Stock Exchange and the
Sapporo Securities Exchange.
The Company Group (collectively referring to 27 companies consisting of the Company and its
25 consolidated subsidiaries and 1 equity method affiliate; the same applies hereinafter)
primarily conducts the following businesses focused on the sale of furniture and interior goods.
 Sale of large furniture and household products;
 Renovation services for home; Corporate services which make a proposal for offices and facilities;
 "Nitori Net" online shopping site for furniture and interior; and "N+" business which suggests total coordinates for female clothing.
The Company Group has a mission statement, "To provide the foundation of prosperous homeliving to the global community" and this vision is shared by each employee as the cornerstoneof how they behave. The Company Group makes it a corporate activity policy to devote all of
its energy to achieve its long-term vision statement. Accordingly, it is the Company Group's
basic principle to improve its strength of "Manufacturing, Logistics, IT and Retail Sales"business model by which the Company Group conducts product planning, manufacturing,logistics and sales by itself, and through the establishment of the global chain, provide highquality products at an affordable price and suggest the enjoyment of perfect coordination ofliving environment to more customers in the world.
In order to achieve the mission statement described above, the Company Group has devised the
management strategy to achieve the mid-long term vision to "hold 1,000 stores by 2022 andhold 3,000 stores by 2032." In order to achieve the mid-long term vision, the Company Groupwill provide products and services that respond to the demographic changes or changes in living
needs and technological progress as well as seek to expand business areas in Japan while it will
vigorously expand the mechanism, system and know-how of human resource development
cultivated in Japan globally.
In order to achieve the mid-long term vision, the Company Group has set the priority policies:(i) "Establish the path for the group's growth and take on new challenges," (ii) "Offer products,
stores and services for prosperous living" and (iii) "Reform the organization and structure that
supports the global chain." Specifically, with respect to (i) "Establish the path for the group's
10

growth and take on new challenges," while the Company Group aims at sustainable growth ofsale of furniture and interior goods in Japan operated by our subsidiary Nitori Co., Ltd.
maintaining its innovation, it tries to develop new sources of revenue such as businessdevelopment abroad with a central focus on China, enhancement of business format for small
trade areas, expansion of B2B business and aggressive entry into a new market. With respect to(ii) "Offer products, stores and services for prosperous living," the Company Group strives toaccurately understand the technological innovation in society and changes in consumers' buying
behavior, and review the products, stores and services thoroughly from the perspective ofcustomers to continuously provide new value. With respect to (iii) "Reform the organizationand structure that supports the global chain," in order to realize the changes above, the Company
Group is renovating the core system, rebuilding the supply chain, transforming to theorganization that deals with cross-sectional and technical issues and developing humanresources. The number of stores of the Company Group as a whole is 607 stores consisting of
541 domestic stores and 66 overseas stores mainly in Asia as of the end of the period ended in
February 2020.
(II) Target's businessAccording to the disclosed information such as the annual securities report for the 60th period
filed by the Target on November 29, 2019 (the "Target Annual Securities Report"), "Shimamura
Cabinet Factory" was founded by Chutaro Shimamura in Kasukabe City, Saitama Prefecture in
1890. Then, in November 1969, the Target changed its structure to kabushiki kaisha and wasestablished under the trade name of Shimachu Furniture Co., Ltd. In April 1978, the Target
expanded into the home improvement retail industry as part of the housing-related industry, andin May 1979, conducted the absorption-type merger by which Kabushiki Kaisha Kobunsha(established in March 1947) became the pro forma surviving company, and changed its tradename to Shimachu Co., Ltd. In November of the same year, the Target went public on the Tokyo
over-the-counter market, listed on the Second Section of the Tokyo Stock Exchange in February
1982, and was designated on the First Section of the Tokyo Stock Exchange in February 1991.
According to the disclosed information such as the Target Annual Securities Report, under thebusiness philosophy of aiming at building stores that are full of satisfaction, surprise and smile
to give customers a "special everyday", the Target has established the basic policy of satisfying
customers' needs concerning their homes and lifestyles and providing "customer satisfaction."
In order to conduct business that places importance on the benefits of shareholders while
maintaining high profitability and financial soundness, the Target manages its business aiming
to improve ROE and dividend payout ratio. Furthermore, while the conventional store layoutof the Target was that home center goods were sold at the first floor and furniture and interior
goods were sold at the second floor, as a medium-term management strategy, the Target has
been expanding into new businesses by joining a franchise and proactively installing tenants toconform with the needs of the local community in order to increase profitability and build storesthat meet the needs of customers. While business environment surrounding retail business is
expected to continue to be severe due to contraction of market size as a result of a declining
population, intensifying domestic market share competition as a result of expanding ecommerce market, chronic labor shortage and cost increases throughout the supply chain, theTarget has identified the following key issues regarding store operation to improve operating
profit.
11

(i)


(ii)




Store development
Renovate existing stores and proactively increase floor space
Reduce the number of old-format stores and proactively open Shop in Shop locations
Business format development
Proactive development of sales spaces that propose new lifestyles
Improve the ability to attract more customers by bringing in new tenants andfranchises
Develop an e-commerce system for interior products

Furthermore, in the "2021 Medium-Term Management Plan", which has a planning period of
three years from the period ended in August 2019 through the period ending in August 2021,
the Target set the achievement of ROE 5% as a target for the period ending in August 2021, andpresented various measures for the target.
Such measures include, as a cost structural reform, improvement of gross margin byimplementing predicative ordering system and aggregating the frequency of product delivery,
and reduction of selling, general and administrative expenses by revolutionized logistics andlabor-saving initiatives.
According to the Earnings Briefing, the number of stores of the Target is 60 stores as of the endof August 2020.
(III) Reasons why the Company is implementing the Tender Offer
Since 2017, the Company has been considering new entry into the home improvement retailindustry through M&A, without limiting a target company, as a concrete measure for growth.
As a part of such consideration, the Company highly values the business of the Target, a leadingbusiness operator in the home improvement retail industry. Also, since 2017, the Company has
been considering that there is high degree of compatibility between the Company which
conducts businesses focused on the sale of furniture and interior goods and the Target which
expanded its business from the sale of furniture to the home improvement retail business, andhas considered capital and business alliance or management integration with the Target as one
option. However, since the Company did not know whether the Target intended to execute
capital and business alliance or management integration with another company, the Company
had not made a further concrete consideration.
Meanwhile, with the spread of COVID-19, customers' awareness toward "living" and theirlifestyles have changed, and needs for "prosperous living" obviously increased. Since April
2020, the Company came to think that the Company is able to make customers' lives more
prosperous by providing wider range of products through entry into home improvement retailbusiness by means of M&A that provides the Company with extensive knowledge and knowhow of another company in the home improvement retail industry, in addition to the sale offurniture and interior goods the Company Group has been conducting. In other words, theCompany recognized that the entry into home improvement retail business is a mission and an
urgent issue for the Company Group which aims to achieve a mission statement of "To provide
the foundation of prosperous home living to the global community." Then, on September 18,
2020, the Company learnt from press reports and the Target's published materials that the Target12

is considering to become a subsidiary of DCM Holdings through DCM Holdings' Tender Offer.
After the press reports described above, the Company decided to concretely consider
management integration with the Target. In late September, 2020, the Company appointed
Daiwa Securities Co., Ltd. (the "Daiwa Securities") as a financial advisor and third-party
valuation organization, and Anderson Mori & Tomotsune as a legal advisor, respectively as
outside advisors independent from the Company, the Target and DCM Holdings, andestablished a consideration process and system for the management integration between the
Company and the Target through the Tender Offer and commenced concrete consideration.
In light of the basic policy, key issues and various initiatives of the Target described in "(II)Target's business" above, the Company believes that participation of the Target in the Company
Group not only (i) enables the Company to enter into the home improvement retail industry, butalso (ii) enables the Target to utilize the experience and strength of the Company Group as arange of measures of the Target including opening of Shop in Shop locations, development of
new business format, development of sales spaces that propose new lifestyles, development ofan e-commerce system and cost reduction through development of logistics are similar to theCompany Group's initiatives it has taken based on its "Manufacturing, Logistics, IT and Retail
Sales" business model, and greatly contribute to the expansion and growth of both companies
and possibly maximize the corporate value of both companies.
In other words, the Company considers that firm alliance between the Company and the Target
which is realized by making the Target a wholly-owned subsidiary of the Company through theTender Offer creates synergy as described below and enables the Company to provide
comprehensive services regarding living to customers by expanding the product lineup such ashome center goods and general goods in addition to furniture and interior goods and conductbusinesses that respond to a variety of lifestyles of customers. In particular, based on themechanism to realize "Offering the Unexpected" that the Company has developed from its
establishment, the Company procures raw materials directly from manufacturers, not fromwholesales, manufactures products in-house to reduce cost and conduct storage, import,
logistics and building of systems in-house, and evolves its "Manufacturing, Logistics, IT and
Retail Sales" business model to reduce every cost, which enables the Company to provide better
products at low prices to customers. Thus, the Company thinks that alliance with the Target will
enable the Company to offer the "Unexpected" in its products in wider areas. The Company has
considered a business alliance between the Company Group and the Target without capital ties
as one option. However, such a business alliance without capital ties or partial equity
participation in the Target will not necessarily facilitate distribution of management resources
to mid-long term business strategy or prompt decision-making while protecting benefits ofshareholders as the Target gives consideration to the benefits of its general shareholders andtakes into account short-term effects on the stock price. Therefore, the Company thinks that itis necessary for the Company to make the Target a wholly-owned subsidiary of the Company
in order to promptly and fully realize synergy as described below for the Company and theTarget. As stated in "(5) Possibility of delisting and reasons thereof" below, if the Company
makes the Target a wholly-owned subsidiary of the Company, the Target Shares will be delisted.
However, the Company expects no disadvantage as a result of such delisting.
Concrete descriptions of synergy and measures to realize synergy are as follows.
13

The Company believes that it will be difficult for it to quantify the effect of the synergies to berealized by DCM Holdings, stated in the DCM Holdings' Tender Offer Commencement Press
Release, in monetary terms. Therefore, this Press Release neither discusses nor analyzes thesuperiority of the synergies that the Company believes will be generated, as stated below, incomparison with the synergies described by DCM Holdings in DCM Holdings' Tender Offer
Commencement Press Release.
(1) Expanding sales opportunities for high-quality furniture and contributing torealization of enriched lifestyles for a wider range of customers by the expansion of
Target’s stores nationwide
The Target has been selling furniture for 130 years, since its establishment as"Shimamura Cabinet Factory" in 1890. The Company believes that the Target’s
furniture, carefully selected utilizing its strong relationship with leading furniture
manufacturers over a long period of time, are set at a higher price range than those of
the Company’s, and have received strong and enduring support from many customers.
The Company recognizes that the Target’s furniture is differentiated from theCompany’s (which are mainly private brand (PB) furniture) in terms of the price range
and customer preference.
The Company believes that more customers will have the opportunity to purchase theTarget’s furniture if they are sold in a wider area and is planning to expand theopportunity to purchase the Target’s furniture. The Target mainly has opened storesin the Tokyo metropolitan area and the Kansai region; upon opening new stores in
new areas where it has not previously done so, the Company's store development
capabilities may be utilized. In addition, the Company believes that its e-commerce
and furniture distribution networks will make it possible to efficiently build a system
for the delivery of the Target’s furniture to customers nationwide.
The Company believes that the nationwide deployment of Target’s products withprices that are different from those of the Company’s will contribute to the realizationof even more enriched lifestyles for customers through the provision of a wider range
of options to meet their various needs as the Company Group, including the Target
after integration.
(2) Expansion of sales by mutual supplementation between the Target's home center (HC)products with the Company’s home fashion (HFa) products, and improvement of
profit margin by the sharing of know-how on the development of private brand (PB)
products
In addition to the sale of furniture, the Target, as a home improvement retail business,
also sells DIY, outdoor, gardening, and pet supplies that allow the enrichment ofcustomer’s lifestyles. On the other hand, the Company has expanded its range to
products such as curtains, rugs, bedding, dining and kitchenware, and small
appliances, which enrich the daily lives of even more customers, in addition to
furniture, sold from the time of the Company’s establishment. The Company believes
that the complementary products of both companies will make it possible to meetcustomers' needs for both exterior and interior living environments, contributing to
the increase in revenue of both companies’ preexisting stores.
In addition, according to the information disclosed by the Target in its "2021 Mediumterm Management Plan," as part of its efforts to improve gross profit margins, the14Target has initiated the development of its private brand products, already launchingsome of such products. As a result of the Company Group's intensified focus in thedevelopment of private brand products from 1979, approximately 90% of the products
sold by the Company Group are now PB products. The Company Group has
established an independent standard of quality for the quality management of its PB
products, aiming for the securement of quality. In the field of manufacturing, theCompany received the Minister of Economy, Trade and Industry Award at thecommendation for excellent companies in product safety measures in 2016 and 2018
respectively for the establishment of its quality management system, including the
conduct of thorough guidance and inspections not only at the Company’s own
furniture plant in Vietnam and curtain plant in Thailand, but also of the local
manufacturing contractors. Such continuous and daily efforts to improve and reform
quality has made it possible to provide high-quality products at low prices, and also
serves as the source of the Company’s growth potential. By having the Target utilize
the Company's PB product development know-how, it will become possible to further
accelerate the Target's PB product development efforts. The Company also believes
that by using its PB products as a base for some of the products that both companies
have in common, the Target will be able to develop PB products efficiently in a shortperiod of time.
In addition, with regard to the expansion of its product lineup, the Company’s firmlyrooted corporate culture is such that each and every employee constantly searches for
products fulfilling the customer’s wishes and pursues the development of customeroriented products, as demonstrated by the product development competition called“wished-for products” hosted by the Company, in which all employees are mandated
to participate.
The combination of the Company's product development capabilities and the productdevelopment know-how of the Target in the field of home improvement retails will
make possible the creation of even more novel and attractive PB products by bothcompanies, which will exceed the expectations of the customers of both companies.
(3) Reduction of costs and improvement of asset efficiency through joint use of logistics
functions
The Company Group holds three logistics bases respectively in China (Taicang),
Taiwan (Taoyuan), and Vietnam (Ho Chi Minh), as well as owning two overseas
subsidiaries, to improve the efficiency of product transportation related to
procurement from its own plants and overseas manufacturing contractors. The
subsidiaries are in charge of the import business and hold offices in China (Shanghai
and Shenzhen), Thailand, Vietnam, Malaysia, Indonesia, India, and Bangladesh, andpromote measures to enhance their transportation capabilities, such as conducting
around 25% of the customs clearance operations by themselves. These products aretransported by trunk line to the Company’s 11 distribution centers located throughout
Japan. Depending on the customer's method of order placement and product category,the distribution center delivers (1) large furniture requiring assembly and installation
to end users from one of the 78 distribution centers nationwide where salespersons
with specialized skills for customer delivery are located, (2) other interior goods fromstores nationwide to end users, and (3) products via e-commerce to end users through11 delivery centers located within the country. The Company Group manages and15

