November 13, 2020
To whom it may concern:
Nitori Holdings Co., Ltd.
Announcement on"Notice Concerning Commencement of Tender Offer for Share Certificates of Shimachu Co.,
Ltd. (Securities Code: 8184), and Execution of Management Integration Agreement with
Shimachu Co., Ltd."
and"Notice Concerning Commencement of Tender Offer for Share Certificates of Shimachu Co.,
Ltd. (8184) and Execution of Management Integration Agreement with Shimachu Co., Ltd."

Nitori Holdings Co., Ltd. (the "Company") resolved today to commence a tender offer to acquire
Shimachu Co., Ltd. ("Shimachu") (the "Tender Offer") on November 16, 2020. In addition, theCompany and Shimachu agreed on management integration through the Tender Offer, and executedmanagement integration agreement (the "Integration Agreement") today.
The Company publishes below (i) "Notice Concerning Commencement of Tender Offer for Share
Certificates of Shimachu Co., Ltd. (Securities Code: 8184), and Execution of Management Integration
Agreement with Shimachu Co., Ltd.," which is disclosed on TDnet today, and (ii) " Notice Concerning
Commencement of Tender Offer for Share Certificates of Shimachu Co., Ltd. (8184) and Execution ofManagement Integration Agreement with Shimachu Co., Ltd.," which is an explanatory material
regarding the Tender Offer and the Integration Agreement.

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 about the process of the tender offer from shareholders and investors:
Tender Offer Agent for Nitori Holdings (Daiwa Securities Co., Ltd.)
Daiwa Securities Contact Center (Japanese Only)
TEL: 0120-010101 (Weekdays 8:00 - 18:00)

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 (Kuhara)[Translation]
November 13, 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 Commencement of Tender Offer for
Share Certificates of Shimachu Co., Ltd. (Securities Code: 8184),
and Execution of Management Integration Agreement with Shimachu Co., Ltd.
As announced in "Notice Concerning Planned Commencement of Tender Offer for Share
Certificates of Shimachu Co., Ltd. (Securities Code: 8184)" dated October 29, 2020 (the"Companys Press Release Dated October 29"), Nitori Holdings Co., Ltd. (the "Company" or
the "Tender Offeror") resolved at its board of directors meeting held on the same date toimplement a tender offer (the "Tender Offer") under the Financial Instruments and Exchange
Act of Japan (Act No. 25 of 1948, as amended; the "Act") for all of the shares of the common
stock of Shimachu Co., Ltd. (securities code: 8184, First Section of Tokyo Stock Exchange, Inc.
(the "Tokyo Stock Exchange"); the "Target") that are listed on the First Section of the Tokyo
Stock Exchange (the "Target Shares") (excluding the Target Shares owned by the Company andthe treasury shares owned by the Target) for the purpose of making the Target a wholly-owned
subsidiary of the Company subject to the satisfaction of all of the preconditions described below(the "Tender Offer Conditions") (or waiver by the Company of the Tender Offer Conditions(but limited to the below-mentioned Conditions (II) and (III)) as a condition for commencementof the Tender Offer.
(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 definedin "(II) Conditions for withdrawal of the Tender Offer, detail of such conditions andmethod of disclosure of withdrawal" under "(9) Other conditions and methods ofpurchase" under "2. Outline of Tender Offer" under "I. Tender Offer" below) underthe Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (ActNo. 54 of 1947, as amended; the "Antitrust Act") required for the implementation of
the Tender Offer, this condition will be deemed to have been satisfied if the Company
determines that these periods are reasonably expected to expire on or before the day1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 theTargets 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); and(III) The tender offer by DCM Holdings Co., Ltd. ("DCM Holdings") for the Target Shares("DCM Holdings Tender Offer") published in "Notice Concerning Commencementof 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") has not been successfully completed (including a situation where DCM
Holdings Tender Offer is continuing).
With respect to the acquisition of the Target Shares through the Tender Offer (the "Share
Acquisition"), the Company filed a Prior Notification (as defined in "(II) Conditions forwithdrawal of the Tender Offer, detail of such conditions and method of disclosure ofwithdrawal" under "(9) Other conditions and methods of purchase" under "2. Outline of Tender
Offer" under "I. Tender Offer" below) with the Fair Trade Commission of Japan ("JFTC") as of
October 27, 2020, and the relevant Prior Notification was accepted on the same day.
Considering the substance of the consultation between the Company and the JFTC regarding
the Prior Notification that took place between the date of acceptance of the notification and thedate of this Press Release, the Company has determined that all of the following are reasonably
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; (ii) no issuance of a Prior
Notice of Cease and Desist Order (as defined in "(II) Conditions for withdrawal of the Tender
Offer, detail of such conditions and method of disclosure of withdrawal" under "(9) Other
conditions and methods of purchase" under "2. Outline of Tender Offer" under "I. Tender Offer"
below); and (iii) non receipt of any urgent temporary suspension order from the court. Thus,
the Company has confirmed the satisfaction of Condition (I) above, and has also confirmed thesatisfaction of Conditions (II) and (III) above (Regarding Condition (III) above, in DCM
Holdings Tender Offer Commencement Press Release , the tender offer period under DCM
Holdings Tender Offer is stated as the period starting from October 5, 2020 (Monday) andending on November 16, 2020 (Monday).).
Therefore, the Company decided today to commence the Tender Offer on November 16, 2020.
In addition, as a result of continued discussions between the Company and the Target sinceNovember 1, 2020 regarding the implementation of a management integration between the twocompanies (the "Management Integration") through the Tender Offer, as described below, on
November 13, 2020, the Company and the Target reached an agreement to effect theManagement Integration, and executed an agreement for the Management Integration (the"Management Integration Agreement"). The Company and the Target are to implement theManagement Integration in a spirit of coexistence and shared prosperity with the aim of
maximizing the corporate value of the Company Group (collectively referring to the Company
and the consolidated subsidiaries and equity method affiliates of the Company; hereinafter thesame), including the Target, after the Tender Offer (for the terms of the Management Integration
2

Agreement, see "(6) Matters related to material agreements concerning Tender Offer" under "1.
Purpose of Tender Offer" under "I. Tender Offer" below.).
I. Tender Offer
1. Purpose of Tender Offer(1) Outline of the Tender Offer
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).
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 "Summary of Non-consolidated Financial Results for theYear Ended August 31, 2020 (Based on Japanese GAAP)" published by the Target
on October 2, 2020 (the "Earnings Briefing"). Hereinafter the same applies.
(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 Targets stock.
As stated above, in the Tender Offer, the Company sets the minimum planned purchase quantity3

