Nitori Holdings Co., Ltd.

Notice Concerning Commencement of Tender Offer for Share
Certificates of Shimachu Co., Ltd. (8184) and Execution ofManagement Integration Agreement with Shimachu Co., Ltd.

November 13, 2020
Nitori Holdings Co., Ltd.
TSE, First Section, XSAP (9843)

Announcement
 Nitori Holdings Co., Ltd. (“Company”) has decided to commence atender offer for Shimachu Co., Ltd. (“Shimachu”) from Nov. 16,
2020.
• Tender Offer Period: Nov. 16 (Mon) 2020 to Dec. 28 (Mon) 2020 (30business days)• Tender Offer Price: 5,500 yen per share (unchanged from announcement on
Oct. 29)

 In addition, the Company and Shimachu continued discussions on
the management integration through the Tender Offer, and as aresult, reached an agreement to integrate management andexecuted a Management Integration Agreement.
• Shimachu made the following resolution at the BoD Meeting held on Nov.
13, 2020.
 Approval of execution of Management Integration Agreement with theCompany Decision to approve the Tender Offer by the Company and to encourage
its shareholders to tender their shares Withdrawal of approval of, and opinion on recommendation of, thetender offer by DCM Holdings
Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited2

Developments from last announcement on Oct. 29, 2020
Announcement on Oct. 29

Announcement on Nov. 13 (Today)

Commencem
ent Date ofTOB

TOB scheduled tocommence in midNovember 2020

TOB to commence from
Nov. 16

Conditionsof TOB

Conditions expected to be
fulfilled

Confirmed that theconditions have actually
been fulfilled

Management
Structure,
Employment
after TOB

■offered the Board of Directors
and the Special Committee of
Shimachu that it will make adecision upon consultation■wishes to discuss and decideon specific details after
consultation, at the moment,
has no specific plan to change
the current management
structure and the employment
and terms thereof

Alliance,synergyeffectSuggested the synergy
anticipated by the Company to
the Board of Directors and theSpecial Committee of Shimachu

Copyright 2020 Nitori Holdings All Rights Reserved

ExecutedManagement Integration
Agreement with Shimachu(maintain management
structure and employment)
Had continued discussions
with Shimachu and agreed thebusiness alliance and synergy■Reproduction, reprinting or distribution is prohibited3

Summary of Management Integration Agreement

PurposeIntegration
Promotion
Committee

Shimachu’s
Management
SystemNitori’sManagement
SystemRealize management integration in a spirit of coexistence and shared prosperity and to
maximize the corporate value of the Company group including Shimachu after the Tender
Offer by providing the business alliance between the Company group and Shimachu and the
management system, etc. of Shimachu after the Tender Offer.
•

For smooth implementation of the management integration, an Integration Promotion
Committee consisting of persons designated respectively by the Company and Shimachu
will be established on the commencement date of the settlement for the Tender Offer.

•

Discuss and decide on the five-year business plan of Shimachu, the alliance mattersregarding the creation of synergies between the Company group and Shimachu and othermatters relating to the implementation of the management integration.

•

Greatest efforts will be made to a reasonable extent to achieve Shimachu’s five-yearbusiness plan.

•

Current system for the executive directors of Shimachu will be maintained for at least five
years after the commencement date of the settlement of the Tender Offer.

•

After the commencement date of the settlement of the Tender Offer, three persons
separately designated by the Company will be newly appointed as directors of Shimachu.

•

After the commencement date of the settlement of the Tender Offer, Mr. Takaaki Okano,
who is the president and representative director of Shimachu, will be newly appointed as
director of the Company, and other four executive directors of Shimachu will be newly
appointed as executive officers of the Company.

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

Summary of Management Integration Agreement•

For at least five (5) years after the commencement date of the settlement of the Tender Offer,basically, the employees of Shimachu will be maintained and the conditions of their employment
will not be less than the level as of the date of the execution of the Management Integration
Agreement.

•

If Nitori Group promotes personnel exchange with the employees of Shimachu (including job
transfer), the intention of the employees of Shimachu will be appropriately taken into account.

•

On and after the commencement date of the settlement of the Tender Offer, the trade name of
Shimachu will not be changed, and the trademarks and brands of Shimachu will be maintained.

•

On and after the commencement date of the settlement of the Tender Offer, if any stores of
Shimachu are integrated or abolished, an agreement will be made through faithful consultation.

Headquarters
location of
Shimachu•

The headquarters location of Shimachu will not be changed for the time being after thecommencement date of the settlement of the Tender Offer.

Matters for
Prior
Consultation
and Advance
Consent•

In case Shimachu decides on certain important matters after the commencement date of
the settlement of the Tender Offer, it will consult with Nitori on matters to be decided or
implemented in advance, and will obtain Nitori's written consent. Provided, however, that
there will be no limitation on the acts or omissions that Shimachu deems reasonably
necessary based on the duty of care of its directors while its shares are listed.

Matterconcerning thesystem for
mutually sharing
information•

After the commencement date of the settlement of the Tender Offer, Shimachu and Nitori
Group will discuss and determine the structuring of the system for mutuallycommunicating and sharing various information regarding their respective business.

Employment of
Employees andMaintenanceof Employment
Conditions of
Shimachu

Trade nameof Shimachu

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited5

Details of the Business Alliance after the Tender Offer
To maximize synergy through management integration, Nitori and Shimachu will implement the following
business alliance on and after the commencement date of settlement relating to the Tender Offer.
1.

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

2.