operates all such logistics on its own in order to achieve both cost efficiency and speed.
In addition, the Company is intending to continue to establish, expand, and reorganize
its domestic distribution centers and review the delivery method of its product to thestores, as well as the frequency of such deliveries, aiming to further advance its
distribution network.
The Company believes that with the addition of the Target's existing store networkand logistics base to the abovementioned distribution network possessed by theCompany Group, it will be able to build a more efficient logistics network, and thatby combining the two companies’ volume of goods, the companies could benefit fromthe economy of scale (reduction in costs due to increased production and sales
volume). The Company believes that through this, both companies' logistics costs be
reduced, and more frequent product transfers will become possible. The Company
also believes that as a result of this, it will be able to further improve the customers’satisfaction with the Company Group, including the Target after integration by
reducing the lead time required to deliver products to customers and improving
delivery costs.
In particular the Company believes that its nationwide last mile furniture distribution
network (i.e. the distribution network which transports products from the Company
Group's stores or distribution bases to end users. The same applies hereinafter) willcontribute to improving the efficiency of the transportation of the Target’s furniture,
expanding the customer base and further increasing customer satisfaction, at an earlystage.
(4) Acceleration of cost reduction and improvement by the provision of function andknow-how pertaining to the various supply chains possessed by the Company Groupin its capacity as a “Manufacturing, Logistics, IT and Retail Sales” business.
As described in "(I) Outline of Tender Offeror" above, the Company Group has
established its own supply chain covering product planning, manufacture, distribution,and sales. The Company Group’s aim with regard to its daily operations is to further
enhance its vertically-integrated supply chain. By being constantly mindful of theentire supply chain when considering matters, and utilizing the know-how
accumulated in each individual part of the supply chain across the entire system, theCompany Group has established a business model that enables it to overcome theconstraints of each process, continuously improving and reforming at every stage,
from planning to sales, and up until the final delivery to customers.
By firmly linking the Target to this business model, and sharing this business modelwith it, such as with the improvement of profitability by the Target’s utilization of theCompany’s overseas suppliers, cost reduction by joint procurement of furniture andfixtures used at stores, realization of cost-effective advertisement and promotional
activities by the engagement of the Company’s advertising agency company (Nitori
Public Co., Ltd., the Company’s consolidated subsidiary), the Company Group
believes that it will be able to contribute not only to drastic cost reduction at the Target,
but also to further improvements in operational efficiency.
(5) Pursuit of synergy with the Nitori Mall and Deco Home businesses
With regard to the development of the Target's business, various measures meetingthe demand of customers at each store will be taken, including the introduction of a16

varied range of tenants and the development of franchising businesses, in order tocreate attractive stores for more customers to visit.
The Target also plans to actively expand its stores in densely populated areas. The
Company Group has, through the development of the Nitori Mall business, which
operates shopping malls, and the Deco Home business, a small-scale home fashion
stores business with a goal of creating stores where customer can drop by every day,with a variety of popular basic items mainly for daily necessities, attracted a variety
of tenants and developed alternative operational styles suitable for densely populatedareas. By sharing this know-how and the relationships built between potential tenantcompanies with the Target, the Company believes that it will be able to improve thespeed of the Target's business development.
(6) Mutual opening of Shop in Shop stores in the Tokyo metropolitan area and other urban
areas, and strategic opening of stores in wider areas
The Target’s understanding is that in light of the demographic trends in Japan, making
efforts towards opening new stores in the Tokyo metropolitan area and other urban
areas is a key issue. The Company has been one of the first in the home improvement
retail and furniture sectors to promote the opening of stores in urban areas, beginningwith the opening of a store in Printemps Ginza (currently known as Marronnier Gate
Ginza 2) in 2015. The establishment of its business model of “Manufacturing,
Logistics, IT and Retail Sales” is one of the reasons why the Company has been able
to generate profits despite the level of rent in urban areas. By making use of theCompany's business infrastructure, the Company believes that the Target will be able
to open stores in various forms that are not tied to its own properties. In addition, theCompany believes that the Target will be able to open stores in a wider range of areas,
not only in the Tokyo metropolitan area or other urban areas but also in various regions
throughout Japan, as a brand that provides high-quality furniture within a price range
different to that of the Company’s. It is the Company’s belief that through this, theTarget will be able to realize further growth even in the shrinking domestic market.
(7) Bolstering of e-commerce sales structure
The Target is currently selling furniture and interior products through e-commerce.
With a focus on its own Nitori Net, the Company also participates in Internet shoppingsites operated by third parties. By adding products that are available exclusively
online to the selection of products that are also offered at physical stores, the Company
sells a wider range of products in e-commerce than at its offline stores. As a result of
this, sales from e-commerce at the Company Group has been 44.3 billion yen in thefiscal year ending February 2020 (with a projection of 71 billion yen for the fiscal
year ending February 2021). The total number of members, including Nitori Card
members, app members and Nitori Net members, is around 40 million. In recent years,
the Company has been actively promoting transfer to and new subscriptions for theapp membership program, and is currently aiming to increase the number of suchmembers from about 7.8 million (as of today) to 9 million by the end of February
2021.The Company is striving to improve its IT system, so that it may provide eachand every app member with products and information that meet their individualinterests in a timely manner. On the other hand, in the wake of the recent COVID-19
pandemic, the Company is improving its overall logistics system to meet the surge in17

e-commerce demand, which has expanded at a faster pace than expected. The
Company believes that sharing its enhanced e-commerce foundations will further
strengthen the Target’s e-commerce operations framework. In particular, with regard
to furniture, by utilizing the Company’s nationwide furniture distribution network, it
will become possible to provide customers all over Japan with services for assembly
and installation, which are necessities specific to furniture, as well as the collectionof used furniture, at prices lower than the costs currently paid by the customers to theTarget. In addition, with the mutual complementation between the Target’s home
center products and the Company’s home fashion products and the development ofnovel and attractive PB products utilizing the product development know-how sharedby both companies, the Company believes that the Company Group as a whole,including the Target after the integration, will be able to introduce a wider range of
products to customers at lower prices through e-commerce channels.
(8) Acquisition of mutual and new customers through the adoption of a shared reward
points system
As mentioned above, the Company has developed its Nitori Card, app, and Nitori Net
online membership systems, and a total of approximately 40 million people havebecome members so far. The Company has also adopted a unique points reward
system, which gives customers the opportunity to purchase products at discounted
prices, and has been well received. The Company believes that the introduction ofshared reward points will lead to the introduction of both companies’ products tocustomers of both, at more reasonable prices.
(9) Sale of the Target's products in overseas stores and realization of future overseas store
openings
The Company opened its first overseas store in Taiwan in 2007, and has sincecontinued its expansion into overseas markets. As of the end of the fiscal year ended
February 2020, the Company had 66 overseas stores, mainly in Asia especially. The
key to success in overseas business development is understanding the needs of local
customers and developing a business infrastructure fulfilling such demand. The
Company believes that as the domestic market shrinks, the Target will be able toutilize the Company Group’s overseas development know-how to strive towards
medium to long-term growth overseas.
In light of the considerations as described above, the Company acquired the opportunity to havea meeting with Target on September 28, 2020, in order to first propose an extensive businessalliance between the two companies (including in production and sales), while also floating thepossibility of making the Target a wholly-owned subsidiary of the Company as one of theoptions. During this meeting, the Company informed the Target that a business alliance between
the Company Group and the Target would be beneficial for both companies through theeconomy of scale (the reduction of cost due to the increase in the amount of production andsale), but the proposal did not progress to more specific negotiations. At this point, there had
been news reports regarding the Target becoming a of DCM Holdings, but as both parties had
made announcements stating that such alliance was not determined, the Company did not
discuss anything specific in relation to the management integration of the Company and theTarget (including the possibility of making the Target a wholly-owned subsidiary of the18Company), and only suggested the possibility of a business alliance, as state above. Around thetime, the Company learned from the Target's Announcement Press Release, that the Target’s
board of directors resolved to express an opinion in support of DCM Holdings' Tender Offer
and to recommend that the Target's shareholders tender their shares in DCM Holdings' Tender
Offer on October 2, 2020.
The Company has learned from the Target’s Announcement Press Release that DCM
Holdings made a detailed proposal for the management integration to the Target, that DCM
Holdings would commence DCM Holdings' Tender Offer as a means of management
integration through making the Target a wholly-owned subsidiary of DCM Holdings and thatthe tender offer period of DCM Holdings' Tender Offer would end on November 16, 2020. In
addition, in the Target’s Announcement Press Release, it is stated that the Target hascommenced setting up a structure independent from DCM Holdings, the Target and DCM
Holdings' Tender Offer, to examine and determine the pros and cons for DCM Holdings' Tender
Offer, the appropriateness of its transaction terms and fairness of the procedures. Specifically,
the Target has established the Target Special Committee comprised of independent outside
directors of the Target and consulted with such committee regarding I and II below.
I. (a) To consider and determine the appropriateness of a series of transactions, including
DCM Holdings' Tender Offer (the "DCM Holdings Transactions") from the perspectiveof whether or not they will contribute to the enhancement of the Target’s corporate valueand (b) to consider whether or not the Target’s board of directors should express its
support of DCM Holdings' Tender offer and whether or not to recommend that theshareholders of the Target tender their shares in DCM Holdings' Tender Offer, and to
make a recommendation to the Target’s board of directors, in examination anddetermination of the appropriateness of the terms and conditions of the DCM Holdings
Transactions and the fairness of the procedures, from the perspective of promoting theinterests of the general shareholders of the Target.
II. To consider whether the following decisions on the DCM Holdings Transactions,
including DCM Holdings' Tender Offer, to be made by the Target’s board of directors, is
not disadvantageous to the general shareholders of the Target, and to state its opinion to
the Target’s board of directors: (i) a decision to express its opinion in support of DCM
Holdings' Tender Offer and recommend that the Target’s shareholders tender their sharesin DCM Holdings' Tender Offer, and (ii) a decision on the procedures for making theTarget a wholly-owned subsidiary through a demand for sale of shares or a shareconsolidation, etc., to be conducted after DCM Holdings' Tender Offer as part of the
DCM Holdings Transactions.
In addition, the Company has learned from the Target’s Announcement Press Release that
the Target’s board of directors had resolved that decisions regarding DCM Holdings' Tender
Offer, including approval or disapproval of the Tender Offer, shall be made by the Target’s
board of directors, in utmost respect of the judgment of the Target Special Committee, and that
if the Target Special Committee determines that the implementation of DCM Holdings' Tender
Offer or the terms and conditions of the transactions are not appropriate, the Target’s board of
directors shall not express its support of DCM Holdings' Tender Offer. Furthermore, theCompany has learned from the Target’s Announcement Press Release that the Target has notentered into any agreement which includes a transaction protection clause that may prohibit the19Target from contacting Competitive Offerors or any other agreement that may restrict any
Competitive Offerors’ contact with the Target, and thus Target has ensured not to prevent
opportunities for any Competitive Offerors including the Company to make proposals, and that
DCM Holdings has ensured an opportunity to receive offers from Competitive Offerors bysetting the tender offer period at 30 business days, not the legally stipulated minimum durationof 20 business days.
The Company believes that it is possible for both the Company and the Target to realize
synergy effects through management integration of the Company and the Target. And then,since the Target’s board of directors and the Target Special Committee have expressed their
willingness to accept competitive offers as stated above, the Company has come to theconclusion that the management integration of the Company and the Target can be realized bymaking a formal offer in accordance with such procedure and providing a sincere explanation
to the Target’s board of directors and the Target Special Committee.
Therefore, the Company has made preparations for the publication of this Press Release since
October 2, 2020, in order to make concrete proposals to the Target for the management
integration. In DCM Holdings' Tender Offer Commencement Press Release, the tender offer
period of DCM Holdings' Tender Offer is stated as the period starting from October 5, 2020
(Monday) and ending on November 16, 2020 (Monday). In order to avoid a situation where
DCM Holdings' Tender Offer is completed before the commencement of the Tender Offer, theCompany has decided to announce the planned commencement of the Tender Offer on the dateof this Press Release. As of the date of this Press Release, in consideration of procedures
required under the Antitrust Act and the progress in such procedures, the Company aims to start
the Tender Offer in around mid-November of 2020. This Press Release is an announcement of
the "planned commencement" of the Tender Offer, not of the "commencement", because theCompany has determined after careful consideration in light of procedures required under the
Antitrust Act and the progress in such procedures that it is premature to decide that the abovementioned Condition (I) of the Tender Offer Condition has been satisfied. Although theCompany had considered making an announcement of the "commencement" of the Tender
Offer as of the date of this Press Release and immediately commencing the Tender Offer fromthe following day under such situation, it has decided to announce the "plannedcommencement" in this Press Release as of the date of this Press Release, since if the NonAcquisition Period and the Period for Measures under the Antitrust Act have not expired by thedate preceding the last day of the Tender Offer Period, though unlikely, the Company would
have to withdraw the Tender Offer, which would cause confusion to related parties, including
the Target’s shareholders and the Target and could disrupt the stock market. Furthermore, theCompany believes that it is important to ensure the transparency and fairness of the proceduresof the Tender Offer for shareholders of the Target given that DCM Holdings' Tender Offer isongoing. Thus, the Company has not held any discussion with the Target since the meeting
between the Company and the Target held in September 28, 2020.
The Company believes that the management integration of the Company and the Target canrealize synergy effects and possibly maximize the corporate value of both companies. The
Company believes that the Tender Offer is a more attractive proposal for the Target and theshareholders of the Target in light of the following: (i) the Company is not aware of any factthat would materially impair or prevent the satisfaction of the Tender Offer Conditions as of thedate of this Press Release, and believes that it will be able to commence the Tender Offer inaround mid-November of 2020 upon the satisfaction of the Tender Offer Conditions, (ii) the
Tender Offer Price (5,500 yen per share) has been set at a higher level than the tender offer
20