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 Targets shareholders may assume that the Tender Offer is less likely to be consumma ted
compared 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 Targets 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 b elow) 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 thedate 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).
(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 Targets
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 Targets
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 the4terms 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.
As published in the Companys Press Release Dated October 29, in view of the announcementof the Targets board of directors and the special committee consisting of the Independent
Outside Directors of the Target (the "Target Special Committee") that they are prepared toaccept competitive offers even after the commencement of the DCM Holdings Tender Offer,
the Company hoped to make, following the process therefor, a proposal for the Management
Integration between the Company and the Target through the Tender Offer.
On October 29, 2020, the Company proposed to make proposal to the Targets board of directors
and the Target Special Committee for the Management Integration with the Company andmaking the Target a wholly-owned subsidiary of the Company through the Tender Offer, as
well as to provide explanations about the Companys proposal including the Tender Offer to theTargets board of directors and the Target Special Committee so t hat they will properly
understand the substance of the Companys proposal and approve the Tender Offer. Following
the proposal by the Target, the Company had opportunities to provide explanations about theTender Offer and the outline of the Management Integration, (i) to the representative directors,
etc. of the Target on November 1, 2020, (ii) to the Target Special Committee on November 4,
2020, and (iii) to the representative directors, etc. of the Target and the Target Special
Committee on November 9, 2020 respectively. In relation to the explanations about the Tender
Offer and the Management Integration by the Company, the Company has received feedbacks
from the Target Special Committee, that the synergies the Company had proposed to the Target(For more information, please refer to "(III) Reasons why the Company is implementing theTender Offer " under "(2) Background and reasons to the decision to implement the Tender
Offer" below.) surpass the synergies DCM Holdings had proposed in DCM Holdings Tende r
Offer Commencement Press Release in medium to long-term perspective.
Alongside the explanations to the representative directors, etc. of the Target and the Target
Special Committee by the Company described above, the Targets board of directors and theTarget Special Committee have indicated their intention to the Company on November 5, 2020,
to negotiate on the Management Integration Agreement in considering and assessing theManagement Integration the Company proposes. On and after the date, the Company has been5

discussing the Management Integration and negotiation on the Management Integration
Agreement with the Targets board of directors and the Target Special Committee (suchdiscussion and negotiation have been done on continual basis through exchanging e-mails,
discussing on conference calls, and discussing at a face-to face meeting which took place on
November 9, 2020 as described above.). In such negotiation, the Company came to believe that
the Target was looking at the difference with the terms and conditions for the management
integration agreement executed with DCM Holdings (the "Management Integration Agreement(DCM Holdings)") as one of the perspectives in the assessment. Therefore the Company
decided as its basic policy to reach agreement on the terms and conditions with the Target,
taking into account the terms and conditions of the Management Integration Agreement (DCM
Holdings).
In the negotiation of the Management Integration Agreement, the Targets board of directors
and the Target Special Committee requested that (i) the employment of the Target’s employees
and the Target’s management system be maintained for five years since the commencement
date of the settlement for the Tender Offer, considering that (a) the Management Integration
Agreement (DCM Holdings) provides that the Target’s employment and management system
will be maintained for three years and for the immediate future, respectively, but (b) the Target
considers to implement its five-year business plan to be established based on the discussion
with the Company, and (ii) the Target dispatch its person(s) as executive officer(s) of theCompany given that the Company will send one person as a director to the Target (This request(ii) was addressing the Company’s prior position that it would be unacceptable for the Company
to appoint a person of the Target as a director of the Company. Meanwhile, under theManagement Integration Agreement (DCM Holdings), DCM Holdings and the Target haveagreed to dispatch directors to each other.).
The Company has accepted the request (i) above because executing the five-year business planby the current employees and management of the Target will possibly maximize the corporate
value of both companies. As for the request (ii) above, in light of making the collaboration
between both companies closer, the Company suggested that (A) the Company dispatch three
persons to the Target as its directors, and instead, (B) the Target dispatch one person to theCompany as its director and four persons as its executive officers. This suggestion has been
accepted by the Target. Further, in the negotiation of the Management Integration Agreement,
for the purpose of obtaining the Target’s support of the Tender Offer, the Company suggested aprovision where the Target is obligated to decide to support the Tender Offer and to recommend
to its shareholders to tender their shares in the Tender Offer, and such suggestion has been
accepted by the Targets board of directors and the Target Special Committee.
As a result, both companies have come to share common understandings on November 9, 2020,
that (i) the following synergies are expected to be realized through the Management Integration,(ii) measures for early realization of such synergies should be promptly implemented after theTarget becomes the Companys subsidiary through the Tender Offer, and (iii) a management
integration agreement should be executed to establish a business alliance between bothcompanies and any other management structures of the Target after the Tender Offer, in orderto realize such synergies. Both companies see the following synergies as not conflicting andcontradicting with the substance of the synergies which the Company has proposed to the Target(For more information, please refer to "(III) Reasons why the Company is implementing the6

Tender Offer " under "(2) Background and reasons to the decision to implement the Tender
Offer" below.), and they embody such substance more.
(a)Expanding sales opportunities for high-quality furniture and contributing to realizationof enriched lifestyles for a wider range of customers by the expansion of Targets storesnationwide
 The Targets furnitur e, carefully selected utilizing its strong relationship withleading furniture manufacturers, are set at a higher price range than those of theCompanys, and they are differentiated from the Companys furniture (which aremainly private brand (PB) furniture) in terms of the price range and customer
preference. It can be expected that sales will expand by opening shops in new areas(areas other than the Tokyo metropolitan area and the Kansai area) utilizing theCompanys store development capabilities, and that delivery will be efficiently
done using the Company s e-commerce and furniture delivery networks.
 In addition, the nationwide deployment by the Target of its furniture with pricerange that are different from those of the Companys will contribute to therealization of even more enriched lifestyle for customers through the provision ofa wider range of options to meet their various needs as the Company Group,
including the Target after the Management Integration.

(b)

Expansion of sales by mutual supplementation between the Targets home center
products and the Companys home fashion products, and improvement of the Targets
profit margin by the development of PB products through the sharing of the Companys
PB product development capabilities and the Targets knowledge and other know -howin its business field In addition to the sale of furniture, the Target, as a home improvement retailbusiness, also sells a lot of products including DIY, outdoor, gardening, and pet
supplies that allow the enrichment of customers lifestyles. On the other hand, theCompany has expanded its range to products such as curtains, rugs, bedding,dining and kitchenware, and small appliances, which enrich the daily lives of evenmore customers, in addition to furniture, sold from the time of the Companys
establishment. It is expected that the mutual complementation of products of bothcompanies will make it possible to meet customers needs for both exterior a ndinterior living environments, contributing to the increase in revenue of bothcompanies preexisting stores.
 By having the Target utilize PB product development know-how of the Company,(around 90% of its products are PB products), the Targets PB produ ct
development efforts will be further accelerated, and by using the Companys PB
products as a base for some of the products that both companies have in common,
the Targets profit margin is expected to improve.
 In addition, the combination of the Companys product development capabilities
and the Targets product development know-how in the field of home improvement
retails is expected to make possible the creation of even more novel and attractive
PB products by both companies, which will exceed the expectations of thecustomers of both companies.

(c)

Joint use of logistics functions including distribution centers, and improved efficiency
7

of product delivery including furniture, expanding the customer base and increasing
customer satisfaction by sharing know-how for delivery management
 With the Targets existing store network and logistics base, added to t heCompanys distribution network managed and operated in a unified manner inorder to achieve both cost efficiency and speed, it will be possible to build a more
efficient logistics network, and by combining the two companies volume of goods,
the companies could benefit from the economy of scale (reduction in costs due toincreased production and sales volume) more. Through this, both companies
logistics costs will be reduced, and more frequent product deliveries will become
possible.
 As a result, it will be able to further improve the customers satisfaction with theCompany Group, including the Target after integration, by reducing the lead timerequired to deliver products to customers and reducing delivery costs, etc.
 In particular, the Companys nationwide last one mile furniture distribution
network (Note 4) is expected to contribute to improving the efficiency of thedelivery of the Targets furniture , expanding the customer base and further
increasing customer satisfaction, at an early stage.
(Note 4) It refers to the distribution network which transports products from theCompany Groups stores or distribution bases to end users. The same applies
hereinafter.
(d)

Cost reduction and improvement of operational efficiency at the Target by theprovision of function and know-how pertaining to the various supply chains possessedby the Company Group in its capacity as a "Manufacturing, Logistics, IT and Retail
Sales" business By utilizing the function and know-how of the Company Groups vertically integrated supply chain, covering product planning, manufacture, distribution, andsales by itself, the Target can expect cost reduction through improving efficiency
at each process of the Targets business.
 In addition, not only the drastic cost reduction at the Target, but also further
improvements in operational efficiency are expected, such as cost reduction by
joint procurement of furniture and fixtures used at stores, and realization of costeffective advertisement and promotional activities by utilizing the Company
Groups advertising agency compan y, etc.