Expansion of sales by mutual supplementation between the Shimachu's home center products with Nitori’s
home fashion products, and improvement of Shimachu’s profit margin by the sharing of the Nitori's private
brand product development capabilities and the Shimachu's knowledge and other know-how in its business
field

3.

Efficient distribution of products, including furniture, through joint use of logistic functions, including
distribution centers, and sharing of distribution management know-how, expansion of customer base andcustomer satisfaction

4.

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

5.

Development of stores to meet diverse customer needs through sharing know-how related to operation andmanagement of stores, including tenant invitation and promotion of store development in densely populated
areas

6.

Diversification of Shimachu stores through mutual opening of Shop in Shop stores in the Tokyo metropolitan
area and central Tokyo and strategic opening of stores in wider areas

7.

Enhancement and development of EC of both companies through operation and management of EC sites andEC apps, utilization of EC member information, and delivery management of products related to EC sales,and sharing know-how on other EC projects

8.

Mutual expansion of sales and improvement of customer satisfaction through acquisition of mutual and newcustomers through the adoption of a shared reward points system

9.

Promotion of overseas sales of Shimachu products and future overseas expansion of Shimachu storesthrough sharing of know-how of Nitori's overseas store network and openings as well as by mutual
cooperation

10. Other matters as separately agreed between Nitori and Shimachu.
Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited6

Major Terms of the Tender Offer
Tender Offeror

Nitori Holdings Co., Ltd. (Security Code 9843 First Section of TSE and XSAP)

Target Company

Shimachu Co., Ltd. (Securities Code 8184 First Section of TSE )Tender Offer Period

Nov. 16, 2020 (Mon.) to Dec. 28, 2020 (Mon.) (30 business days)

Settlement Date

January 6, 2021 (Wed.)

Purchase Price

JPY 5,500 per share of common shares

Premium

Refer

Closing Price： 91.10%

Refer

Closing Price： 12.47%

ence

1 month average： 88.10%ence

1 month average： 28.93%Date

3 months average： 86.76%

Date

3 months average： 60.26%

9/18

6 months average： 93.05%

10/28

6 months average： 74.22%

Min. planned purchase quantity

50.00％

Max. planned purchase quantity

Not setTotal purchase price

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

Tender Offer Agent

Daiwa Securities Co. Ltd.

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

7

•

•

•

•

•

•

This Document is intended to explain the Tender Offer and has not been prepared for the purpose of soliciting an offer to sellshares. 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 an offer to sell their shares at their own discretion. This Document shall neither be, norconstitute a part of, an offer to sell or purchase, or solicitation to sell or purchase, any securities, and neither this Document (or apart of this Document) nor its distribution shall be interpreted to constitute the basis of any agreement in relation to the Tender
Offer, and this Document may not be relied upon at the time of 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 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 (as amended; “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 notnecessarily the case that all financial information in this Document 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 Nitori and
Shimachu are incorporated outside the United States and all of their directors are non-U.S. residents. Shareholders may not beable 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 to compel 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 Nitori 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 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 andExchange Act and other applicable laws and regulations in Japan. If any information concerning such purchase is disclosed inJapan, the disclosure 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 in connection 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 Document contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933 (as amended) andSection 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 Nitori,
Shimachu 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 theinformation available to Nitori as of the date of this Document and, unless required by laws and regulations, neither Nitori nor its
related parties including related companies shall have the obligation to update or correct the statements made herein in order toreflect the future events or circumstances.
Some countries or regions may impose restrictions on the announcement, issue or distribution of this Document. In such cases,
please take note of such restrictions and comply with them. In countries or regions where the implementation of the Tender Offeris illegal, even upon receiving this Document, such receipt shall not constitute a solicitation of an offer to sell or an offer to buy
shares relating to the Tender 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 prohibited8

[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 prohibited9

Nitori Holdings Co., Ltd.

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

Reference Material
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
Business

Overview
Trade
Name

Nitori Holdings Co., Ltd.

Head Office

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

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

Representative

Akio Nitori

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

History
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

1973-2002

Vision Statement
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

Curtains
and rugs

Bedding

Dining andkitchenware

Small
appliances

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“Manufacturing, Logistics,
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:
Operation of shopping mall (ashopping mall that focuses on
specialty stores including
Nitori)
Copyright 2020 Nitori Holdings All Rights Reserved

Deco Home business:
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■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

24 39
15 52
11 38

15
5 34

•

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.

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.
(Billions of yen)

71.0

80.0
60.0

20.0
0.0
E-commerce
ratio

17.0

22.6

30.5

44.3

Forecast

40.0

Number of app members: 7.8 million
FY2020 target number:(114.6% YoY)

38.6

Nitori’s e-commercefoundations

FY2015FY2016FY2017FY2018FY2019FY2020 (Forecast)

3.8%

4.5％

5.4%

6.4%

6.9％

10.0%

(Forecast)

9.0 million

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

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:

Membership foundation
Number of members in the ecommerce customer base

Approx. 40.0

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%
Average over Past threemonths: 86.76%

Reference
date II:
10/28

month: 28.93%
Average over Past threemonths: 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.

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

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

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited21

・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.

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

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 structure

6. Cooperation and collaboration in EC business

8.

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

7. Sharing of know-how and other forms of mutual
cooperation in the opening of new stores, renovation ofexisting stores and other management matters

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.

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.

Copyright 2020 Nitori Holdings All Rights Reserved■Reproduction, reprinting or distribution is prohibited28

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%
200%

245%
138%

202%

138%

136%

152%

100%
0%

NitoriDCM
1 year

3 years

5 years

10 years

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

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

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