price under DCM Holdings' Tender Offer (4,200 yen per share) (For the process ofdetermination of the Tender Offer Price, see "(II) Details of valuation" under "(4) Basis forvaluation of Tender Offer Price, etc." under "2. Outline of Tender Offer" below.), and (iii) while
the Company plans to apply the money borrowed from Mizuho Bank, Ltd. and its own funds
to the settlement related to the Tender Offer, it has obtained a loan certificate dated October 28,
2020 from Mizuho Bank, Ltd. and has already secured funding for the settlement. Therefore, inview of the announcement of the board of directors of the Target and the Target Special
Committee that they are prepared to accept competitive offers, as described above, theCompany has decided to make, following the process therefor, a proposal for management
integration between the Company and the Target through the Tender Offer. As of the date ofthis Press Release, the Company has not specifically consulted with the Target regarding themanagement integration, as stated above. As such, the date and time of consultation with theTarget or the date and time of explanation to the Target's board of directors and the Target
Special Committee have not been determined. However, the Company hopes to provide
explanations to the Target's board of directors and the Target Special Committee as soon as
possible so that they will properly understand the substance of the Company's proposal andapprove the Tender Offer.
The Company is to provide explanations in good faith to the Target's board of directors andthe Target Special Committee so that they will approve the Tender Offer. However, even if theTarget's board of directors and the Target Special Committee do not approve the Tender Offer,
the Company will have no choice but to commence the Tender Offer upon the satisfaction of
the Tender Offer Conditions (or waiver by the Company of the Tender Offer Conditions) given
the manifestation of the Target's board of directors and the Target Special Committee that they
are prepared to accept competitive offers, as described above, and also because of our belief
that the pros and cons of an offer from a Competitive Offeror should be ultimately judged byshareholders of the Target.
(3) Management policy after the Tender Offer
The Company believes that the Company and the Target will be able to contribute to the further
development of the business of the Company and the Target and maximization of the corporate
value of both companies by fully utilizing advantages of both companies such as businesscharacteristics, product appeal and development capabilities even after the Tender Offer as wellas pursuing and realizing potential synergy effects in their respective business area throughcollaboration with each other. Although the Company is considering, as a possible option,
dispatching directors from the Company after the Tender Offer is completed, as for specificmanagement policy and structure, the Company intends to make decisions on such matters after
discussions with the Target from the date of this Press Release onward with a perspective offurther improving the corporate value of both companies and no matters have yet been finalized
at this point. Since the Company wishes to discuss with the Target and decide on specific detailsof the management policy and structure after the completion of the Tender Offer and at the
moment, it has no specific plan to change the company name or the brand name of the Target,change or reform the current management structure and the employment and terms thereof of
the Target.
Since the Company has made analysis and preparation of materials until the date of this Press
Release in order to obtain a support of the Tender Offer from the Target’s board of directors and21the Target Special Committee, it has not made a specific plan of the management policy andstructure for the case where the Tender Offer is completed without obtaining such support.
(4) Post-Tender Offer reorganization policy (so-called Two-step acquisition)
As stated in "(1) Overview of Tender Offer" above, the Company’s plan is to make the Target
a wholly-owned subsidiary of the Company. Thus, when the Tender Offer is completed but theCompany fails to acquire all of the Target Shares (excluding Target Shares owned by theCompany and treasury shares owned by the Target) through the Tender Offer, after the Tender
Offer is completed, the Company intends to implement procedures for acquiring all of theTarget Shares (excluding Target Shares owned by the Company and treasury shares owned by
the Target) in the following manner.
(A) Demand for sale of shares
Upon completion of the Tender Offer, if the Company acquires 90% or more of the total voting
rights owned by all shareholders of the Target and the Company becomes a Special Controlling
Shareholder as prescribed in Article 179, Paragraph 1 of the Companies Act (Act No. 86 of2005, as amended; hereinafter the same applies), the Company, in accordance with theprovisions of Part II, Chapter 2, Section 4-2 of the Companies Act, intends to request the saleof all of the Target Shares owned by all shareholders of the Target (excluding the Company and
the Target) promptly after the completion of the settlement of the Tender Offer (the "Demandfor Sale of Shares"). With respect to the Demand for Sale of Shares, the Company plans toprovide the shareholders of the Target (excluding the Company and the Target) with a cash
amount equivalent to the Tender Offer Price in consideration for each Target Share. In such
event, the Company will provide the Target with notice to such effect and seek approval fromthe Target for the Demand for Sale of Shares. If the Target approves of the Demand for Sale ofShares with a resolution of its board of directors, the Company will acquire all Target Shares
owned by all shareholders of the Target (excluding the Company and the Target) as of theacquisition date designated in the Demand for Sale of Shares, in accordance with the proceduresprescribed by the relevant laws and regulations, and without need for individual approval fromthe Target’s shareholders. As consideration for each Target Share owned by such shareholder,
the Company intends to provide each of such shareholders a cash amount equivalent to theTender Offer Price.
As a provision under the Companies Act for the purpose of protecting the rights of minority
shareholders in relation to the Demand for Sale of Shares, it is provided that any shareholder of
the Target who did not tender in the Tender Offer may file a petition to a court for adetermination of the purchase price of the Target Shares they own in accordance with Article
179-8 of the Companies Act and the provisions of other relevant laws and regulations.
(B) Share consolidationIf, following the completion of the Tender Offer, the total number of the voting rights in theTarget held by the Company is two-thirds or higher and also less than 90% of all of the voting
rights of the Target, the Company will request the Target to hold an extraordinary general22meeting of shareholders of which proposals includes a consolidation of Target Shares inaccordance with Article 180 of the Companies Act (the "Share Consolidation") and a change to
the Target’s articles of incorporation that will abolish provisions on share unit numbers (the"Extraordinary Shareholders’ Meeting").
On the other hand, even in the case where the Company holds less than two-thirds of the total
voting rights in the Target after the completion of the Tender Offer, taking into account theexistence of shareholders of the Target Shares, such as passive index funds, who hold the Target
Shares with policies of not tendering in tender offers regardless of the appropriateness of theterms of the transactions, the Company recognizes from DCM Holdings' Tender Offer
Commencement Press Release that there may be some shareholders who did not tender in theTender Offer but are in favor of each of the above-mentioned proposals regarding the Share
Consolidation and the change to the Target’s articles of incorporation that will abolishprovisions on share unit numbers, and therefore, plans to make these requests in order toconfirm the intentions of those shareholders who did not tender in the Tender Offer (TheCompany has not independently confirmed the ownership ratio of passive index funds of theTarget). Passive index fund herein means, as it is defined in DCM Holdings' Tender Offer
Commencement Press Release, "a fund that aims to match its investment performance with abenchmark index to provide returns similar to that of stock or other investment asset market".
Regarding the timing and other details of the Extraordinary Shareholders’ Meeting, theCompany will request the Target to promptly disclose such information upon determination
thereof after consultation between the Company and the Target. The Company intends tosincerely provide explanation on the Extraordinary Shareholders’ Meeting to the Target in orderto obtain their cooperation, but even if the Target does not cooperate to hold such meeting, theCompany will conduct procedures required for holding the Extraordinary Shareholders’Meeting as a shareholder as promptly as possible. The Company is going to agree with each of
the above-mentioned proposals at the Extraordinary Shareholders’ Meeting.
If the Share Consolidation is approved at the Extraordinary Shareholders’ Meeting, the Target’s
shareholders will each, as of the date on which the Share Consolidation is to take effect, retain
a number of Target Shares corresponding to the Share Consolidation ratio approved at theExtraordinary Shareholders’ Meeting. If the Share Consolidation results in fractional sharesthat constitute less than one full share, the sum total of such fractional shares (if the total of
fractional shares is less than one full share, the fractional shares will be discarded; the same
shall apply hereinafter) will be sold to the Target or the Company in accordance with the termsof Article 235 of the Companies Act and the provisions of other relevant laws and regulations,and the owners of such fractional shares will be provided with cash in exchange. With respect
to the sale price of the total number of fractional shares of the Target, the Company will request
the Target to file a petition to a court for permission for voluntary sale, after ensuring that as aresult of such sale of fractional shares, the cash amount to be provided to shareholders of theTarget who did not tender their shares in the Tender Offer (excluding the Company and theTarget) will be the same as the amount obtained when the number of Target Shares owned bysuch shareholders is multiplied by the Tender Offer Price.
Furthermore, although the consolidation ratio of the Share Consolidation is still undetermined
as of the date of this Press Release, the Company will request the Target to ensure that the23