(e)

Active expansion of its stores along with the variety of customers needs, or in densely
populated areas, through sharing of know-how for operation and management of storesincluding tenants invitation
 By sharing know-how for attracting a variety of tenants and developing alternative
operational styles suitable for densely populated areas, and the relationships builtwith potential tenant companies, all of which the Company established throughthe development of the Nitori Mall business, which operates shopping malls, andthe Deco Home business, a small-scale home fashion stores business with a goalof creating stores where customer can drop by every day, with a variety of popular
basic items mainly for daily necessities, it will be possible to improve the speedof the business development, such as attracting a variety of tenants in the Targets
stores and opening stores in densely populated areas.
8

(f)Diversifying forms to open the Targets stores, and promoting expansion of operatingareas of the Targets stores, through mutual opening of Shop in Shop stores in theTokyo metropolitan area and other urban areas
 The Company has been one of the first in the home improvement retail andfurniture sectors to promote the opening of stores in urban areas, and by making
use of the Companys business infrastructure, the Target will be able to open storesin various forms.
 In addition, by sharing know-how for the Companys store devel opment, etc., theTarget 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,
with the Targets high -quality furniture at a price range different to that of theCompanys.
 Through these, it is expected that the Target will realize further growth even in theshrinking domestic market.

(g)Enhancement and development of EC of both companies through sharing of knowhow for operation and management of EC sites and EC apps, utilization of EC
members information, product delivery management for EC sales, or any other knowhow for EC business The Targets e -commerce operations framework will be further strengthened bysharing the Companys enhanced e -commerce foundations, where there has been
44.3 billion yen of sales in the fiscal year ending February 2020, and which hasaround 40 million of the total members, including Nitori Card members, app
members and Nitori Net members (of which about 7.8 million members are app
members).
 In particular, with regard to furniture, by utilizing the Companys nationwide
furniture distribution network, it will become possible to provide customers allover Japan with services for assembly and installation, which are necessities
specific to furniture, as well as the collection of used furniture, at lower pricestandard than now.
 In addition, with the mutual complementation between the Targets home center
products and the Companys home fashion products and the development of no vel
and attractive PB products utilizing the product development know-how sharedby both companies mentioned in above (b), the Company Group as a whole,including the Target after the integration, will be able to introduce a wider rangeof products to customers at lower prices through e-commerce channels.

(h)Expansion of sales and increasing customer satisfaction of both companies throughacquisition of mutual and new customers by the adoption of a shared reward points
system The introduction of shared reward points will lead to the introduction of bothcompanies products to customers of both at more reasonable prices, enabling the
expansion of sales and increasing customer satisfaction of both companies.

(i)

Promoting overseas sales of the Targets products and overseas development of theTargets stores in the future, through sharing of know -how for the Companys overseas
9store network and overseas store openings, or any other mutual cooperation
 By utilizing know-how for overseas store network and overseas store openings theCompany Group has, the Target will be able to pursue overseas sales of the Targets
products and overseas development of the Targets stores in the future, leading to
the Targets medium to long -term growth overseas.
Following the common understandings between the Company and the Target mentioned above,
the Company agreed with the Target on November 13, 2020 to carry out the Management
Integration, and executed the Management Integration Agreement. In the Management
Integration Agreement, it is agreed that the Targets board of directors shall (i) decide to agreewith the Tender Offer, and to recommend the Targets shareholders to tender in the Tender Offer,
as well as (ii) decide to withdraw the announced approval to, and the opinion recommending totender in, the DCM Holdings Tender Offer, by the resolution of the Targets board of directors
took place on October 2, 2020. For more information about the Management Integration
Agreement, please refer to "(6) Matters related to material agreements concerning Tender
Offer" below.
Also, according to the "Announcement of Opinion Regarding Tender Offer for the Companys
Shares by Nitori Holdings Co., Ltd., and Execution of Management Integration Agreement withNitori Holdings Co., Ltd." published by the Target on November 13, 2020 (the "Targets
Announcement Press Release (Nitori Holdings)"), the Target has approved at the meeting of theTargets board of directors that took place on November 13, 2020 the execution of theManagement Integration Agreement, and has (i) decided to agree with the Tender Offer, and torecommend the Targets shareholders to tender in the Tender Offer, as well as (ii) decided towithdraw the announced approval to, and the opinion recommending to tender in, the DCM
Holdings Tender Offer, by the resolution of the Targets board of directors that took place on
October 2, 2020. For more information about the decision of the Targets board of directors,
please refer to the Targets Announcement Press Release (Nitori Holdings) a nd "(IV) Process ofand grounds for decision-making by the Target" under "(2) Background and reasons to thedecision to implement the Tender Offer" below.
As of the date of this Press Release, the Company does not have a full understanding of the
progress at the Target (including the Target Special Committee) in considering the Management
Integration yet, therefore the Company plans to submit an Amendment to the Tender Offer
Registration Statement for the Tender Offer to Director-General of the Kanto Local Finance
Bureau, in which such progress of consideration is described, promptly after it obtains such fullunderstanding. After the Company submits the Amendment to Director-General of the Kanto
Local Finance Bureau, it will promptly announce the content.
(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 listed10

on 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 Companys shares are listed on the First Section of the Tokyo Stock Exchange and the
Sapporo Securities Exchange.
The Company Group primarily conducts the following businesses focused on the sale offurniture 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 Groups
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 groups 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 groups
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 organization
11

and 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) Targets 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.
(i) Store development
 Renovate existing stores and proactively increase floor space Reduce the number of old-format stores and proactively open Shop in Shop locations(ii) 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
12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 Targets published materials that the Target
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.
13

In light of the basic policy, key issues and various initiatives of the Target described in "(II)Targets 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 Groups 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.
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.
The Company and the Target see the synergies agreed on by the Company and the Target
described in "(1) Outline of Tender Offer" as not conflicting and contradicting with the14substance of the following synergies which the Company considers. The Company and theTarget believe that the synergies agreed on by the Company and the Target Company embody
the following synergies more.
(1) Expanding sales opportunities for high-quality furniture and contributing torealization of enriched lifestyles for a wider range of customers by the expansion of
Targets stores nation wide
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 stores in
the Tokyo metropolitan area and the Kansai region; upon opening new stores in new
areas where it has not previously done so, the Companys 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 Targets home center (HC)products with the Companys 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, theTarget has initiated the development of its private brand products, already launchingsome of such products. As a result of the Company Groups intensified focus in thedevelopment of private brand products from 1979, approximately 90% of the products
15

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 Companys PB product development know -how, it will become possible to further
accelerate the Targets 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 Companys product development capabilities
and the product development 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 both companies, which will exceed the expectations of the customersof 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 Companys 11 distribution centers located throughout
Japan. Depending on the customers method of order placement and produc t 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 manages and 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 the16stores, as well as the frequency of such deliveries, aiming to further advance its
distribution network.
The Company believes that with the addition of the Targets existing store networkand logistics base to the abovementioned distribution network possessed by theCompany, it will be able to build a more efficient logistics network, and by combining
the two companies volume of goods, the companies could benefit from the 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, andmore 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 leadtime required to deliver products to customers and improving delivery costs. In
particular the Company believes that its nationwide last one mile furniture distribution
network will contribute to improving the efficiency of the transportation of theTargets furniture, expanding the customer base and further increasing customer
satisfaction, at an early stage.
(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" businessAs 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 Groups 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 Group’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 Targets business, various measures meetingthe demand of customers at each store will be taken, including the introduction of avaried 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,17