decided-upon ratio will result in fractional shares owned by shareholders of the Target who did
not tender in the Tender Offer totaling less than one full share so that the Company will retain
all of the Target Shares (excluding treasury shares owned by the Target).
If the Share Consolidation is implemented, and such Share Consolidation results in fractional
shares that constitute less than one full share, the regulations of the Companies Act with respect
to the protection of minority shareholders allow Target shareholders to demand that the Target
purchase any fractional shares constituting less than one full share in their possession at a fair
price, as well as to petition to a court for a determination regarding the price of the Target Shares,
with satisfaction of certain stipulated conditions, and all in accordance with the provisions ofArticle 182-4 and 182-5 of the Companies Act and the provisions of other relevant laws andregulations. As described above, in the Share Consolidation, the number of the Target Shares
owned by the Target’s shareholders who did not tender their Target Shares in the Tender Offer(excluding the Company and the Target) is expected to be fractional shares that constitute lessthan one full share. Therefore, dissenting shareholders of the Target will be able to file theabove-mentioned petition to a court.
The Tender Offer is not for the purpose of soliciting the approval of the Target's shareholders at
the Extraordinary Shareholders’ Meeting.
With respect to the procedures (A) and (B) described above, the implementation may take extra
time, or the implementation method may be changed to other methods that have equivalenteffects based on the status of amendments to, implementation of, and interpretation by relevant
authorities of the relevant laws and regulations. However, even in such case, if the Tender Offeris completed, the method of the provision of money to the shareholders of the Target who did
not tender their shares in the Tender Offer (excluding the Company and the Target) will beapplied, and the amount of money to be delivered to each such shareholder in such case will becalculated to be the same as the Tender Offer Price multiplied by the number of Target Shares
held by each such shareholder. Nevertheless, in the case where a petition is filed for thedetermination of the purchase price with respect to the Demand for Sale of Shares or for thedetermination of the price with respect to the Share Consolidation, the purchase price of theTarget Shares or the price with respect to the Demand for Sale of Shares shall be determined by
the court.
After the completion of the Tender Offer, the Company will propose to the Target for
consultation with respect to the specific procedures to be taken and the timing of
implementation of such procedures in each of the above cases, and will request that the Target
promptly make a public announcement upon determination thereof.
Note also that the shareholders of the Target are each personally responsible for consulting tax
experts regarding application for the Tender Offer or the tax treatment in each of the above
procedures.
(5) Likelihood of delisting and reasons thereof
Although the Target Shares are listed on the First Section of the Tokyo Stock Exchange as of24the date of this Press Release, the Company has not set a maximum planned purchase quantitywith respect to the Tender Offer, so it is possible that the Target Shares may be delisted
following the designated procedures in accordance with the delisting criteria set out by the
Tokyo Stock Exchange depending on the results of the Tender Offer. Furthermore, even in theevent those criteria do not apply at the time of the completion of the Tender Offer, the Company
intends to realize the transaction for acquiring all of the Target Shares (excluding Target Shares
owned by the Company and treasury shares owned by the Target) in accordance with relevantlaws and regulations, as described in “(4) Post-Tender Offer reorganization policy (so-calledTwo-step acquisition)” above, and thus in such case, the Target Shares will be delisted inaccordance with the designated procedures in accordance with the delisting criteria set out by
the Tokyo Stock Exchange. After delisting, the Target Shares will not be able to be traded on
the First Section of the Tokyo Stock Exchange.
In the Tender Offer, the Company sets the minimum planned purchase quantity at 19,477,600
shares (ownership ratio: 50.00%). Although the Company aims to make the Target a whollyowned subsidiary of the Company in the Tender Offer, the Company considered that (i) the
minimum planned purchase quantity is set at 19,477,700 shares (ownership ratio: 50.00%) in
DCM Holdings' Tender Offer and (ii) if the Company sets the minimum planned purchasequantity higher than that of DCM Holdings' Tender Offer, the Target's shareholders may assume
that the Tender Offer is less likely to be consummated compared to DCM Holdings' Tender
Offer. Therefore, the Company set the minimum planned purchase quantity for the Tender Offer
by deducting the number of the Target Shares owned by the Company as of the date of thisPress Release (100 shares) from 19,477,700 shares which is the minimum planned purchasequantity in DCM Holdings' Tender Offer.
Accordingly, after consummation of the Tender Offer, the number of voting rights pertaining to
the number of the Target Shares owned by the Company could fall below two-thirds of the total
voting rights of the Target's shareholders. As a result of this, it could be difficult to obtainapproval for the agenda regarding the Share Consolidation at the Extraordinary Shareholders'Meeting as stated in "(4) Policy regarding reorganization following completion of the Tender
Offer (so-called two-step acquisition)" above. However, even if such approval is not obtained,as the Company aims to acquire all of the Target Shares (excluding the Target Shares held by
the Company and treasury shares owned by the Target), the Company plans to acquire
additional shares of the Target Shares until it has acquired the number of shares equivalent to
two-thirds of the voting rights pertaining to the total number of issued shares of the Target lessthe number of treasury shares held by the Target. As of the date of this Press Release, nothinghas been determined with respect to the specific timing and method of additional acquisition of
the Target Shares by the Company.
(6) Matters related to material agreements concerning Tender Offer
Not applicable.

252. Outline of Tender Offer(1) Outline of Target(i) Name

SHIMACHU CO., LTD.
8-3-32,Kamiochiai,Chuo-ku,Saitama(ii) Address
shi,Saitama
Takaaki Okano, President and Representative(iii) Name and title of representative
Director
Retail business for furniture and interior goods(curtains, carpet, interior small items, etc.), and(iv) Description of businesshome center goods (daily necessaries,
gardening, pets, timber, tools, etc.)(v) Capital stock
16,533,000,000 yen (as of August 31, 2020)(vi) Date of incorporation
November 15, 1969
Japan Trustee Services Bank, Ltd. 7.88%(Trust Account)
The Master Trust Bank of Japan, 7.28%
Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. 5.69%(Trust Account 9)
NORTHERN TRUST CO. (AVFC) 5.67%
RE
SILCHESTERINTERNATIONAL INVESTORSINTERNATIONALVALUEEQUITY TRUST(Standing Proxy: Tokyo Branch of
The Hongkong and Shanghai
Banking Corporation Limited)(vii) Major shareholders and shareholding
IRIS OHYAMA Inc.
4.80%
ratios (as of February 29, 2020)
Saitama Resona Bank, Limited

3.22%

NORTHERN TRUST CO. (AVFC) 2.95%
RE
U.S.TAXEXEMPTEDPENSION FUNDS(Standing Proxy: Tokyo Branch of
The Hongkong and Shanghai
Banking Corporation Limited)
Hitoshi Shimamura

2.42%

Minami Aoyama Real Estate Co., 2.17%
Ltd.

26

NORTHERN
TRUSTCO. 2.05%(AVFC)ACCOUNT NON TREATY(Standing Proxy: Tokyo Branch of
The Hongkong and Shanghai
Banking Corporation Limited)(viii) Relationship between the Tender Offeror and Target
The Company owns 100 shares of the Target
Capital relationship
Shares (ownership ratio: 0.00％) as of the dateof this Press Release.
Personal relationship
N/A
Business relationship
N/A
Applicability to related parties
N/A(Note)"Major shareholders and shareholding ratios (as of February 29, 2020)" is based on
the information stated in "Status of Major Shareholders" of the 2nd quarterly reportfor the 61st fiscal year filed by the Target on April 10, 2020.
(2) Schedule of Tender Offer
The Company plans to launch the Tender Offer within five business days of the satisfaction of
the Tender Offer Conditions (or upon waiver by the Company of the Tender Offer Conditions),
and aims to commence the Tender Offer in mid-November of 2020 given that the Company
filed a Prior Notification regarding the Share Acquisition with the JFTC on October 27, 2020
and the relevant Prior Notification was accepted on the same date. We believe that the Tender
Offer will have a limited impact on competition in the relevant markets because the Company,
with its core business being sale of furniture and interior goods, is not operating the home
improvement retail business in which the Target is primarily engaged, as stated in "(III) Reasons
why the Company is implementing the Tender Offer" under "(2) Background and reasons to thedecision to implement the Tender Offer" under "1. Purpose of Tender Offer" above. As this is
the case, as of the date of this Press Release, the Company is not aware of any fact constituting
a material obstacle to the expiration of the Non-acquisition Period and the Period for Measures
under the Antitrust Act, and believes that the Tender Offer Conditions will be satisfied in aroundmid-November of 2020. However, the Share Acquisition is under examination by the JFTC,
and it is difficult to precisely estimate the time needed for the Company to determine that the
Non-acquisition Period and the Period for Measures are reasonably expected to expire on or
before the day preceding the last day of the Tender Offer Period under the Tender Offer. The
Company will announce the details of the schedule for the Tender Offer as soon as they are
finalized.
The Tender Offer Period for the Tender Offer will be 30 business days, in principle. However,
the Company may extend the Tender Offer Period under the Tender Offer (i) if the Nonacquisition Period and the Period for Measures do not expire on or before the day preceding thelast day of the Tender Offer Period under the Tender Offer, (ii) if a Prior Notice of Cease andDesist Order is given to the Company within 30 days of the date of acceptance of the Prior
Notification, or (iii) if the Company receives an Urgent Temporary Suspension Order from thecourt.
27

(3) Tender Offer Price, etc.
5,500 yen per share of common shares (Planned)(4) Basis for valuation of Tender Offer Price, etc.
(I)

Basis for valuation

In determining the Tender Offer Price, the Company requested Daiwa Securities, a financial
advisor, to calculate the value of the Target Shares as a third-party valuation organization
independent of the Company, Target and DCM Holdings.
After reviewing the calculation method to be adopted for the calculation of the share value of
the Target from among the multiple share value calculation methods, based on the determinationthat it is appropriate to evaluate the value of the Target Shares from multiple dimensions, andunder the premise that the Target is a going concern, Daiwa Securities calculated the value of
the Target Shares using the following methods: a market share price analysis (considering thetrend of the market price of the shares); a comparable company analysis (because there are
multiple listed companies comparable to the Target, and it is possible to estimate the value of
the Target Shares by comparing similar companies); and a discounted cash flow method (the"DCF analysis") (in order to reflect the status of future business activities in the calculation).
On October 28, 2020, the Company obtained a report on the valuation of the Target Shares (the"Valuation Report") from Daiwa Securities. The Company has not obtained any written opinion
regarding the fairness of the Tender Offer Price (i.e., a fairness opinion) from Daiwa Securities.
The results of calculation by Daiwa Securities of the per-share value of the Target Shares are as
follows. The following results do not include synergistic effect.
Market share price analysis (1)Market share price analysis (2)Comparable company analysis
DCF analysis

2,849 yen – 2,945 yen
3,157 yen – 4,890 yen
2,239 yen – 4,114 yen
2,964 yen – 5,763 yen

Under the market share price analysis (1), where September 18, 2020 (the most recent trading
day before the speculative reports regarding DCM Holdings' Tender Offer were released (after
the close of trading on September 18, 2020)) was the reference date, the per-share value of theTarget Shares was calculated to be in the range from 2,849 yen to 2,945 yen based on thefollowing prices of the Target Shares on the First Section of the Tokyo Stock Exchange: theclosing price on the reference date (2,878 yen); the simple average of the closing prices overthe past one month immediately preceding the reference date (August 19, 2020 to September
18, 2020) (2,924 yen, round to the nearest whole number; hereinafter the same shall apply withrespect to the calculations of simple average closing price.); the simple average of the closing
prices over the past three months immediately preceding the reference date (June 19, 2020 to
September 18, 2020) (2,945 yen); and the simple average of the closing prices over the past six
months immediately preceding the reference date (March 19, 2020 to September 18, 2020)(2,849 yen).
Under the market share price analysis (2), where October 28, 2020 was the reference date, the28

per-share value of the Target Shares was calculated to be in the range from 3,157 yen to 4,890
yen based on the following prices of the Target Shares on the First Section of the Tokyo Stock
Exchange: the closing price on the reference date (4,890 yen); the simple average of the closing
prices over the past one month immediately preceding the reference date (September 29, 2020
to October 28, 2020) (4,266 yen); the simple average of the closing prices over the past threemonths immediately preceding the reference date (July 29, 2020 to October 28, 2020) (3,432yen); and the simple average of the closing prices over the past six months immediately
preceding the reference date (April 30, 2020 to October 28, 2020) (3,157 yen).
Under the comparable company analysis, the value of the Target Shares is calculated bycomparing the value of the Target Shares with the market price and the financial indicesindicating profitability, etc., of listed companies engaged in a business relatively similar to thatof the Target, and the per-share value of the Target Shares is calculated to be in the range from
2,239 yen to 4,114 yen.
Under the DCF analysis, the corporate value and share value of the Target were calculated bydiscounting the free cash flows expected to be generated after the term ending in August 2021
by the Target to present value at a certain discount rate, based on the business plan of the Target
for 5 fiscal years from the fiscal year ending August 2021 through the fiscal year ending inAugust 2025 that the Company projected considering various factors such as recent businessperformance and publicly disclosed information, and based on the knowledge the Company has
about the Target's business. Using this method, the per-share value of the Target Shares wascalculated to be in the range from 2,964 yen to 5,763 yen. In addition, the synergistic effects
expected to be realized through the Tender Offer are not included at this point.
Based on the content and results of the calculation presented in the Valuation Report,
comprehensively considering factors such as the tender offer price under DCM Holdings' tender
offer, the market price trend of the Target Shares, examples of premiums actually paid in tender
offers conducted by parties other than issuer in expectation of making the target a wholly owned
subsidiary, prospects for tenders of the Target Shares in the Tender Offer, the Company
determined that it is appropriate to present a price with an appropriate premium to the market
price of the Target Shares and, ultimately decided on October 29, 2020 to set the Tender Offer
Price at 5,500 yen per share.
The Tender Offer Price of 5,500 yen per share is the price obtained by adding respective
percentage of premiums to each of the corresponding prices below: 91.10% (rounded to thenearest hundredth; the same shall apply to all other premium value percentages in thisparagraph.) to 2,878 yen which is the closing price of the Target Shares on the First Section of
the Tokyo Stock Exchange on September 18, 2020 (the most recent trading day before thespeculative reports regarding DCM Holdings' Tender Offer were released (after the close of
trading on September 18, 2020)); 88.10% to 2,924 yen which is the simple average of theclosing prices over the past one month (August 19, 2020 to September 18, 2020); 86.76% to2,945 yen which is the simple average of the prices over the past three months (June 19, 2020
to September 18, 2020); and 93.05% to 2,849 yen which is the simple average of the closing
prices over the past six months (March 19, 2020 to September 18, 2020). In addition, Tender
Offer Price is the price obtained by adding respective percentage of premiums to each of thecorresponding prices below: 12.47% to 4,890 yen which is the closing price of the Target Shareson the First Section of the Tokyo Stock Exchange on October 28, 2020, the business day
immediately before the day of the public announcement of the implementation of this Tender
Offer; 28.93% to 4,266 yen which is the simple average of the closing prices over the past one
month (September 29, 2020 to October 28, 2020); 60.26% to 3,432 yen which is the simple
29

average of the closing prices for the three months (July 29, 2020 to October 28, 2020); and74.22% to 3,157 yen which is the simple average of the closing prices over the past six months(April 30, 2020 to October 28, 2020). Also, the Tender Offer Price is the price obtained byadding 30.95% premium to the 4,200 yen per share which was the tender offer price in DCM
Holdings' Tender Offer.
On October 20, 2020, the Company acquired the Target Shares (100 shares) at the then-market
price (4,200 yen per share) through market transactions. Unlike the Tender Offer, however,there was no premium added because the market transactions were conducted throughcompetitive transactions on the First Section of the Tokyo Stock Exchange.
(II)

Details of valuation(How Tender Offer Price was determined)
As described in "(III) Reasons why the Company is implementing the Tender Offer" under"(2) Background and reasons to the decision to implement the Tender Offer" under "1. Purposeof Tender Offer," the Company acquired the opportunity to have a meeting with Target on
September 28, 2020, in order to first propose an extensive business alliance between the twocompanies (including in production and sales), while also floating the possibility of making theTarget a wholly-owned subsidiary of the Company as one of the options. During this meeting,
the Company informed the Target that a business alliance between the Company Group and theTarget would be beneficial for both companies through the economy of scale (the reduction of
cost due to the increase in the amount of production and sale), but the proposal did not progress
to more specific negotiations. At this point, there had been news reports regarding the Target
becoming a subsidiary of DCM Holdings, but as both parties had made announcements statingthat such alliance was not determined, the Company did not discuss anything specific in relation
to the management integration of the Company and the Target (including the possibility ofmaking the Target a wholly-owned subsidiary of the Company), and only suggested thepossibility of a business alliance, as state above. Around the time, the Company learned fromthe Target's Announcement Press Release, that the Target's board of directors resolved toexpress an opinion in support of DCM Holdings' Tender Offer and to recommend that theTarget's shareholders tender their shares in DCM Holdings' Tender Offer on October 2, 2020.
The Company has learned from the Target's Announcement Press Release that the Target's
board of directors had resolved that decisions regarding DCM Holdings' Tender Offer, including
approval or disapproval of the Tender Offer, shall be made by the Target's board of directors, inutmost respect of the judgment of the Target Special Committee, and that if the Target Special
Committee determines that the implementation of DCM Holdings' Tender Offer or the terms
and conditions of the transactions are not appropriate, the Target's board of directors shall not
express its support of DCM Holdings' Tender Offer. Furthermore, the Company has also cometo know from the Target's Announcement Press Release that the Target has not entered into any
agreement which includes a transaction protection clause that may prohibit the Target fromcontacting Competitive Offerors or any other agreement that may restrict any Competitive
Offerors’ contact with the Target, and thus Target has ensured not to prevent opportunities for
any Competitive Offerors including the Company to make acquisition proposals, and that DCM
Holdings has ensured an opportunity of offering by Competitive Offerors by setting the tender
offer period at 30 business days, not the legally stipulated minimum duration of 20 business
days.
30

The Company believes that it is possible for both the Company and the Target to realize
synergy effects through management integration of the Company and the Target. And then,since the Target's board of directors and the Target Special Committee have expressed their
willingness to accept competitive offers by aforementioned means, the Company has come tothe conclusion that the management integration of the Company and the Target can be realizedby making a formal offer in accordance with such procedure and providing a sincere
explanation to the Target's board of directors and the Target Special Committee.
Furthermore, the Company believes that it is important to ensure the transparency andfairness of the Tender Offer for shareholders of the Target given that DCM Holdings' Tender
Offer is ongoing. Thus, the Company has not held any discussion with the Target since themeeting between the Company and the Target held in September 28, 2020.
The Company believes that the management integration of the Company and the Target canrealize synergy effects and possibly maximize the corporate value of both companies. The
Company believes that the Tender Offer is a more attractive proposal for the Target and theshareholders of the Target in light of the following: (i) the Company is not aware of any factthat would materially impair or prevent the satisfaction of the Tender Offer Conditions as of thedate of this Press Release, and believes that it will be able to commence the Tender Offer inaround mid-November of 2020 upon the satisfaction of the Tender Offer Conditions, (ii) the
Tender Offer Price (5,500 yen per share) has been set at a higher level than the tender offer
price under DCM Holdings' Tender Offer (4,200 yen per share), and (iii) while the Company
plans to apply the money borrowed from Mizuho Bank, Ltd. and its own funds to the settlement
related to the Tender Offer, it has obtained a loan certificate dated October 28, 2020 from
Mizuho Bank, Ltd. and has already secured funding for the settlement. Therefore, in view of
the announcement of the board of directors of the Target and the Target Special Committee thatthey are prepared to accept competitive offers, as described above, the Company has decided
to make, following the process therefor, a proposal for management integration between the
Company and the Target through the Tender Offer. As of the date of this Press Release, theCompany has not specifically consulted with the Target regarding the management integration,
as stated above. As such, the date and time of consultation with the Target or the date and timeof explanation to the Target's board of directors and the Target Special Committee have not been
determined. However, the Company hopes to provide explanations to the Target's board of
directors and the Target Special Committee as soon as possible so that they will properly
understand the substance of the Company's proposal and approve the Tender Offer.
The Company is to provide explanations in good faith to the Target's board of directors andthe Target Special Committee so that they will approve the Tender Offer. However, even if theTarget's board of directors and the Target Special Committee do not approve the Tender Offer,
the Company will have no choice but to commence the Tender Offer upon the satisfaction of
the Tender Offer Conditions (or waiver by the Company of the Tender Offer Conditions) given
the manifestation of the Target's board of directors and the Target Special Committee that they
are prepared to accept competitive offers, as described above, and also because of our belief
that the pros and cons of an offer from a Competitive Offeror should be ultimately judged byshareholders of the Target.
(i)Name of the third party from which the Company requested opinion for valuation

In determining the Tender Offer Price, the Company requested Daiwa Securities, a financial
advisor, to calculate the value of the Target Shares as a third-party valuation organization31independent of the Company, Target and DCM Holdings. On October 28, 2020, the Company
obtained the Valuation Report from Daiwa Securities. Daiwa Securities does not constitute a
related party to the Company, Target and DCM Holdings, and has no material interest regarding
the Tender Offer. The Company has not obtained any written opinion regarding the fairness of
the Tender Offer Price (i.e., a fairness opinion) from Daiwa Securities.
(ii)

Overview of the opinion

In accordance with the Valuation Report, the methods adopted and the ranges of the per-sharevalue of the Target Shares calculated based on such methods are as follows:
Market share price analysis (1)Market share price analysis (2)Comparable company analysis
DCF analysis(iii)

2,849 yen – 2,945 yen
3,157 yen – 4,890 yen
2,239 yen – 4,114 yen
2,964 yen – 5,763 yen

How the Tender Offer Price was determined based on the opinion

In determining the Tender Offer Price, based on the content and results of the calculation
presented in the Valuation Report, comprehensively considering factors such as the tender offer
price under DCM Holdings' Tender Offer, the market price trend of the Target Shares, examples
of premiums actually paid in tender offers conducted by parties other than issuer in expectationof making the target a wholly owned subsidiary, prospects for tenders of the Target Shares in
the Tender Offer, the Company determined that it was appropriate to present a price with anappropriate premium to the market price of the Target Shares and, on October 29, 2020,
ultimately determined to set the Tender Offer Price at 5,500 yen per share.
(III)

Relationship with valuation organization

Daiwa Securities, a financial advisor of the Company, does not constitute a related party to theCompany, Target and DCM Holdings and has no material interest regarding the Tender Offer.
(5) Number of share certificates to be purchased
Minimum planned purchase Maximum planned purchasequantityquantity
38,955,187 shares
19,477,600 shares- shares(Note 1) The Company will not purchase all of the Tendered Share Certificates, if the total
number of the Tendered Share Certificates is less than the minimum planned purchasequantity (19,477,600 shares). The Company will purchase all of the Tendered Share
Certificates, if the total number of the Tendered Share Certificates is no less than theminimum planned purchase quantity (19,477,600 shares).
(Note 2) As the Company has not set any maximum planned purchase quantity, the plannedpurchase quantity indicated is the maximum number of Target Shares that theCompany will acquire through the Tender Offer. The maximum number of Target
Shares is 38,955,187 shares, which is obtained by deducting the number of treasury
shares owned by the Target as of the August 31, 2020 (3,653,817 shares) as indicatedPlanned purchase quantity32

in the Earnings Briefing and the number of the Target Shares owned by the Company
as of the date of this Press Release (100 shares) from the total number of issued shares
as of August 31, 2020 (42,609,104 shares) as indicated in the Earnings Briefing. The
planned purchase quantity is a provisional number based on the information as of thedate of this Press Release, and the actual planned purchase quantity in the Tender
Offer may differ from the number indicated above due to any change that may occur
after such date.
(Note 3) Fractional shares are also subject to the Tender Offer. Please note that, in the event
the Target's shareholder exercises its right to demand a purchase of fractional sharesin accordance with the Companies Act, the Target may purchase its own shares during
the tender offer period in accordance with the procedures set forth in applicable laws
and regulations.
(Note 4) There is no plan to acquire the treasury shares owned by the Target in the Tender
Offer.
(6) Changes in ownership ratio of share certificates by after Tender Offer
Number of voting rights represented byshare certificates owned by Tender Offeror
before Tender Offer
Number of voting rights represented byshare certificates owned by specially relatedparties before Tender Offer
Number of voting rights represented byshare certificates owned by Tender Offeror
after Tender Offer
Number of voting rights represented byshare certificates owned by specially relatedparties after Tender Offer
Total number of voting rights owned by all
shareholders of Target(Ownership ratio of share
1 certificates before Tender
Offer: 0.00%)(Ownership ratio of share
TBD certificates before Tender
Offer: TBD %)(Ownership ratio of share
389,552 certificates after Tender
Offer: 100.00%)(Ownership ratio of share
0 certificates after Tender
Offer: 0.00%)
415,898(Note 1) "Number of voting rights represented by share certificates owned by specially relatedparties before Tender Offer" and the corresponding "Ownership ratio of sharecertificates before Tender Offer" will be disclosed by the commencement of theTender Offer after investigation. Further, since the share certificates owned by eachspecially related party are also subject to the Tender Offer, the "Number of voting
rights represented by share certificates owned by specially related parties after Tender
Offer" is indicated as zero (0).
(Note 2) "Total number of voting rights owned by all shareholders of Target" is the number ofthe voting rights owned by all shareholders as of February 29, 2020 as indicated inthe 3rd quarterly report for the 61st fiscal year filed by the Target on July 10, 2020.
Given that the fractional shares are also subject to the Tender Offer, however, for the
purpose of calculating the "Ownership ratio of share certificates before Tender Offer"and "Ownership ratio of share certificates after Tender Offer," the denominator is389,552 (the number of voting rights represented by the number of shares(38,955,287 shares), which is obtained by deducting the number of treasury shares33

owned by the Target as of August 31, 2020 (3,653,817 shares) from the total number
of issued shares of the Target as of the same date (42,609,104 shares), both asindicated in the Earnings Briefing).
(Note 3) "Ownership ratio of share certificates before Tender Offer" and "Ownership ratio ofshare certificates after Tender Offer" are both rounded to the nearest hundredth.
(7) Aggregate Tender Offer Price: 214,253,528,500 yen (planned)(Note)

The aggregate Tender Office Price indicated above is calculated by multiplying theplanned purchase quantity (38,955,187 shares) as described in "(5) Number of sharecertificates to be purchased" by the Tender Offer Price (5,500 yen per share). Due tothe reasons including any change in the number of shares occurring after the date ofthis Press Release, the aggregate Tender Offer Price may change, if the actual numberof planned purchase quantity in the Tender offer changes.