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 Targets 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 Targets 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 the Companys 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, the Company 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 highquality furniture within a price range different to that of the Companys. It is theCompanys belief that through this, the Target will be able to realize further growtheven 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 in
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 Targets e -commerce operations framework. In particular, with regard
to furniture, by utilizing the Companys nationwide furniture distribution network, it
will become possible to provide customers all over Japan with services for assembly18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 Targets home
center products and the Companys 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 Targets 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 Groups 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 theCompany), and only suggested the possibility of a business alliance, as state above. Around thetime, the Company learned from "Announcement of Opinion Regarding Tender Offer for theCompanys Shares by DCM Holdings Co., Ltd., and Execution of Management Integ ration
Agreement with DCM Holdings Co., Ltd." dated October 2, 2020 (the "Targets Announcement
Press Release (DCM Holdings)"), that the Targets board of directors resolved to express an
19

opinion in support of DCM Holdings Tender Offer and to recommend th at the Targets
shareholders tender their shares in DCM Holdings Tender Offer on October 2, 2020.
The Company has learned from the Target’s Announcement Press Release (DCM Holdings)
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 (DCM Holdings), it is stated that theTarget has commenced 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 (DCM
Holdings) 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 madeby 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, the Company has learned from the Target’s Announcement Press Release (DCM
Holdings) that the Target has not entered into any agreement which includes a transaction
protection clause that may prohibit the 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 the20Company to make proposals, and that DCM Holdings has ensured an opportunity to receive
offers from Competitive Offerors by setting the tender offer period at 30 business days, not thelegally stipulated minimum duration of 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 theTarget’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 the conclusion that the
management integration of the Company and the Target can be realized by 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.
Therefore, the Company has made preparations for the publication of the Companys Press
Release Dated October 29 since October 2, 2020, in order to make concrete proposals to theTarget 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 startingfrom 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 theTender Offer, the Company has decided to announce the planned commencement of the Tender
Offer on October 29, 2020. Furthermore, the Company believes that it is important to ensure
the transparency and fairness of the procedures of the Tender Offer for shareholders of theTarget given that DCM Holdings Tender Offer is ongoing. 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 until the release of the Companys Press Release Dated October 29.
The Company believes, as it announced in the Companys Press Release Dated October 29, thatthe management integration of the Company and the Target can realize synergy effects andpossibly maximize the corporate value of both companies. The Company has believed that theTender Offer is a more attractive proposal for the Target and the shareholders of the Target inlight of the following: (i) the Company was not aware of any fact that would materially impair
or prevent the satisfaction of the Tender Offer Conditions as of the date of the release of theCompanys Press Release Dated October 29 , and has believed that it will be able to commence
the Tender Offer in around mid-November of 2020 upon the satisfaction of the Tender Offer
Conditions, (ii) the price of the tender offer with respect to the Tender Offer (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 (4,2 00 yen per share) (For the process of determination of theTender Offer Price, see "(II) Details of valuation" under "(4) Basis for valuation of Tender Offer
Price, etc." under "2. Outline of Tender Offer" below.), and (iii) while the Company plans toapply 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 announcementof the board of directors of the Target and the Target Special Committee that they are preparedto accept competitive offers, as described above, the Company had wished to make a proposal
on October 29, 2020 for Management Integration between the Company and the Target throughthe Tender Offer in accordance with the process of such offering.
On October 29, 2020, the Company proposed to make proposal to the Targets board of directors
21and the Target Special Committee for the Management Integration with the Company andmaking the Target a wholly-owned subsidiary of the Company through the Tender Offer, as
well as to provide explanations about the Companys proposal including the Tender Offer to theTargets board of directors and the Target Special Committee so that they will properly
understand the substance of the Companys proposal and approve the Tender Offer. Following
the proposal by the Target, the Company had opportunities to provide explanations about theTender Offer and the outline of the Management Integration, (i) to the representative directors,
etc. of the Target on November 1, 2020, (ii) to the Target Special Committee on November 4,
2020, and (iii) to the representative directors, etc. of the Target and the Target Special
Committee on November 9, 2020 respectively. In relation to the explanations about the Tender
Offer and the Management Integration by the Company, the Company has received feedbacks
from the Target Special Committee that the above-mentioned synergies the Company had
proposed to the Target surpass the synergies DCM Holdings had proposed in DCM Holdings
Tender Offer Commencement Press Release in medium to long-term perspective.
Alongside the explanations to the representative directors, etc. of the Target and the Target
Special Committee by the Company described above, the Targets board of directors and theTarget Special Committee have indicated their intention to the Company on November 5, 2020,
to negotiate on the Management Integration Agreement in considering and assessing theManagement Integration the Company proposes. On and after the day, the Company has been
discussing the Management Integration and negotiation on the Management Integration
Agreement with the Targets board of directors a nd the Target Special Committee (suchdiscussion and negotiation have been done on continual basis through exchanging e-mails,
discussing on conference calls, and discussing at a face-to face meeting which took place on
November 9, 2020 as described above.). In such negotiation, the Company came to believe that
the Target was looking at the difference with the terms and conditions for the Management
Integration Agreement (DCM Holdings) as one of the perspectives in the assessment. Therefore
the Company decided as its basic policy to reach agreement on the terms and conditions with
the Target, taking into account the terms and conditions of the Management Integration
Agreement (DCM Holdings).
In the negotiation of the Management Integration Agreement, the Targets board of directors
and the Target Special Committee requested that (i) the employment of the Target’s employees
and the Target’s management system be maintained for five years since the commencement
date of the settlement for the Tender Offer, considering that (a) the Management Integration
Agreement (DCM Holdings) provides that the Target’s employment and management system
will be maintained for three years and for the immediate future, respectively, but (b) the Target
considers to implement its five-year business plan to be established based on the discussion
with the Company, and (ii) the Target dispatch its person(s) as executive officer(s) of theCompany given that the Company will send one person as a director to the Target (This request(ii) was addressing the Company’s prior position that it would be unacceptable for the Company
to appoint a person of the Target as a director of the Company. Meanwhile, under theManagement Integration Agreement (DCM Holdings), DCM Holdings and the Target haveagreed to dispatch directors to each other.).
The Company has accepted the request (i) above because executing the five-year business planby the current employees and management of the Target will possibly maximize the corporate22

value of both companies. As for the request (ii) above, in light of making the collaboration
between both companies closer, the Company suggested that (A) the Company dispatch three
persons to the Target as its directors, and instead, (B) the Target dispatch one person to theCompany as its director and four persons as its executive officers. This suggestion has been
accepted by the Target. Further, in the negotiation of the Management Integration Agreement,
for the purpose of obtaining the Target’s support of the Tender Offer, the Company suggested aprovision where the Target is obligated to decide to support the Tender Offer and to recommend
to its shareholders to tender their shares in the Tender Offer, and such suggestion has been
accepted by the Targets board of directors and the Target Special Committee.
As a result, both companies have come to share common understandings on November 9, 2020,
that (i) the synergies described in "(1) Outline of Tender Offer" are expected to be realized
through the Management Integration, (ii) measures for early realization of such synergies
should be promptly implemented after the Target becomes the Companys subsidiary throughthe Tender Offer, and (iii) a management integration agreement should be executed to establish
a business alliance between both companies and any other management structures of the Target
after the Tender Offer, in order to realize such synergies.
Following the common understandings between the Company and the Target mentioned above,
the Company agreed with the Target on November 13, 2020 to carry out the Management
Integration, and executed the Management Integration Agreement. In the Management
Integration Agreement, it is agreed on that the Targets boa rd of directors shall (i) decide toagree with the Tender Offer, and to recommend the Targets shareholders to tender in the Tender
Offer, as well as (ii) decide to withdraw the announced approval to, and the opinion
recommending to tender in, the DCM Holdings Tender Offer, by the resolution of the Targets
board of directors took place on October 2, 2020. For more information about the Management
Integration Agreement, please refer to "(6) Matters related to material agreements concerning
Tender Offer" below.
(IV) Process of and grounds for decision-making by the Target
According to the Targets Announcement Press Release (Nitori Holdings), the Target has
approved at the Targets board of directors took place on November 13, 2020 the execution of
the Management Integration Agreement, and has (i) decided to agree with the Tender Offer, andto recommend the Targets shareholders to tender in the Tender Offer, as well as (ii) decided towithdraw the announced approval to, and the opinion recommending to tender in, the DCM
Holdings Tender Offer, by the resolution of the Targets board of directors took place on
October 2, 2020. For more information about the decision of the Targets board of directors,
please refer to the Targets Announcement Press Release (Nitori Holdin gs).
As of the date of this Press Release, the Company does not have a full understanding of the
progress at the Target (including the Target Special Committee) in considering the Management
Integration yet. Therefore the Company plans to submit an Amendment to the Tender Offer
Registration Statement for the Tender Offer to Director-General of the Kanto Local Finance
Bureau, in which such progress of consideration is described, promptly after it obtains such fullunderstanding. After the Company submits the Amendment to Director-General of the Kanto
Local Finance Bureau, it will promptly announce the content.
23

(3) Management policy after the Tender Offer
The Company and the Target believes that the companies can contribute to further developmentof business and maximization of corporate value of the Company and the Target, by utilizing
superior points of both companies such as the business characteristics, value of products ordevelopment capabilities even after the Tender Offer, as well as by pursuing and realizing
possible synergies in respective business areas through collaboration of the companies.
With respect to the business structure of the Target after the Tender Offer, the Company and theTarget have agreed in the Management Integration Agreement (i) to dispatch three persons as adirector from the Company to the Target, (ii) to have Takaaki Okano, the president andrepresentative director of the Target, as a director of the Company and (iii) to add four otherexecutive directors of the Target to the members of executive officers of the Company.
Furthermore, it is decided in the Management Integration Agreement that the current system ofexecutive directors of the Target shall be maintained at least for five years after thecommencement date of the settlement for the Tender Offer, in consideration of the continuityof management and business of the Target, etc.
For the details of the Management Integration Agreement, please see "(6) Matters related tomaterial agreements concerning Tender Offer."(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 from24the 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 general
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 is going to agreewith 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, retain25

a number of Target Shares corresponding to the Share Consolidation ratio approved at theExtraordinary Shareholders’ Meeting. If the Share Consolidation results in fractional shares that
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 terms of Article
235 of the Companies Act and the provisions of other relevant laws and regulations, and theowners of such fractional shares will be provided with cash in exchange. With respect to thesale price of the total number of fractional shares of the Target, the Company will request theTarget to file a petition to a court for permission for voluntary sale, after ensuring that as a resultof such sale of fractional shares, the cash amount to be provided to shareholders of the Target
who did not tender their shares in the Tender Offer (excluding the Company and the Target)
will be the same as the amount obtained when the number of Target Shares owned by suchshareholders 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 thedecided-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 Targets 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 the26

Target 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 ofthe 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 Targets shareholders may a ssume
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 Targets 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,27

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
As stated in "(1) Outline of the Tender Offer" above, the Company executed the Management
Integration Agreement with the Target on November 13, 2020. Under the Management
Integration Agreement, the Company and the Target have substantially agreed upon thefollowing matters. The Management Integration Agreement provides that, among the following
matters, the matters provided in "(iv) Business Alliance, Etc. after Tender Offer" shall become
effective on the commencement date of settlement of the Tender Offer on the condition
precedent that the Tender Offer is consummated. The Company plans to acquire additional
shares of the Target Shares until it has acquired the number of shares equivalent to two-thirdsof the voting rights pertaining to the total number of issued shares of the Target less the numberof treasury shares held by the Target. As of the date of this Press Release, nothing has been
determined with respect to the specific timing and method of additional acquisition of the Target
Shares by the Company, and such additional acquisition has not been agreed in the Management
Integration Agreement.
(i) Purpose- The purpose of the Management Integration Agreement is to realize the Management
Integration in a spirit of coexistence and shared prosperity and to maximize the corporate valueof the Company Group including the Target after the Tender Offer by stipulating the businessalliance between the Company Group and the Target and the management system, etc. of theTarget after the Tender Offer.
(ii) Opinion to Support the Tender Offer- If the Company commences the Tender Offer under the conditions for the Tender Offer asstated in this Press Release, the Targets board of directors will (i) decide to support the Tender
Offer and to recommend to its shareholders to tender their shares in the Tender Offer, and (ii)
decide to withdraw its opinion to support DCM Holdings Tender Offer and the opinio n torecommend to the shareholders to tender their shares by a resolution of the Targets board of
directors on October 2, 2020.
(iii) Covenants concerning the Tender Offer(a) Matters concerning the operation of business before the completion of the Tender Offer- From the execution date of the Management Integration Agreement to the commencement
28

date of settlement of the Tender Offer, the Target will operate its business within the scope ofordinary course of business. Provided, however, that the acts or omissions of the Target
considered to be reasonably necessary based on the duty of care of its directors will not be
restricted in any way.
(b) Procedures required for implementing the Tender Offer- The Company will perform any procedures required for lawfully implementing the Tender
Offer under laws and regulations or its articles of incorporation and other internal rules(including the filing of the notification under the Antitrust Act and the lapse of the waiting
period thereof), and the Target will provide cooperation reasonably necessary for performing
such procedures.
(c) Procedures for making the Target a wholly-owned subsidiary after the Tender Offer- On and after the commencement date of settlement of the Tender Offer, if the Company
performs the procedures for making the Target a wholly-owned subsidiary through demand forsale of shares or share consolidation, the Target will provide cooperation reasonably necessary
for performing such procedures; provided, however, that the acts or omissions of the Target
considered to be reasonably necessary based on the duty of care of its directors will not be
restricted in any way.
(iv) Business Alliance, Etc. after Tender Offer(a) Contents of Business Alliance, Etc. after Tender Offer- In order to maximize the synergies of the Management Integration, the Company and theTarget will, on and after the commencement date of the settlement of the Tender Offer,
implement the business alliance with respect to each of the following matters, and the Company
will cause each company of the Company Group to implement each of the following matters:(1) Expanding sales opportunities for high-quality furniture and contributing to realization ofenriched lifestyles for a wider range of customers by the expansion of Targets storesnationwide;(2) Expansion of sales by mutual supplementation between the Targets home center products
and the Companys home fashion products, and improvement of the Targets profit margin
by the development of PB products through the sharing of the Companys PB productdevelopment capabilities and the Targets knowledge and other know -how in its businessfield;(3) Joint use of logistics functions including distribution centers, and improved efficiency of
product delivery including furniture, expanding the customer base and increasing customer
satisfaction by sharing know-how for delivery management;(4) Cost reduction and improvement of operational efficiency at the Target by the provisionof function and know-how pertaining to the various supply chains possessed by theCompany Group in its capacity as a "Manufacturing, Logistics, IT and Retail Sales"business;(5) Active expansion of its stores along with the variety of customers needs, or in densely29populated areas, through sharing of know-how for operation and management of storesincluding tenants invitation;(6) Diversifying forms to open the Targets stores, and promoting expansion of operating areasof the Targets stores, through mutual opening of Shop in Shop stores in the Tokyo
metropolitan area and other urban areas;(7) Enhancement and development of EC of both companies through sharing of know-how
for operation and management of EC sites and EC apps, utilization of EC members
information, product delivery management for EC sales, or any other know-how for EC
business;(8) Expansion of sales and increasing customer satisfaction of both companies throughacquisition of mutual and new customers by the adoption of a shared reward points system;(9) Promoting overseas sales of the Targets products and overseas development of the Targets
stores in the future, through sharing of know-how for the Companys overseas store
network and overseas store openings, or any other mutual cooperation; and(10) Other matters separately agreed upon between the parties.
(b) Integration Promotion Committee- For smooth implementation of the Management Integration, an Integration Promotion
Committee consisting of persons designated respectively by the Company and the Target willbe established as of the commencement date of the settlement for the Tender Offer, andthereafter, the Integration Promotion Committee will share the information necessary for theManagement Integration and discuss and decide on the five-year business plan of the Target("Five-year Business Plan"), the alliance matters regarding the creation of synergies between
the Company Group and the Target and other matters relating to the implementation of theManagement Integration.
(c) Management system of the Target- If the content of the Five-year Business Plan is determined, the greatest efforts will be madeto achieve the same to the reasonable extent.
- Considering the period for the Five-year Business Plan and the continuity of management andbusiness of the Target, etc., the current system for the executive directors of the Target will bemaintained for at least five years after the commencement date of the settlement of the Tender
Offer, and the conditions for appointment of such directors will be reasonably determinedthrough faithful consultation based on the current conditions.
- Promptly, within a reasonable range, after the commencement date of the settlement of theTender Offer, three persons separately designated by the Company will be newly appointed as
directors of the Target.
(d) Management system of the Company- Promptly, within a reasonable range, after the commencement date of the settlement of theTender Offer, Mr. Takaaki Okano, who is the president and representative director of the Target,
will be newly appointed as director of the Company, and other four executive directors of theTarget will be newly appointed as executive officers of the Company.
30

(e) Employment of Employees and Maintenance of Employment Conditions of the Target- For at least five years after the commencement of the settlement for the Tender Offer, basically,
the employees of the Target 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 the Company Group promotes personnel exchange with the employees of the Target(including job transfer), the intention of the employees of the Target will be appropriately taken
into account.
(f) Trade name of the Target- On and after the commencement date of the settlement of the Tender Offer, the trade name of
the Target will not be changed, and the trademarks and brands of the Target will be maintained.
- On and after the commencement date of the settlement of the Tender Offer, if any stores of
the Target are integrated or abolished, an agreement will be made through faithful consultation.
(g) Headquarters location of the Target- The headquarters location of the Target will not be changed for the time being after thecommencement date of the settlement of the Tender Offer.
(h) Matters for Prior Consultation and Advance Consent- In case the Target decides on certain important matters after the commencement of thesettlement for the Tender Offer, it will consult with the Company on matters to be decided or
implemented in advance, and will obtain the Companys written consent (provided that theCompany will not unreasonably reject, withhold, delay or impose conditions on such consent) ;provided, however, that there will be no limitation on the acts or omissions that the Target deems
reasonably necessary based on the duty of care of its directors.
(i) Matter concerning the system for mutually sharing information- After the commencement date of the settlement of the Tender Offer, the Target and theCompany Group will discuss and determine the structuring of the system for mutuallycommunicating and sharing various information regarding their respective business.
2. Outline of Tender Offer(1) Outline of Target(i) Name(ii) Address(iii) Name and title of representative

SHIMACHU CO., LTD.
8-3-32, Kamiochiai, Chuo-ku, Saitama-shi,
Saitama
Takaaki Okano, President and Representative
Director
31

(iv) Description of business(v) Capital stock(vi) Date of incorporation(vii) Major shareholders and shareholding
ratios (as of February 29, 2020)

Retail business for furniture and interior goods(curtains, carpet, interior small items, etc.), andhome center goods (daily necessaries,
gardening, pets, timber, tools, etc.)
16,533,000,000 yen (as of August 31, 2020)
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)
IRIS OHYAMA Inc.
4.80%
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.
NORTHERN
TRUST
CO. 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 report32

for the 61st fiscal year filed by the Target on April 10, 2020.
(2) Schedule of Tender Offer(I) Schedule
TenderOffer
commencement public
notice date
Name of newspaper inwhich a public notice isplacedTender
Offer
Registration Statement
filing dateNovember 16, 2020 (Monday)
A public notice will be given electronically, and a notice to that effectwill be placed in the Nihon Keizai Shimbun.
URL of the electronic public notice: https://disclosure.edinet-fsa.go.jp/
November 16, 2020 (Monday)(II) Notified initial period for purchases, etc.
From November 16, 2020 (Monday) to December 28, 2020 (Monday) (30 business days)(III) Possibility of extension at the Targets request
Not applicable(3) Tender Offer Price, etc.
5,500 yen per share of common shares(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).
33

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, theper-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
34about the Targets 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
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.
In addition, 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: 0.18% to 5,490
yen, which is the closing price of the Target Shares on the First Section of the Tokyo Stock
Exchange on November 12, 2020, the business day immediately before the day of the publicannouncement of the commencement of this Tender Offer; 11.47% to 4,934 yen, which is thesimple average of the closing prices over the past one month (October 13, 2020 to November
12, 2020); 43.23% to 3,840 yen, which is the simple average of the closing prices over the past
three months (August 13, 2020 to November 12, 2020); and 63.64% to 3,361 yen, which is thesimple average of the closing prices over the past six months (May 13, 2020 to November 12,2020).
35

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. Purpose of
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, etc.), while also floating the possibility of making
the Target a wholly-owned subsidiary of the Company as one of the options. During thismeeting, the Company informed the Target that a business alliance between the Company
Group and the Target 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 madeannouncements stating that 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 of making the Target a wholly-owned subsidiary of the Company),and only suggested the possibility of a business alliance, as state above. Around the time, theCompany learned from the Targets Announcement Press Release (DCM Hold ings), that theTargets board of directors resolved to express an opinion in support of DCM Holdings Tender
Offer and to recommend that the Targets shareholders tender their shares in DCM Holdings
Tender Offer on October 2, 2020.
The Company has learned from the Targets Announcement Press Release (DCM Holdings) that
the Targets 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 Targets boardof directors, in utmost respect of the judgment of the Target Special Committee, and that if theTarget Special Committee determines that the implementation of DCM Holdings Tender Offeror the terms and conditions of the transactions are not appropriate, the Targets board of directors
shall not express its support of DCM Holdings Tender Offer. Furthermore, the Company has
also come to know from the Targets Announcement Press Release (DCM Holdings) that theTarget has not entered into any agreement which includes a transaction protection clause thatmay prohibit the 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 toprevent 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.
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 the36Targets board of directors and the Target Special Committee have expressed their willingness
to accept competitive offers by aforementioned means, 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 Targets board of directors and the Target Special Committee.
Furthermore, the Company believes that it is important to ensure the transparency and fairnessof the Tender Offer for shareholders of the Target given that DCM Holdings Tender Offer isongoing. Thus, the Company did not hold any discussion with the Target after the meeting
between the Company and the Target held in September 28, 2020 until the public announcementof the Companys Press Release Dated October 29.
As announced in the Companys Press Release Dated October 29, the Company believes thatthe management integration of the Company and the Target can realize synergy effects andpossibly maximize the corporate value of both companies. Therefore, in view of theannouncement 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, and on October 29, 2020, the Company
decided to implement the Tender Offer and also decided the Tender Offer Price.
After the decision above, the Company discussed the Management Integration with the Target,
but did not negotiate the Tender Offer Price in such discussion.
(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 organization
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

2,849 yen – 2,945 yen
3,157 yen – 4,890 yen
2,239 yen – 4,114 yen
2,964 yen – 5,763 yen(iii) 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 calculation37

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
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).
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 indicatedin 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.
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 applicablelaws and regulations.
There is no plan to acquire the treasury shares owned by the Target in the Tender
Offer.

Planned purchase quantity(Note 1)

(Note 2)

(Note 3)(Note 4)

(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(Ownership ratio of share
1 certificates before Tender
Offer: 0.00%)(Ownership ratio of share
0 certificates before Tender
Offer: 0.00 %)38

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
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" shows the total number of voting rights represented byshare certificates owned by each specially related party (excluding any persons whoare excluded from specially related parties pursuant to Article 3(2)(i) of the Cabinet
Office Ordinance on Disclosure Required for Tender Offer for Share Certificates, etc.
by Person Other than Issuer (Ordinance of the Ministry of Finance No. 38 ofNovember 26, 1990, as amended; the ("Ordinance")) in the calculation of theownership ratio of share certificates pursuant to each item of Article 27-2(1) of theAct). Further, since the share certificates owned by each specially related party(excluding the treasury shares owned by the Target) 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 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 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(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).

(8) Settlement method(I) Name and headquarters address of financial instruments business operator or bank, etc., tosettle the purchase, etc.
Daiwa Securities Co., Ltd.

9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo
39

(II) Commencement date of settlement for the Tender Offer
January 6, 2021 (Wednesday)(III) Settlement method
Without delay after the conclusion of the Tender Offer Period, the Company will post to theaddress of each tendering shareholder, etc. (or, in the case of foreign shareholders, their standing
proxies) a notice of purchase, etc., through the Tender Offer.
Purchases will be made in cash. In accordance with the instructions of the tendering shareholder,etc., the sales price of the share certificates purchased will be remitted by the tender offer agent
to a location designated by the tendering shareholder, etc. (or, in the case of foreign shareholders,
their standing proxies) (a remittance charge may be payable) or be paid into the account of thetendering shareholder, etc. at the tender offer agent where the tender has been accepted, without
delay after the commencement date of settlement for the Tender Offer.
(IV) Method of returning share certificates
If not all of Tendered Share Certificates are purchased in accordance with the conditions set out
in "(I) Conditions set forth in each item of Article 27-13(4) of the Act, and detail of suchconditions" or "(II) Conditions for withdrawal of the Tender Offer, detail of such conditions andmethod of disclosure of withdrawal" under "(9) Other conditions and methods of purchase"
below, the share certificates that are required to be returned will be returned in the condition
that they were in when they were tendered, without delay, two business days or more after thelast day of the Tender Offer Period (or, if the Tender Offer is withdrawn, the date on which thewithdrawal was made).
(9) Other conditions and methods of purchase(I) Conditions set forth in each item of Article 27-13(4) of the Act, and detail of such conditions
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) Conditions for withdrawal of the Tender Offer, detail of such conditions and method of
disclosure of withdrawal
Upon occurrence of any of the matters as provided in Article 14(1)(i)(a) through (i) and (l)through (s), (iii)(a) through (h) and (j), (iv) and Article 14(2)(iii) through (vi) of the Order for
Enforcement of the Financial Instruments and Exchange Act (Cabinet Order No. 321 of 1965,
as amended; the ("Enforcement Order")), the Tender Offer may be withdrawn.
For the purpose of the Tender Offer, "the matters equivalent to those listed in (a) through (r)"40

as provided in Article 14(1)(i)(s) of the Enforcement Order refer to (i) the case where a decisionmaking body for the execution of business of the Target (a) has resolved to distribute dividendsof 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 to be less than the amount equivalent to 10% of the book value of net assets of theTarget 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 Targets shareholders meeting a
proposal to make such a distribution of surplus, or (b) has resolved to distribute dividends ofsurplus with a record date preceding the commencement date of settlement for the Tender 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 book value of net assets of theTarget on its non-consolidated balance sheet as of the end of the most recent business year and(ii) the case where a decision-making body for the execution of business of the Target has
resolved to acquire treasury shares (except where the amount of money or other properties tobe delivered in exchange for the acquisition of the shares is estimated to be less than the amountequivalent 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)) or has resolved tosubmit to the Targets shareholders meeting a proposal for such acquisition of treasury shares.
In addition, for the purpose of the Tender Offer, "the facts equivalent to those listed in (a)through (i)" as provided in Article 14(1)(iii)(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.
(Note) Assuming that there has been no change in the total number of issued shares and thenumber of treasury shares, this threshold is equivalent to a dividend per share of 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 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 of August 31, 2020 (42,609,104 shares), bothas stated in the Earnings Briefing, with fractions of 1 yen in the calculation resultrounded up to the nearest yen.).
In addition, pursuant to Article 10, Paragraph 2 of the Antitrust Act, the Company is required
to file a plan for the the Share Acquisition with the JFTC in advance (such filling is hereinafterrefered to as the "Prior Notification"), and may not acquire the Shares in principle until 30 days
(or a shorter period as allowed in certain cases) have passed from the date of acceptance of thePrior Notification (such period during which the acquisition of shares is prohibited is hereinafterrefered to as the "Non-acquisition Period") in accordance with Paragraph 8 of the Article.
Article 10, Paragraph 1 of the Antitrust Act prohibits the acquisition of shares in anothercompany that would substantially restrain competition in any particular field of trade, and the
JFTC may order the necessary measures to eliminate acts in violation of this provision (Article
17-2, item 1 of the Antitrust Act; the "Cease and Desist Order") or may file petition for an
emergency suspension order with the courts (Article 70-4, item 1 of the Antitrust Act; the41

"Petition for an Urgent Temporary Suspension Order "). If the JFTC intends to issue the Cease
and Desist Order when the Prior Notification mentioned above is made, the JFTC must hear theopinions of a person who should be addressee of the Cease and Desist Order (Article 49 of the
Antitrust Act), and when hearing the opinions, the JFTC must notify a person who should be
addressee of the contents of the scheduled Cease and Desist Order (Article 50, Paragraph 1 of
the Antitrust Act; the "Prior Notice of Cease and Desist Order"). A Prior Notice of Cease andDesist 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") (Article 10, Paragraph 9 of the Antitrust Act).
If the JFTC decides not to give the Prior Notification of the Cease and Desist Order, it shallgive notice to that effect (the "Notice to the Effect that Cease and Desist Order Will not be
Issued") (Article 9 of Rules on Applications for Approval, Reporting, Notification, etc. Pursuant
to the Provisions of Articles 9 to 16 of the Act on Prohibition of Private Monopolization and
Maintenance of Fair Trade (The Fair Trade Commission Rule No. 1 of 1953)).
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 the passage ofNovember 26, 2020, in principle. As of today, the Company has received neither Prior
Notification of the Cease and Desist Order nor the Notice to the Effect that Cease and Desist
Order Will not be Issued from the JFTC.
With respect to the Companys Prior Notification to the JFTC pursuant to the provisions ofArticle 10, Paragraph 2 of the Antitrust Act by the day before the expiration of the Tender Offer
Period (including extension thereof), the Company may withdraw the Tender Offer, etc. if: (a)the Company receives from the JFTC the Prior Notice of Cease and Desist Order ordering thedisposition of all or part of the shares of the Target, the transfer of a part of its business or any
other equivalent disposition; (b) the Period for Measures for which the Prior Notice of Cease
and Desist Order should be given under the Antitrust Act does not expire; or (c) the Company
receives a Petition for an Urgent Suspension Order from the court as a person engaging in an
act suspected of violating the provisions of Article 10, Paragraph 1 of the Antitrust Act, and if
it has failed to obtain the "Permission, etc." prescribed in Article 14, Paragraph 1, item 4 of the
Enforcement Order. If Period for Measures ends without the Prior Notice of Cease and Desist
Order and the request for a report, etc. under Article 10, Paragraph 9 of the Antitrust Act fromthe JFTC, or if the Company receives a Notice to the Effect that Cease and Desist Order Will
not be Issued from the JFTC, the Company shall immediately submit an amendment to theTender Offer Notification to the Director-General of the Kanto Local Finance Bureau inaccordance with Article 27, Paragraph 8, item 2 of the Act.
If the Company intends to withdraw the Tender Offer, it will issue an electronic public noticeand publish the notice in the Nihon Keizai Shimbun. However, if it is difficult to give public
notice by the last day of the Tender Offer Period, the Company shall give public notice by themethod prescribed in Article 20 of the Cabinet Office Ordinance and give public notice
immediately thereafter.
(III) Whether there are any conditions for the reduction of the Tender Offcer Price, the details
42thereof and the method of disclosure of such reduction
Pursuant to the provisions of Article 27-6, Paragraph 1, item (i) of the Act, if the Target conducts
the act presecribed in Article 13, Paragraph 1 of the Enforcement Order during the Tender Offer
Period, the Tender Offer Price. may be reduced in accordance with the criteria prescribed in
Article 19, Paragraph 1 of the Cabinet Office Ordinance. If the Company intends to reduce theTender Offer Price, the Company will issue an electronic public notice and publish the noticein the Nihon Keizai Shimbun. However, if it is difficult to give public notice by the last day of
the Tender Offer Period, the Company shall give public notice by the method prescribed in
Article 20 of the Cabinet Office Ordinance and give public notice immediately thereafter. If theTender Offer Price. is reduced, the Company will purchase the Tendered Share Certificates prior
to the public notice at the reduced Tender Offer Price.
(IV) Matters concerning the right of tendering shareholders, etc. to cancel the contract
The tendering shareholders, etc. may cancel the contract for the Tender Offer at any time during
the Tender Offer Period. If the Company cancels the contract, it shall deliver or send acancellation document (the acceptance form for application for the a tender offer and adocument to the effect that the contract for the tender offer will be cancelled) to the head officeor branch offices throughout Japan of the Tender Offer Agent that accepts the cancellation
document by 16:00 p.m. on the last day of the Tender Offer Period. However, in the case of
sending the cancellation document, the cancellation document shall be reached by 16:00 p.m.
on the last day of the Tender Offer Period.
The person authorized to receive the cancellation document:
Daiwa Securities Co., Ltd. 9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo(Other Daiwa Securities branches throughout Japan)
The Company will not seek damages or penalties from tendering shareholders, etc. inconnection with the cancellation of the contract. The Company shall also bear costs required
for the return of the Tendered Share Certificates. If the cancellation is requested, the Tendered
Share Certificates will be returned promptly after the procedures are completed by the method
described in "(IV) Method of returning share certificates" under "(8) Method of settlement."(V) The method of disclosure in the case where the terms of tender offer, etc. have been changed
During the Tender Offer Period, the Company may change the terms of tender offer, etc., except
as otherwise prohibited by Article 27-6, Paragraph 1 of the Act and Article 13 of the
Enforcement Order. If the Company intends to change the terms of tender offer, etc., it shallissue an electronic public notice of the contents of the change, etc., and publish the notice in
the Nihon Keizai Shimbun. However, if it is difficult to give public notice by the last day of theTender Offer Period, the Company shall give public notice by the method prescribed in Article
20 of the Cabinet Office Ordinance and give public notice immediately thereafter. If the termsof tender offer, etc. are changed, the Company will purchase, etc. the Tendered Share
Certificates tendered prior to the date of the public notice pursuant to the changed terms oftender offer, etc.
43

(VI) The method of disclosure in the case where an amendment is submitted
When the Company submits an amendment to the tender offer notification to the DirectorGeneral of the Kanto Local Finance Bureau (except for the cases prescribed in the proviso of
Article 27- 8, Paragraph 11 of the Act), the Company will publicly and promptly announce thecontents of the amendment to the tender offer commencement public notice out of the contentsof the amendment to the tender offer notification, in the manner prescribed in Article 20 of the
Cabinet Office Ordinance. In addition, the Company will immediately amend the Tender Offer
Explanation Statement and will immediately deliver the amended Tender Offer Explanation
Statement to tendering shareholders, etc., to whom the Tender Offer Explanation Statement has
already been delivered. However, if the scope of such amendment is limited to a small portion,
the Company will amend by preparing and delivering a document describing the reasons forsuch amendment, matters amended and the contents after such amendment to the tendering
shareholders, etc.
(VII) Method of disclosure of the results of a Tender Offer
The results of a Tender Offer will be publicly announced on the day following the last day of
the Tender Offer Period in the manner prescribed in Article 9-4 of the Enforcement Order andArticle 30-2 of the Cabinet Office Ordinance.
(10) Tender offer commencement public notice dateNovember 16, 2020 (Monday)(11) Tender Offer Agent
Daiwa Securities Co., Ltd.

9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo

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(1) Agreements between the Tender Offeror and the Target or its officers and the detail of such

44

agreements
According to the Target's Announcement Press Release (Nitori Holdings), at the meeting of theTarget's Board of Directors held on November 13, 2020, the Target expressed its opinion infavor of the Tender Offer and resolved to recommend that all of the shareholders of the Target
tender their shares in the Tender Offer.
The Company entered into the Management Integration Agreement with the Target on
November 13, 2020. For details, see "(VI) Matters related to material agreements concerning
Tender Offer" under "1. Purpose of Tender Offer" above.
(2) Other information deemed necessary for investors to judge whether or not to accept thetender 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
45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.
II. Execution of Management Integration Agreement
1. Reason for Management Integration
See "(III) Reasons why the Company is implementing the Tender Offer" under "(2) Backgroundand reasons to the decision to implement the Tender Offer," under "1. Purpose of Tender Offer"
under "I. Tender Offer" above.
2. Details of Management Integration
See "(6) Matters related to material agreements concerning Tender Offer" under "1. Purpose of
Tender Offer" under "I. Tender Offer" above.
3. Outline of the other party to Management Integration
See "(1) Outline of Target" under "2. Outline of Tender Offer" under "I. Tender Offer" above.
As described in "(6) Matters related to material agreements concerning Tender Offer" under "1.
Purpose of Tender Offer" under "I. Tender Offer" above, the Company will newly appoint
Takaaki Okano, president and representative director of the Target, as a director of the Company,and four other executive directors of the Target as executive officers of the Company, within areasonable time after the commencement date of the settlement of the Tender Offer.
4. Schedule of Management Integration
Public announcement date of Management
Integration
Execution date of Management Integration
Agreement
Commencement of Tender Offer
Completion of Tender Offer
Commencement date of settlement of Tender
Offer
Effective date of provisions of Management
Integration Agreement that were subject toconditions precedent (Note)
Effective date of Demand for Sale of Shares orShare Consolidation
46

November 13, 2020
Same as above
November 16, 2020 (scheduled)
December 28, 2020 (scheduled)
January 6, 2021 (scheduled)
January 6, 2021 (scheduled)

From February 2021 to April 2021
(scheduled)(Note) The said provisions refer to the part of the Management Integration Agreementthat sets forth the "Matters concerning the business alliance after the Tender
Offer." For details, see "(6) Matters related to material agreements concerning
the Tender Offer" under "1. Purpose of Tender Offer" under "I. Tender Offer"above.
5. Future outlook
See "3. Management Policy Following Completion of the Tender Offer and Future Outlook"under "I. Tender Offer" above.

End

47



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.



Some countries or regions may impose restrictions on the announcement, issue or distribution of this48

press 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.

49