(8) Other conditions and methods of purchase(I)

Conditions set forth in each item of Article 27-13(4) of the Act, and detail of suchconditions

The Company will not purchase all of the Tendered Share Certificates, if the total number of
the Tendered Share Certificates is less than the minimum planned purchase quantity(19,477,600 shares). The Company will purchase all of the Tendered Share Certificates, if thetotal number of the Tendered Share Certificates is no less than the minimum planned purchasequantity (19,477,600 shares).
(II)

Other

The method of settlement, the date of public notice of the commencement of the Tender Offer,and other conditions and methods for purchase will be announced as soon as they are
determined. The Company plans to appoint Daiwa Securities as the tender offer agent.
3. Management Policy Following Completion of the Tender Offer and Future Outlook
For the management policy following the Tender Offer, please refer to "(3) Management policy
after the Tender Offer," "(4) Policy regarding reorganization following completion of the Tender
Offer (so-called 'two-step acquisition')," and "(5) Possibility of delisting and reasons thereof"
under "1. Purpose of Tender Offer" above.
The effect of the Tender Offer on the earnings forecast for the current fiscal year is currently
under scrutiny, and in the future, if there is a need to revise the earnings forecast or if there are
any matters to be disclosed, the Company will promptly disclose any such information.
4. Other Information

34

(1)
Agreements between the Tender Offeror and the Target or its officers and the detail ofsuch agreements
Not applicable.
(2)
Other information deemed necessary for investors to judge whether or not to accept
the tender offer(I) Release of "Earnings Briefing for the fiscal year ended August 2020 (Japanese GAAP) (Nonconsolidated)"
The Target released the Earnings Briefing ("Earnings Briefing for the fiscal year ended August2020 (Japanese GAAP) (Non-consolidated)") as of October 2, 2020, which is summarized
below. Please note that the information contained therein has not been audited by the audit firmin accordance with the provisions of Article 193-2, Paragraph 1 of the Act. The following
summary is an excerpt from the information released by the Target. For details, please refer tothe content of the release.
(a) Status of profit and loss
Fiscal year ended August 2020
(Non-consolidated)
146,694 million yen
97,251 million yen
46,691 million yen
9,598 million yen
10,094 million yen
6,422 million yen

Fiscal year/month
Sales
Cost of sales
Selling, general and administrative expenses
Operating profit
Ordinary profit
Net profit(b) Status per share

Fiscal year ended August 2020
(Non-consolidated)

Fiscal year/month
Net profit per share
Dividend per share
Net asset value per share

156.80 yen
50.00 yen
4,661.36 yen(II) Release of "Announcement of revised dividend forecast for the fiscal year ending August
2020"
The Target resolved at the meeting of its board of directors held on October 2, 2020, to revise
the dividend forecast for the fiscal year ended August 2020 that had been released on July 9,2020 and not to pay any year-end dividend for the fiscal year. For details, please refer to the"Announcement of revised dividend forecast for the fiscal year ending August 2020" releasedby the Target on October 2, 2020.

35

This press release is intended to announce the Tender Offer to the public and has not been prepared forthe purpose of soliciting an offer to sell shares. If shareholders wish to make an offer to sell their shares,
they should first read the Tender Offer Explanation Statement concerning the Tender Offer and make anoffer to sell their shares at their own discretion. This press release shall neither be, nor constitute a partof, an offer to sell or purchase, or solicitation to sell or purchase, any securities, and neither this press
release (or a part of this press release) nor its distribution shall be interpreted to constitute the basis of
any agreement in relation to the Tender Offer, and this press release may not be relied upon at the timeof entering into any such agreement.



The Tender Offer shall be implemented in compliance with the procedures and information disclosure
standards provided by the Financial Instruments and Exchange Act of Japan, which procedures andstandards are not necessarily identical to the procedures and information disclosure standards applied in
the United States. Specifically, Section 13(e) and Section 14(d) the Securities Exchange Act of 1934 (asamended; “Securities Exchange Act”) and the rules promulgated under such Section do not apply to theTender Offer, and the Tender Offer is not necessarily in compliance with the procedures and standards
thereunder. It is not necessarily the case that all financial information in this press release are equivalent
to financial statements of companies in the United States. It may be difficult to enforce any right or
claim arising under U.S. federal securities laws because the Tender Offeror and the Target areincorporated outside the United States and all of their directors are non-U.S. residents. Shareholders
may not be able to sue a company outside the United States and its directors in a non-U.S. court forviolations of the U.S. securities laws. Furthermore, there is no guarantee that shareholders will be able
to compel a company outside the United States or its subsidiaries and affiliates to subject themselves tothe jurisdiction of a U.S. court.



The financial advisor of the Tender Offeror or the Target and their respective affiliates may, within theirordinary course of business, purchase, or conduct any act toward the purchase of, the shares of thecommon stock of the Target for their own account or for their customers’ accounts outside the Tender
Offer prior to the commencement of, or during, the period of the Tender Offer, etc. in accordance withthe requirements of Rule 14e-5(b) under the Securities Exchange Act to the extent permissible under the
Financial Instruments and Exchange Act and other applicable laws and regulations in Japan. If any
information concerning such purchase is disclosed in Japan, the disclosure of such information will bemade in the United States in a similar manner.



All the procedures in connection with the Tender Offer shall be taken in the Japanese language. Whilea part or all of the documents in connection with the Tender Offer may be prepared in English, theJapanese documents shall prevail in case of any discrepancies between Japanese documents andcorresponding English documents.

This press release contains “forward-looking statements” as defined in Section 27A of the Securities
Act of 1933 (as amended) and Section 21E of the Securities Exchange Act. The actual results may besignificantly different from the projections implied or expressly stated as “forward-looking statements”
due to known or unknown risks, uncertainties or other factors. None of the Tender Offeror, the Target
or any of their respective affiliates assures that such express or implied projections set forth herein as“forward-looking statements” will eventually prove to be correct. “Forward-looking statements”
contained herein were prepared based on the information available to the Tender Offeror as of the dateof this press release and, unless required by laws and regulations, neither Tender Offeror nor its relatedparties including related companies shall have the obligation to update or correct the statements madeherein in order to reflect the future events or circumstances.

36

Some countries or regions may impose restrictions on the announcement, issue or distribution of thispress release. In such cases, please take note of such restrictions and comply with them. In countries orregions where the implementation of the Tender Offer is illegal, even upon receiving this press release,such receipt shall not constitute a solicitation of an offer to sell or an offer to buy shares relating to theTender Offer and shall be deemed a distribution of materials for informative purposes only.

37

Nitori Holdings Co., Ltd.

Proposal to Shimachu Co., Ltd. for management integration andbecoming a wholly-owned subsidiary through the tender offer.

October 29, 2020
Nitori Holdings Co., Ltd.

TSE, First Section, SSE (9843)

Proposal to maximize the corporate value of both companies
Proposal to the Board of Directors and the Special Committee of Shimachu Co., Ltd. for amanagement integration and becoming a wholly-owned subsidiary through the tender
offer (the “Tender Offer”).


We (the “Tender Offeror”, “Company” or “Nitori”) have long considered entering the home improvement industry through mergers
and acquisitions. Given the recent COVID-19 developments, we believe that customers’ awareness of “residence” and lifestyles havechanged, and the demands of customers who pursue “prosperous home living” have become apparent. In addition to the sale offurniture and interior products that Nitori and its group companies (the “Company Group” or “Nitori Group”) has marketed for many
years, we believe that by offering a wider range of products to customers, we can enrich their lives even more.

On September 18, 2020, it was reported that Shimachu Co., Ltd. ("Shimachu") was considering to be a subsidiary of DCM Holdings
Corporation ("DCM") by way of a tender offer which led to our consideration of a business integration with Shimachu. As a result, we
believe that welcoming Shimachu to Nitori Group will not only enable our Company to (1) enter new business areas in the home
improvement industry, but also that (2) it will enable Shimachu to utilize the experience and strengths of our "Manufacturing,
Logistics, IT and Retail Sales" since the various fields that Shimachu has already been working on are in common with those Nitori
Group has cultivated to date, and therefore this will make a significant contribution to the expansion and development of bothcompanies and maximize the corporate value of both companies.



We believe that management integration through the Tender Offer and the acquisition of Shimachu as a wholly owned subsidiary will
enable the two companies to work together to realize synergies, expand the scope of business further into home improvement
products and general products in addition to existing furniture and interior products, and provide comprehensive services related tohousing to customers, enabling the development of businesses that respond to various lifestyles of customers.



The offer price of the Tender Offer (the “Tender Offer Price”) is JPY 5,500 per share which is set higher than the tender offer price(JPY 4,200 per share) for the tender offer by DCM, and Nitori believes that our offer is more attractive to Shimachu and its
shareholders.



In light of the fact that the Shimachu Board of Directors and the Shimachu Special Committee have expressed their willingness toaccept competitive proposals, Nitori will submit proposals in a manner consistent with the process.

In order to ensure that the Board of Directors and the Special Committee of Shimachu correctly understand our Company's proposal
and agree with the Tender Offer, Nitori would like to have the opportunity to explain Nitori's proposal to the Board of Directors andthe Special Committee of Shimachu, and we would like to do so as soon as possible.



Nitori believes that the management integration between Shimachu and Nitori will generate synergies in both of Shimachu and Nitori,
thereby maximizing corporate value for both companies.

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited2

Overview of Nitori Holdings
Overview
Trade
Name

Nitori Holdings Co., Ltd.

Head Office

1-2-39 Shinkotoni 7-jo,
Kita-ku, Sapporo-shi

Business
Manufacture and sale of furniture andinterior products
Has a total of 607 stores in Japan andoverseas. Handles everything frommanufacturing to distribution and sales.

President and CEO

Akio Nitori

History

Representative
President and COO

Toshiyuki Shirai
CapitalJPY 13.37 billion

Net salesYear ended
Feb 2020

Consolidated: JPY 642,273 M
Non-consolidated: JPY 30,411 M

Listed Stock
Exchange

TSE, First Section and
SSE (9843)

Employees
As of Feb. 2020

Consolidated: 14,337
Non-consolidated: 558

Group
Companies

Consolidated subsidiaries: 25
Equity affiliate: 1

Copyright 2020 Nitori Holdings All Rights Reserved

1967
1972
1978
1986

1989
2002
2003
2004
2007
2010
2013
2014

Established as Nitori Furniture StoreFounded as Nitori Furniture Wholesale Center
Co., Ltd.
Changed its trade name to Nitori Furniture Co.,Ltd.
Direct import of overseas products started
Changed its trade name to Nitori Co., Ltd.
Listed on the Sapporo Stock Exchange.
Listed on the Tokyo Stock Exchange
Achieved sales of 100 billion yen
Entered the E-commerce market
The first overseas store opened in Kaohsiung,TaiwanSwitched to a holding company system andchanged its trade name to Nitori Holdings Co.,
Ltd.
Opened the first stores in the United States
Started distributing Nitori Smartphone App
Opened the first stores in China■Reproduction, reprinting or distribution is prohibited3

Corporate Philosophy

Mission Statement
Enriching homes around the World

Vision Statement
1973-2002

2003-2032

First 30-Year Vision Statement

Second 30-Year Vision Statement

100 stores and JPY 100 billion in sales

3,000 stores / JPY 3 trillion in net sales
2003

Achieved 100 stores and JPY 100 billion in net sales

2009

Achieved 200 stores and JPY 200 billion in net sales

2012

Achieved 300 stores and JPY 340 billion in net sales

2017

Achieved 500 stores and JPY 550 billion in net sales
Start to address transformation of Japanese lifestyles
and global chain development2022

1,000 stores and JPY 1 trillion in sales

2032

3,000 stores and JPY 3 trillion in sales

Continually striving to achieve our vision statement based on our mission to enrichhomes around the World.
Here at Nitori Group, we have a mission statement of “Enriching homes around the World.” That vision is sharedby each one of our employees, as this is the cornerstone of how we behave as a company. We are also committed
to devoting all of our energy to achieve our long-term vision statement.

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited4

Issues to be Addressed by Nitori and the Significance of theTender Offer

Issues to be Addressed by Nitori
Establish the path for thegroup's growth and takeon new challenges

Offer products, storesand services forprosperous living

Reform the organizationand structure that
supports the global chain

New Potential from management integration between
Shimachu and Nitori
Enable to provide a wider range of
products

Shimachu can utilize the experience andstrengths of Nitori Group’s "Manufacturing,
Logistics, IT and Retail Sales"

Strong collaboration between the two companies enables synergy, provides comprehensive services
related to housing to customers, realizing the development of businesses that responds to various
lifestyles of customers.

We believe that management integration with Shimachu through theTender Offer and becoming a wholly owned subsidiary will maximize
corporate value of both companies
Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited5Synergies between Shimachu and Nitori
1

Expanding sales opportunities for high-quality furniture and contributing to realization ofenriched lifestyles for a wider range of customers by expansion of Shimachu’s stores nationwide

2

Expansion of sales by mutual supplementation between Shimachu's home center (HC) productswith Nitori’s home fashion (HFa) products, and improvement of profit margin by the sharing of
knowhow on the development of private brand (PB) products

3

Reduction of costs and improvement of asset efficiency through joint use oflogistics functions

4

Acceleration of cost reduction and improvement by the provision of function and knowhow
pertaining to the various supply chains possessed by Nitori Group in its capacity as a
“Manufacturing, Logistics, IT and Retail Sales”.

5

Pursuit of synergy with the Nitori Mall business and Deco Home
businesses

6

Mutual opening of “shop in shop” stores in the Tokyo metropolitan andcentral areas, and strategic opening of stores in wider areas

7

Bolstering of e-commerce sales structure8

Acquisition of mutual and new customers through the adoption of ashared reward points system

9

Sale of the Shimachu's products in overseas stores and realization of
future overseas store openings

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited

6

① Expanding sales opportunities and range of customers by expansion of
Shimachu’s stores nationwide•

Shimachu’s carefully selected furniture・・・set at a higher price range than those of the
Nitori’s, and have received strong and enduring support from many customers•

Shimachu’s furniture set as a different price range from Nitori will continue•

A nationwide deployment of Shimachu’s product will contribute to the realization ofeven more enriched lifestyles for customers to meet their various needs

Shimachu will be able to utilize
nationwide Nitori’s

Nitori541 stores

Shimachu

60 stores• Store development
capabilities• E-commerce• Furniture
distribution
networks

Note. The number of Nitori stores is the number of domestic branches out of all stores as of the end of February 2020 (607 Stores). The number of Shimachu stores is basedon Nitori's Home Page, as of October 27, 2020.

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited7

②

Expansion of sales by mutual supplementation between Shimachu's home center
products with Nitori’s home fashion products, and improvement of profit margin by
the sharing of knowhow on the development of private brand products•

The complementary products of both companies will make it possible to meet customers' needs for both
exterior and interior living environments, contributing to the increase in revenue of both companies’ preexisting
stores.

•By utilizing the Nitori's PB development knowhow, it will become possible to further accelerate Shimachu’s PB
development efforts.

•

The combination of the Nitori's product development capabilities and the knowhow of the Shimachu in the fieldof home center products development will make possible the creation of even more novel and attractive PB
products by both companies, which will exceed the expectations of the customers.

Nitori

Shimachu
Furniture(Higher
price range)

Gardening

DIY
Pet
supplies

MutualOutdoorsupplementation
And otherrange ofproducts

Initiated development ofprivate brand（2021 Medium-termManagement Plan）

Furniture
Dining andkitchenware

Curtains
and rugs

Bedding

Smallappliances

And otherrange ofproducts

Approx. 90% of
the products sold are
PB products.
Utilize knowhow （Nitori’s source of growth)

Increase in revenue of both companies’
preexisting stores
Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited8

③ Reduction of costs and improvement of asset efficiency
through joint use of logistics functions•

Nitori manages and operates all logistics on its own in order to achieve both cost efficiency and speed.

•With the addition of Shimachu's existing store network and logistics base to the distribution network
possessed by Nitori, it will be able to build a more efficient logistics network•

By combining the both companies’ volume of goods, the companies could enjoy a larger economic
effect and Shimachu‘s logistics costs can be reduced while experiencing a more frequent producttransfer.

Nitori Group’s logistic system: Last mile furniture distribution network

Overseas distribution
network
Logistics baseTaicang, China;
Taoyuan, Taiwan;
and Ho Chi Minh,
Vietnam

Imports
Shanghai, China;
Shenzhen, China;
Thailand; Vietnam;
Malaysia; Indonesia;
India; andBangladesh

Domestic distribution network
11 distribution centers

78 delivery centers

Customers(1) Large furniture that requires assembly and installation: From 78 delivery
centers across Japan to customers (Sales personnel with professional skills
are assigned.)(2) Other interior decorating products: From stores across Japan to customers(3) Purchases via e-commerce: Through 11 distribution centers across Japan tocustomers

Joint use of logistics functions will
improve efficiency of transportation＋
Expand customer base and increase customer satisfaction
Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited9

④ Acceleration of cost reduction and improvement by theprovision of various supply chains possessed by Nitori
Nitori’s unique vertically integrated supply chain

ROA Logistics,“Manufacturing,
IT and Retail Sales”

Market research andproduct planning

Call centers

Raw Material
Procurement

EC

Product
development

StoresA new business model:
Nitori controls all
aspects

Advertisement

Manufacturing

Quality control

Logistics
Trade

Copyright 2020 Nitori Holdings All Rights Reserved

Through firmly linking, andsharing this supply chain with
Shimachu, Shimachu will enjoy• improvement of profitabilityby the Nitori’s utilization of
its overseas supplier• cost reduction by joint
procurement of materials• cost-effective advertisement
and promotional activities■Reproduction, reprinting or distribution is prohibited10

⑤ Pursuit of synergy with the Nitori Mall and Deco Home
businesses•

Shimachu has been taking aggressive measures including the introduction of a varied
range of tenants, the development of franchising businesses and expansion its stores indensely populated areas.

•

Nitori Group has also been taking measures, including the development of the Nitori
Mall business and the Deco Home business that attracted a variety of tenants anddeveloped alternative operational styles suitable for densely populated areas.

•

By sharing Nitori’s know-how of expanding stores and the relationships built between
potential tenant companies with Shimachu, it will be able to improve the speed of
Shimachu's business development.

Nitori Mall business:

Deco Home business:

Operation of shopping mall (ashopping mall that focuses on
specialty stores including
Nitori)A small-scale home fashion
stores business with a goal of
creating stores where customer
can drop by every day, with avariety of popular basic items
mainly for daily necessities

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited11

⑥ Mutual opening of Shop in Shop stores in the Tokyo metropolitan area
and other urban areas, and strategic opening of stores in wider areas•

Shimachu’s understanding is that in light of the demographic trends in Japan, making
efforts towards opening new stores in the Tokyo metropolitan and other urban areas isa key issue.

•

Nitori has been one of the first in the home improvement retail and furniture sectors topromote the opening of stores in urban areas, beginning with the opening of a store in
Printemps Ginza (currently known as Marronnier Gate Ginza 2) in 2015.

Number of
Shimachu stores

9

Unique business model of“Manufacturing, Logistics, IT and
Retail Sales”

Number of
Nitori stores

1 12
15
24 39

15 52
11 38

•

By making use of Nitori's business infrastructure, Shimachu
will be able to open stores in various forms that are not tied
to its own properties.

•

Shimachu will be able to open stores in a wider range ofareas, not only in the Tokyo metropolitan areas but also invarious regions throughout Japan, as a brand that provides
high-quality furniture within a price range different to that of
Nitori’s and Shimachu will be able to realize further growtheven in the shrinking domestic market.

5 34

Note. The number of Shimachu stores is based on its homepage as of October 27, 2020

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited12

⑦ Bolstering of e-commerce sales structure•

Shimachu is currently selling furniture and interior products through e-commerce.

•With a focus on its own Nitori Net, Nitori sells a wider range of products in e-commerce than at its
offline stores. The total number of members, including Nitori Card members, app members and Nitori
Net members, is around 40 million. In recent years, Nitori has been actively promoting transfer to andnew subscriptions for the app membership program.

•

Sharing Nitori’s e-commerce foundations will further strengthen Shimachu's e-commerce operations
framework.

E-commerce sales: 44.3 billion yen
E-commerce demand surged under the COVID-19 pandemic.

Nitori’s e-commercefoundations(Billions of yen)

71.0

80.0
60.0

0.0
E-commerce
ratio

17.0

22.6

30.5

9.0 million

44.3
Forecast

40.0
20.0

FY2020 target number:(114.6% YoY)

38.6

Number of app members: 7.8 million

FY2015FY2016FY2017FY2018FY2019FY2020 (Forecast)

3.8%

4.5％

5.4%

6.4%

6.9％

10.0%
(Forecast)

Post-merger mutual
product
complementation will
enable us to introduce
a wider range of
products to customers
at a lower prices
through e-commercechannels.

Enhanced promotionof the transfer toand new
Approx.
subscriptions for theapp membershipprogram underway
Copyright 2020 Nitori Holdings All Rights Reserved ■Reproduction, reprinting or distribution is prohibited

Total number of Nitori members

40.0 million

13

⑧ Acquisition of mutual and new customers through the
adoption of a shared reward points system•

Nitori has developed its Nitori Card, app, and Nitori Net online membershipsystems, and a total of approx. 40 million people have become members•

Nitori has adopted a unique points reward system, which gives customers
the opportunity to purchase products at discounted prices, and has been
well received. Nitori believes that the introduction of shared reward points
will lead to the introduction of both companies’ products to customers of
both, at more reasonable prices.

Shimachu
Shimaho Net
Subscribers

NitoriNumber of Nitori Membership
Subscribers

40 M
7.8 M

Approx.
App Subscribers
Approx.

Target in the fiscal year ended February 2021 9.0M

Acquisition of mutual and newcustomers through the adoption ofa shared reward points system
Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited14

⑨ Sale of the Shimachu's products in overseas stores andrealization of future overseas store openings•

Nitori opened its first overseas store in Taiwan in 2007, and has since continued its
expansion into overseas markets. As of the end of the fiscal year ended February 2020,
Nitori has 66 overseas stores, mainly in Asia.

•

As the domestic market shrinks, Shimachu will be able to utilize Nitori Group’s overseas
development know-how to strive towards medium to long-term growth.

Shimachu will be able to utilize the overseas
development know-how to strive towards medium tolong-term growth overseas.
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15

Key figures related to synergies proposed by Nitori(Summary)
Shimachu

Nitori

Note

Number of stores in Japan(room for expansion)

60

541

Private brand (PB) strategy(growth driver)Started developing
PBs

PBs make up
approx. 90% of
products handledManagement
integration will
make possible toincrease sales atexisting stores ofboth companies

Operating profit to net sales
ratio (cost reduction)
ROA (asset efficiency
improvement)

6.1%
2.5%

16.7%
11.0%

TSE 1st Section retailtrade average:

5.0%

TSE 1st Section retailtrade average:

2.5%

Total number of members:

Approx. 40.0

Membership foundation
Number of members in the ecommerce customer base

Shimaho Net

millionNumber of app members:

7.8 million

FY2020 target number:
9.0 million

Overseas expansion-

66 stores

Note. The Operating profit ratio and ROA of each company are calculated by the Company from the immediately preceding annual securities report. Our Company calculated
the TSE First Section retail average from SPEEDA. The number of Shimachu stores is in accordance with the number released on its website as of October 27, 2020.

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited16

Major Conditions of the Tender Offer
Tender Offeror

TargetTender Offer Period(Planned)
Commencement Date of
Settlement (Planned)
Tender Offer Price

Nitori Holdings Co., Ltd. (Securities Code: 9843 First Section of TSE, SSE)
Shimachu Co., Ltd. (Securities Code: 8184 First Section of TSE)
Scheduled to start from Mid-November, 2020 (Planned) (30 business days
(Planned))
Note: See page 27 for Conditions of Tender Offer.
To be decided (however, if commenced in mid-Nov 2020, commencement
date of settlement will be scheduled for Dec 2020 or Jan 2021)
5,500 yen per share

Reference

Premium

date I:
9/18

Closing Price: 91.10%

Closing Price: 12.47%

Average over Past one

Average over Past one

month: 88.10%

Referencemonth: 28.93%

Average over Past threedate II:

Average over Past threemonths: 86.76%

10/28

months: 60.26%

Average over Past six

Average over Past six

months: 93.05%

months: 74.22%

Minimum Planned Purchase
Quantity

50.00％

Maximum Planned Purchase
Quantity

Not Set Forth

Aggregate Tender Offer Price

214,253,528,500 yen (using borrowing from Mizuho Bank, Ltd. and its own funds)

Tender Offer Agent

Daiwa Securities Co., Ltd.

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17

Attractive Premium Level– Comparison with share priceTender Offer Price: 5,500 yen per share
Share price of
Shimachu

Premium

Trade date nearest to the date of media report of DCM’s tender
offer (Sep. 18, 2020)

2,878 yen

91.10%

Monthly average (Aug. 18, 2020 to Sep. 18, 2020)

2,924 yen

88.10%(Closing stock price: yen)

Share price of Shimachu for the past five years

5,500 yen

6,000

5,000

Nitori’s TOB price:

DCM’s TOB price:

4,200 yen

4,000

3,000

2,000

1,000

0

Note. Information form Bloomberg. October 28, 2015 – October 28, 2020

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited18

Attractive Premium Level-Comparison with similar tender offer casesComparison with similar tender offer cases (past 3 years)(Premium: %)200%

 Vs. price on the business day
immediately before the release Vs. previous 1month average

 Vs. previous 3months average

 Vs. previous 6months average

180%
160%
140%

Nitori’s TOB premium:(vs. Sep. 18)
91.10 %

120%

100%
80%
60%
40%
20%
0%

(Companies
subject tocomparison)Note. Similar tender offer cases published in the last 3 years (Sep. 2017- Sep. 2020), completed the purchase and meet the all of following conditions are shown: (1) tender
offeror is a listed company, (2) target is a listed company, (3) is not an acquisition of shares by an issuing company, (4) ownership of voting rights before tender offer is lessthan 50%, (5) ownership of voting rights after tender offer is more than 50%, (6) TOB price is not a discount price.
(Source) Press releases of the companies, calculated by using SPEEDA

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19

Attractive Premium Level-TOB cases in the past 10 yearsTOB premium in the last 10 years
Nitori’s TOB premium:(vs. Sep. 18)
91.10%(Number of cases)

60

50

40

30

20

10

0

(Premium: %) Premium to the closing stock price on
the day immediately before the release Premium to the average closing stock price forthe month prior to the releaseNote. TOB cases published in the last 10 years (Oct. 2010-Oct. 2020) and meet all of the following conditions are shown: (1) target is a listed company, (2) is not an
acquisition of shares by an issuing company, (3) is not generally recognized as an MBO (Management Buyout)(Source) Press releases of the companies, calculated by using SPEEDA

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited20

Attractive Premium Level-Cumulative share volume ratio according to price rangeCumulative share volume ratio according to price range in the last 3 years
Nitori’s TOB price:
5,500 yen
(Turnover: shares)(Ratio to cumulative turnover)

14,000,000

100%
90%

12,000,000

A high-level premium for
all the shareholders in tradingin the past three years

10,000,000

8,000,000

80%
70%
60%
50%

6,000,000

40%
30%

4,000,000

20%

2,000,000
10%00%(Price range)

Turnover
系列1

Ration to cumulative turnover
系列2

Note. Calculated from share price (VWAP:Volume Weighted Average Price) and share volume from Oct. 24, 2017-Oct. 23, 2020
(Source) Bloomberg

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・Comparison of Nitori/DCM proposal
・Condition of Tender Offer by Nitori
・Reference Index

Comparison Between Nitori/DCM (1)NitoriDCM

TOB Price

5,500 yen per share

4,200 yen per share

TOB Period

Scheduled to commence around mid
November of 2020(30 business days (Planned))

From October 5 (Monday), 2020 toNovember 16 (Monday), 2020(30 business days)

Minimum
PlannedPurchase
Quantity

50.00%

50.00％

Maximum
PlannedPurchase
Quantity

Not Set Forth

Not Set ForthTender Offer
Agent

Daiwa Securities Co. Ltd.

SMBC Nikko Securities Inc.

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23

Comparison Between Nitori/DCM (2)Nitori

DCM

Plans to make Shimachu a wholly owned
subsidiary after the completion of theTender Offer

Matters
regardingtwo-step
acquisition

Management
structure
after TOB

Employment■If Nitori acquires 9/10th or more of thevoting rights in the TOB, Nitori plans torequest Shimachu shareholders who did nottender their shares to sell their shares(Demand for Sale of Shares)

Same as Nitori■If Nitori fails to acquire 9/10th of thevoting rights in the TOB, Nitori plans torequest Shimachu to hold an extraordinary
shareholder meeting to carry out shareconsolidation (Share Consolidation)■ Nitori has offered the Board of Directors
and the Special Committee of Shimachu that
it will make a decision upon consultation■Since Nitori wishes to discuss with
Shimachu and decide on specific details
after consultation with Shimachu, at the
moment, Nitori has no specific plan tochange the current management structure
and the employment and terms thereof of
Shimachu

Copyright 2020 Nitori Holdings All Rights Reserved

DCM will appoint 1 director of
Shimachu（Shimachu will appoint 2 directors of
DCM）
Will retain employment of employees
for at least 3 years■Reproduction, reprinting or distribution is prohibited

24

Comparison Between Nitori/DCM (3)DCM

Nitori<Synergy><Synergy>

1.

1. Improvement of sales and profit margins through mutual
supply, etc. of PB products

2.

Details ofAlliance,synergyeffectExpanding sales opportunities for high-quality
furniture and contributing to the realization ofenriched lifestyles for a wider range of customers by
the expansion of Shimachu’s stores nationwide
Expansion of sales by mutual supplementation
between the Shimachu's home center (HC) productswith Nitori’s home fashion (HFa) products, andimprovement of profit margin by the sharing ofknow-how on the development of private brand (PB)
products

2. Improvement of product development ability
3. Improvement of profit margin utilizing economies of scale
4. Use cross-company membership points to enticecustomers to visit both companies’ stores and attract
new customers
5. Cross-company use of business resources and know-how
6. Lower selling and administration costs

3.

Reduction of costs and improvement of asset
efficiency through joint use of logistics functions

4.

Acceleration of cost reduction and improvement by
the provision of function and know-how pertaining to
the various supply chains possessed by Nitori Groupin its capacity as a “Manufacturing, Logistics, IT and
Retail Sale” business<Planned Business Alliance>

5.

Pursuit of synergy with the Nitori Mall and Deco
Home businesses

3. Provision of the DCM’s home-improvement and housingmaterials to Shimachu

6.

Mutual opening of “Shop in Shop” stores in the Tokyo
metropolitan area and other urban areas, andstrategic opening of stores in wider areas

4. Provision of Shimachu’s furniture and home fashion
products to DCM Group7.

Bolstering of e-commerce sales structure8.

Acquisition of mutual and new customers through the
adoption of a shared reward points system

9.

Sale of Shimachu’s products in overseas stores andrealization of future overseas store openings

Copyright 2020 Nitori Holdings All Rights Reserved

7. Coordination and cooperation in EC business1. Cooperative purchasing of national brand products
2. Sharing of private brand products (including joint
development)

5. Consolidation of mutual supply chains and logistics, etc.
6. Cooperation and collaboration in EC business
7. Sharing of know-how and other forms of mutual
cooperation in the opening of new stores, renovation ofexisting stores and other management matters
8. Other matters to be separately agreed upon by both DCM
and Shimachu■Reproduction, reprinting or distribution is prohibited25

Share Value Calculation Result
DCM’s TOB price:
4,200 yen

Nitori’s TOB price:
5,500 yen

SMBC Nikko Securities/DCM’s third-party valuation organization (Share valuation report)
2,849

Market stock price市場株価平均法①
method (1)Market stock price市場株価平均法②
method (2)2,894

類似会社比較法
Comparable company
analysis
method
DCF法
DCF method

2,894

2,945
3,047
3,686
3,166

4,837

Nomura Securities/Shimachu’s third-party valuation organization (Share valuation report)
Market stock price市場株価平均法①
method (1)2,849Market stock price市場株価平均法②
method (2)Comparable company analysis
類似会社比較法
method

2,945

2,894

3,590

2,217

3,311
3,350

DCF法
DCF method

4,383

Plutus Consulting/Shimachu Special Committee’s third-party valuation organization(Share valuation report and a fairness opinion)
2,849

市場株価平均法
Market stock pricemethodComparable company
analysis
類似会社比較法
method

2,945

2,670

2,995

DCF method
DCF法

3,371

4,219

Daiwa Securities/Nitori’s third-party valuation organization
2,849

Market stock price市場株価平均法①
method (1)3,157Market stock price市場株価平均法②
method (2)類似会社比較法
Comparable company
analysis
method

4,890
4,114

2,239
2,964

DCF法

DCF method

1,500

2,945

2,000

2,500

3,000

5,763
3,500

4,000

4,500

5,000

5,500

6,000

* Shimachu Special Committee obtained a fairness opinion from Plutus Consulting stating that the Tender Offer Price of
4,200 yen per share is fair from a financial perspective
Note. Based on DCM Holding’s Tender Offer Registration Statement

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26

Conditions of Tender Offer by Nitori
No material obstacles to the fulfillment of the conditions forthe commencement of the Tender Offer by Nitori as of Today
Details

Understanding of Nitori

License andApproval

The implementation of the Tender Offer does notconflict, in any material respect, with any of thelicenses and approvals under applicable laws andregulations or any of the terms and conditions ofsuch licenses and approvals (the "License andApproval"), or violate any of the procedures
necessary for the License and Approval, nor is any
such conflict or violation reasonably expected tooccur (With respect to the expiration of the Nonacquisition Period and the Period for Measures underthe Antitrust Act required for the implementation of
the Tender Offer, this condition will be deemed tohave been satisfied if Nitori determines that these
periods are reasonably expected to expire on or
before the day preceding the last day of the tender
offer period under the Tender Offer).

The obtainment of the License and Approval required
for the implementation of the Tender Offer is the
expiration of the Non-Acquisition Period and the
Period for Measures under the Antitrust Act, and theexpiration of these periods can be determined by
mid-November at the latest. Therefore, the conditionin the left column is expected to be fulfilled.

No grounds
forwithdrawal

There has occurred no event that would give rise toa material adverse effect on Shimachu's financial
status (which means any event justifying withdrawal
of a tender offer as provided in the proviso to Article
27-11, Paragraph 1 of the Financial Instruments andExchange Act).

Nitori is not aware of any grounds for withdrawal andthe condition in the left column is expected to be
fulfilled.

Noncompletionof TOB by
DCM

DCM’s Tender Offer has not been successfullycompleted (including a situation where DCM's Tender
Offer is continuing).

Nitori aims to commence the Tender Offer before
DCM completes its Tender Offer, so the condition in
the left column is expected to be fulfilled.

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27

Comparison of Major Management Indices of
Nitori/DCM
NitoriDCM

2,481.1 billion yen

Market value

209.3 billion yen

642.3 billion yen

Net sales

437.4 billion yen

107.5 billion yen

Operating income

20.8 billion yen

71.4 billion yen

Net income

13.8 billion yen

13.5%

ROE

7.1%

11.0%

ROA

3.2%

28.7x

P/E Estimate

10.1x

4.0x

PBR

0.9x

607 stores

Number of stores

677 stores

Approx. 40.0 million

Aggregate number of Nitori card
members, app members, and Nitorinet members

Number ofmembers

Number of Myvot members:
Approx. 3.4 million

Note. Performance numbers and ROE of each company are based on latest ASR. ROA and PER and PBR is obtained by using SPEEDA, share price is closing price ofOctober 28, 2020, number of DCM stores is based on DCM’s financial explanatory materials for the second quarter ending Feb. 2021.

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Reference Index: Relative Share Price
Comparison of share price growth rate in the last 10 years
800

700

600

500

400

300

200

100

0

NITORI

DCM

TOPIX

Note. Calculated with October 20, 2010 as 100. Changes from October 20, 2010 to October 20, 2020

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited29

Reference Index: TSR(Total Shareholder Return)
TSR Comparison
800%
722%
700%
600%
468%

500%
400%
300%

245%
202%

200%

138%

138%

136%

152%

100%
0%

DCM

Nitori1 year

3 years

5 years

10 years

Note. Information from Bloomberg. Calculated based on October 13, 2020.

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30

•

•

•

•

•

•

This presentation is intended to explain the Tender Offer to the Board of Directors of Shimachu and the Shimachu Special Committee andhas not been prepared for the purpose of soliciting an offer to sell shares. If shareholders wish to make an offer to sell their shares, theyshould first read the Tender Offer Explanation Statement concerning the Tender Offer and make an offer to sell their shares at their own
discretion. This presentation shall neither be, nor constitute a part of, an offer to sell or purchase, or solicitation to sell or purchase, any
securities, and neither this presentation (or a part of this presentation) nor its distribution shall be interpreted to constitute the basis of
any agreement in relation to the Tender Offer, and this presentation may not be relied upon at the time of entering into any suchagreement.
The Tender Offer shall be implemented in compliance with the procedures and information disclosure standards provided by the Financial
Instruments and Exchange Act of Japan, which procedures and standards are not necessarily identical to the procedures and information
disclosure standards applied in the United States. Specifically, Section 13(e) and Section 14(d) the Securities Exchange Act of 1934 (asamended; “Securities Exchange Act”) and the rules promulgated under such Section do not apply to the Tender Offer, and the Tender
Offer is not necessarily in compliance with the procedures and standards thereunder. It is not necessarily the case that all financial
information in this presentation are equivalent to financial statements of companies in the United States. It may be difficult to enforce any
right or claim arising under U.S. federal securities laws because the Tender Offeror and Shimachu are incorporated outside the UnitedStates and all of their directors are non-U.S. residents. Shareholders may not be able to sue a company outside the United States and its
directors in a non-U.S. court for violations of the U.S. securities laws. Furthermore, there is no guarantee that shareholders will be able tocompel a company outside the United States or its subsidiaries and affiliates to subject themselves to the jurisdiction of a U.S. court.
The financial advisor of the Tender Offeror or Shimachu and their respective affiliates may, within their ordinary course of business,purchase, or conduct any act toward the purchase of, the shares of the common stock of Shimachu for their own account or for theircustomers’ accounts outside the Tender Offer prior to the commencement of, or during, the period of the Tender Offer, etc. in accordancewith the requirements of Rule 14e-5(b) under the Securities Exchange Act to the extent permissible under the Financial Instruments andExchange Act and other applicable laws and regulations in Japan. If any information concerning such purchase is disclosed in Japan, thedisclosure of such information will be made in the United States in a similar manner.
All the procedures in connection with the Tender Offer shall be taken in the Japanese language. While a part or all of the documents inconnection with the Tender Offer may be prepared in English, the Japanese documents shall prevail in case of any discrepancies between
Japanese documents and corresponding English documents.
This presentation contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933 (as amended) and Section
21E of the Securities Exchange Act. The actual results may be significantly different from the projections implied or expressly stated as“forward-looking statements” due to known or unknown risks, uncertainties or other factors. None of the Tender Offeror, Shimachu or anyof their respective affiliates assures that such express or implied projections set forth herein as “forward-looking statements” will
eventually prove to be correct. “Forward-looking statements” contained herein were prepared based on the information available to theTender Offeror as of the date of this presentation and, unless required by laws and regulations, neither Tender Offeror nor its relatedparties including related companies shall have the obligation to update or correct the statements made herein in order to reflect the future
events or circumstances.
Some countries or regions may impose restrictions on the announcement, issue or distribution of this presentation. In such cases, pleasetake note of such restrictions and comply with them. In countries or regions where the implementation of the Tender Offer is illegal, evenupon receiving this presentation, such receipt shall not constitute a solicitation of an offer to sell or an offer to buy shares relating to theTender Offer and shall be deemed a distribution of materials for informative purposes only.

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited31

[Warning concerning forward-looking statements]
This document contains forward-looking statements regarding the future plans, strategies andperformance of Nitori and its affiliates. These statements are not historical facts, but rather forecasts
based on assumptions and beliefs based on information currently available to Nitori. They are also
subject to risks and uncertainties related to economic trends, consumer spending, market demand,
taxation and regulatory systems, among other factors. It is therefore important to note that actual
results may differ materially from those projected by Nitori.
This material contains unaudited reference figures and is rounded to the nearest whole number.

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited32