[Translation]
December 24, 2020
For immediate release
Name of company:

Japan Systems Co., Ltd.

Representative:

Tomohiro Kawada
President & Representative Director(Code No.: 9758, TSE JASDAQ)

Contact:

Jun Maejima
Corporate Planning Section Manager(Tel: 03-5309-0300)

Announcement of Opinion regarding the Tender Offer for Our Shares to be Conductedby JSL Holdings LLC
Japan Systems Co., Ltd. (the “Company”) hereby announces that it resolved at its board of
directors meeting held today to express its opinion in favor of a tender offer (the “Tender
Offer”) for its common shares (the “Company Shares”) to be conducted by JSL Holdings LLC(the “Tender Offeror”) as described below and to take a neutral position regarding whether its
shareholders tender their shares in the Tender Offer, thereby leaving that decision to the
judgment of its shareholders.
The resolution of the board of directors stated above was made on the assumption that theTender Offeror intends to make the Company its wholly-owned subsidiary through the Tender
Offer and a series of subsequent procedures and that the Company Shares will be delisted.
1.

Outline of the Tender Offeror

(1)

Name

JSL Holdings LLC(2)

Location

Sumitomo Realty & Development, Fukuoka Hanzomon
Building 3F, 1-12-1, Kojimachi, Chiyoda-ku, Tokyo(3)

Name and title ofrepresentative

Law Thin Ken, Operating Officer

1

(4)

Description of business1.

Control and management of the business activities
of companies by owning the shares or interests of
those companies; and2.

All businesses incidental and relating to the above.

(5)

Capital

0 yen

(6)

Date of incorporation

July 15, 2020

(7)

Major shareholders andshareholding ratios

Daylight Holding L.P. (Note)(8)

Relationship between the listed company and the Tender Offeror(Note)

2.

Capital relationship

N/A

Personnel relationship

N/A

Business relationship

N/A

Status as related party

N/A

The Tender Offeror is a godo kaisha but is composed of only one member, Daylight
Holding L.P.
Price of tender offer
590 yen per Company Share (the “Tender Offer Price”)

3.

Details of Opinion on the Tender Offer and Grounds and Reasons Therefor(1)

Details of the Opinion on the Tender Offer
The Company resolved at its board of directors meeting held on December 24, 2020
to express its opinion in favor of the Tender Offer and to take a neutral position
regarding whether its shareholders tender shares in the Tender Offer, thereby leavingthat decision to the judgment of its shareholders, based on the grounds and reasonsstated in “(2) Grounds and Reasons for the Opinion on the Tender Offer” below. As
stated in “(C) Process of and Reasons for the Decision by the Company” in “(2)Grounds and Reasons for the Opinion on the Tender Offer” below, in order for theCompany to take advantage of the chance to dramatically expand the domains to whichit contributes as a company promoting innovation amid the recent acceleration of thetrend towards digitalization, since the Company can expect to make aggressive
investments and expeditious business decisions using the management resources of theLongreach Group (as defined below) by reviewing the Company’s previous capital
structure and cooperating with the Longreach Group, the Company has determinedthat the Tender Offer will contribute to the enhancement of Company’s corporate valueand has expressed its opinion in support of the Tender Offer. 590 yen, which is thetender offer price in the Tender Offer, is reasonable from the perspective of providing
the general shareholders of the Company with an opportunity to recover their2

investments and can be determined to have been sufficiently valuated. However, (i)as stated in “(C) Process of and Reasons for the Decision by the Company” in “(2)Grounds and Reasons for the Opinion on the Tender Offer” below, since the New
MBO Proposal (for details, please refer to ““(C) Process of and Reasons for theDecision by the Company” of “(2) Grounds and Reasons for the Opinion on the Tender
Offer” below) presented by Mr. Tomohiro Kawada, the president and representative
director of the Company, implied the possibility of implementing a competitive tender
offer with the tender offer price being 615 yen per share (however, because whether
such tender offer will actually be implemented or not will be determined by the party
making the MBO Proposal, the Company does not express its opinion on theprobability thereof; in addition, DXC (as defined below) has expressed its intention
not to support or tender shares in such tender offer even if it is actually implemented)
and (ii) although the Company does not express its opinion on the probability of the
MBO Proposal being implemented, because the Company thought that if it
recommends that its shareholders tender shares in the Tender Offer under the present
circumstances where Mr. Tomohiro Kawada has implied the possibility of
implementing a competitive tender offer in the event of the implementation of theTender Offer, it is likely that such recommendation could invite a misunderstandingthat the Company has made a decision regarding the case of the implementation of acompetitive tender offer despite the fact that the Company has not made any decisionon whether or not to support the MBO Proposal as of today, and therefore the Company
cannot recommend that its shareholders tender shares in the Tender Offer and leaves
the decision on whether or not to tender shares in the Tender Offer to the judgment of
the shareholders.
The above board of directors’ resolution was made by the method stated in “(E)Approval of All Disinterested Directors of the Company” of “(6) Measures to Ensure
Fairness of the Tender Offer, Including Measures to Ensure Fairness of the Tender
Offer Price and Measures to Avoid Conflicts of Interest” below.
(2)

Grounds and Reasons for the Opinion on the Tender Offer
Statements regarding the grounds and reasons for the opinion on the Tender Offer that
relate to the Tender Offeror are based on the explanations given by the Tender Offeror.

(A) Outline of the Tender Offer
The following is an outline of the Tender Offer as explained by the Tender Offeror to
the Company.
The Tender Offeror is a godo kaisha established on July 15, 2020 for the main purposeof acquiring and holding all of the Company Shares listed on the JASDAQ Standard
Market (the “JASDAQ”) of the Tokyo Stock Exchange, Inc. (the “TSE”), and all of
its equity interests are held by Daylight Holding L.P. (“DH Fund”) as of today. Asof today, (i) Sunlight Investment L.P. (“SI Fund”), which is held and managed as aninvestment fund by the Longreach Group (meaning, collectively, the investment
entities to which The Longreach Group Inc., which engages in the business of research
and analysis of strategic private equity investment in Japan and Asia, and The
Longreach Group Limited based in Hong Kong provide services, and all entities
affiliated with any of the above; the same applies below), holds 79% of the equity
interests of DH Fund, and (ii) Longreach-DXC Co-Investment Fund, L.P. (“DXCFund”), in which DXC Pension Trust e.V. (“DXC Pension”) (which is an affiliated3company pension of DXC Technology Company (collectively meaning the corporate
entities that provide next-generation IT services and solutions to more than 6,000
customers in 70 countries worldwide and develop businesses in Japan through DXC
Technology Japan, LLC and DXC Technology Japan, Ltd.; “DXC”)) holds all of theequity interests, holds 21% of the equity interests of DH Fund. The Tender Offeror
does not hold any Company Shares as of today.
The Longreach Group was established in October 2003 for the purpose of providing
Japanese and other Asian corporations with strategic capital and management advice
with the aim of realizing perpetual business growth and securing international
competitiveness. One of the features of the Longreach Group is a fusion of the“ability to offer added value on a global scale” and “trusted management based on theunderstanding of Japanese culture,” and the Longreach Group provides support forrealizing corporate growth by offering global-level solutions that are required by
Japanese corporations for value creation, such as support for medium-scale
corporations in strengthening competitiveness and for large-scale corporations in
optimizing business portfolios. Since its establishment, the Longreach Group has
made 16 investments in total (cumulatively, approximately 140 billion yen), whichwere mainly domestic, and its major investments include: a tender offer for shares in,and the privatization of, SANYO Electric Logistics, Co., Ltd.; strategic investment in
McDonald’s Holdings Company (Japan), Ltd.; acquisition of 100% of shares in
Hitachi Via Mechanics, Ltd.; acquisition of 100% of shares in NOC Japan Outsourcing
Inc.; investment in Wendy’s Japan LLC to make First Kitchen Co., Ltd. a whollyowned subsidiary of Wendy’s Japan LLC; acquisition of 100% of shares in Kohikan
Corporation, Ltd.; a tender offer for shares in, and the privatization of, Fujitsu
Component Limited; and investment in CHAT NOIR Co., Ltd.
The Tender Offeror will implement the Tender Offer as part of the transactions for the
purpose of acquiring all of the Company Shares (excluding treasury shares held by theCompany and the Company Shares held by DXC US (Netherlands) LLC (“DXC US”),
which is a wholly-owned subsidiary of DXC (number of shares owned: 13,973,000
shares (Note 1); ownership ratio (Note 2): 53.67%) (the “Untendered Shares”)) andmaking the Company a wholly-owned subsidiary of the Tender Offeror (the“Transactions”).
In the Transactions, the Tender Offeror intends to ultimately make the Company awholly-owned subsidiary of the Tender Offeror through the following procedures:(A)making the Tender Offeror and DXC US the only shareholders of theCompany through the Tender Offer and a share consolidation (the “Share
Consolidation”) to be conducted by the Company if the Tender Offer iscompleted but the Tender Offeror is not able to acquire all of the Company
Shares (excluding treasury shares held by the Company and the Untendered
Shares) through the Tender Offer (the “Squeeze-Out”);(B)after the completion of the Squeeze-Out, (i) a capital increase by a thirdparty allotment through which shares are allotted to the Tender Offeror (the“Capital Increase by Third-Party Allotment”) and (ii) a decrease in theamounts of the stated capital and capital reserve of the Company inaccordance with Article 447, Paragraph 1 and Article 448, Paragraph 1 of
the Companies Act ((Note 3); the “Capital Decrease, Etc.”) to be conductedby the Company for the purpose of procuring funds and a distributable4

amount necessary for conducting the Company’s Share Repurchase definedin (C)(i) below; and(C)after the Capital Increase by Third-Party Allotment and the Capital Decrease,
Etc. become effective, a share repurchase by the Company, through which
the Untendered Shares held by DXC US are acquired (the “Company’s
Share Repurchase”).

Please refer to “(5) Policy for Organizational Restructuring, Etc. after the Tender Offer(Matters relating to the “Two-Step Acquisition”)” below for details of the Share
Consolidation.
Upon implementing the Tender Offer, the Tender Offeror have entered into theTransaction Agreement dated December 24, 2020 (the “Transaction Agreement”)
with DXC US, which stipulates the terms and conditions to the effect that, among
others, (i) DXC US shall not tender the Untendered Shares held by DXC US in
response to the Tender Offer; and (ii) the Untendered Shares shall be transferred to theCompany upon the Company’s Share Repurchase after the completion of the SqueezeOut. Sunlight Investment GP Ltd. (“SIGP”), which is a general partner of DH Fund,SI Fund and DXC Fund have entered into the Amended and Restated Exempted
Limited Partnership Agreement dated September 1, 2020 (the “Partnership
Agreement”) with DXC Pension, which is a limited partner of DXC Fund, regarding
the disposal of the Company Shares and appointment of directors of the Company.
Please refer to “4. Matters relating to Important Agreements regarding the Tender Offer”
below for details of the Transaction Agreement and the Partnership Agreement.
In the Tender Offer, in order to ensure that the Share Consolidation is conducted if theTender Offer is completed but the Tender Offeror is not able to acquire all of theCompany Shares (excluding treasury shares held by the Company and the Untendered
Shares) through the Tender Offer, the minimum number of shares to be purchased(Note 4) has been set by the Tender Offeror at 3,384,400 shares (ownership ratio:
13.00%), and if the total number of Share Certificates, Etc. tendered in response to theTender Offer (the “Tendered Share Certificates, Etc.”) is less than the minimum
number of shares to be purchased (3,384,400 shares), the Tender Offeror will notpurchase any of the Tendered Share Certificates, Etc. Conversely, as described above,
given that the Tender Offeror intends to acquire all of the Company Shares (excluding
treasury shares held by the Company and the Untendered Shares) and there is no
maximum number of shares to be purchased in the Tender Offer, if the total number of
the Tendered Share Certificates, Etc. meets or exceeds the minimum number of shares
to be purchased (3,384,400 shares), the Tender Offeror will purchase all of theTendered Share Certificates, Etc.
(Note 1): The number of shares owned is the number of shares held by DXC US statedin the Report of Change (henkou houkoku sho) (No. 2) regarding theCompany Shares owned by DXC US filed on November 9, 2020.
(Note 2): “Ownership ratio” means the percentage (rounded up or down to the nearest
two decimal places) of the difference (26,036,005 shares) of the total
number of issued shares of the Company as of September 30, 2020
(26,051,832 shares) stated in the Q3 Report for the 52nd fiscal year filed by
the Company on November 13, 2020 (the “Company’s Quarterly
Report”) less the number of treasury shares held by the Company as of
September 30, 2020 (15,827 shares) stated in the Q3 Financial Statement
5(Japanese GAAP) (consolidated) for Y.E. December 2020 released by theCompany on November 12, 2020 (the “Company’s Financial Statement”);
the same applies to statements regarding ownership ratios below.
(Note 3): It is planned that, upon the Capital Decrease, Etc., the amounts of theCompany’s stated capital and capital reserve will be decreased and thedecreased portions will be transferred to other capital surplus.
(Note 4): The minimum number of shares to be purchased in the Tender Offer(3,384,400 shares) has been set to be the number calculated by multiplying(i) the number of voting rights (173,574 voting rights) equivalent to twothirds or more of the number of voting rights (260,360 voting rights)
represented by the number of shares (26,036,005 shares) equal to the total
number of issued shares of the Company as of September 30, 2020
(26,051,832 shares) stated in the Company’s Quarterly Report, minus thenumber of treasury shares held by the Company as of September 30, 2020
(15,827 shares) stated in the Company’s Financial Statement, by (ii) one unitof the Company Shares (100 shares), then subtracting the number of the
Untendered Shares held by DXC US (13,973,000 shares).
The Tender Offeror intends to cover funds required for the settlement of the Tender
Offer by contribution from DH Fund (the “Contribution”) and loan from MUFG Bank,
Ltd. (“MUFG”). Also, as set out in “(5) Policy for Organizational Restructuring, Etc.
after the Tender Offer (Matters relating to the “Two-Step Acquisition”)” below, theTender Offeror intends to request the Company to conduct the Share Consolidation aspart of the Transactions if the Tender Offeror is not able to acquire all of the Company
Shares (excluding treasury shares held by the Company and the Untendered Shares)
through the Tender Offer. However, the acquisition price of the Company Shares thatis equivalent to the total amount of fractions of shares that will arise as a result of the
Share Consolidation will be covered by a part of the Contribution and loan from
MUFG.
In addition, although the Company’s Share Repurchase will be conducted within the
distributable amount of the Company, the Tender Offeror intends to cover any shortagein the distributable amount of the Company by (A) subscribing for the Capital Increaseby Third-Party Allotment to be conducted by the Company after the Share
Consolidation takes effect and (B) causing the Company to conduct the Capital
Decrease, Etc., and taking other necessary measures after the completion of the Tender
Offer, taking into account the amount of cash required by the Company for thepayment of the Company’s Share Repurchase, the amount of deposits held by theCompany, and the level of deposits required for business operations. The Capital
Increase by Third-Party Allotment will be covered by a part of the Contribution andloan from MUFG.
The following are diagrams of the Transactions.
I.

Before the Tender Offer

As of today, DXC US holds 13,973,000 Company Shares (ownership ratio: 53.67%)
and minority shareholders hold the remaining 12,063,005 shares (ownership ratio:
46.33%).

6

DXC US53.67%II.

Minority Shareholders
46.33%

Company

The Tender Offer

The Tender Offeror conducts the Tender Offer for acquiring all of the Company Shares(excluding the Untendered Shares held by DXC US (13,973,000 shares) and treasury
shares held by the Company).
DXC Pension
100%

DXC FundLongreach CapitalPartners 3 ‒ JPY,
L.P.
100%

SI Fund
21%

79%
100%
DH Fund100%

DXC US

Minority Sharehoders

Tender Offeror
Tender Offer

53.67%
CompanyIII.

After the Tender Offer(i)

The Share Consolidation

If the Tender Offeror is not able to acquire all of the Company Shares (excluding theUntendered Shares held by DXC US (13,973,000 shares) and treasury shares held by
the Company) through the Tender Offer, the Tender Offeror requests the Company totake procedures for the Share Consolidation and carries out a set of procedures formaking the Tender Offeror and DXC US the only shareholders of the Company.

7

DXC US

Minority Shareholders

53.67%

Squeeze out by Share
Consolidation

Company(ii)

Tender Offeror

The Capital Increase by Third-Party Allotment and Capital Decrease, Etc.

After the Company Shares are delisted and the Share Consolidation takes effect, theCompany will conduct the Capital Increase by Third-Party Allotment, through whichshares are allotted to the Tender Offeror, and the Capital Decrease, Etc. in order toprocure funds and a distributable amount required for “(iii) Company’s Share
Repurchase” below.

DXC US
Capital Increase by Third-Party Allotment

Tender Offeror

53.67%
Company
CapitalDecrease, Etc.

(iii)

The Company’s Share Repurchase

The Company will conduct the Company’s Share Repurchase, through which all of the
Untendered Shares held by DXC US (13,973,000 Company Shares (ownership ratio:
53.67%) as of today) are acquired, utilizing the distributable amount procured through“(ii) Capital Increase by Third-Party Allotment and Capital Decrease, Etc.” above.

DXC US

Tender Offeror
Company’s Share Repurchase

53.67%
Company(B)

Background, Purpose, and Decision-Making Process with respect to the Tender
Offeror Conducting the Tender Offer, and Management Policy After the Tender Offer

8

(i)

Consultation between the Tender Offeror and the Company and DXC anddecision-making process of the Tender Offeror

As stated in “(C) Process of and Reasons for the Decision by the Company” below,
the Company’s revenue from sales declined for two successive fiscal years from 2017
to 2018, and its profit margin was much lower than the average of the service
information industry. Under such circumstances, DXC, which is the ultimate parent
company of the Company, commenced a review of the holding of the Company Sharesfrom the perspective of its business strategy in 2018 and, taking into account the advice
from multiple investment banks, reached the conclusion that it is necessary toaggressively take the lead in creating value and making investments, including
strategic acquisitions, in order to enhance the corporate value of the Company.
However, DXC determined that it is limited in regard to expending resources for theCompany for creating value and making investments from the perspective of thebusiness strategy of the DXC Group as a whole and believed that it is necessary to
drastically review its capital structure in order to implement a growth strategy basedon the Company’s current business environment and to strengthen competitiveness andenhance corporate value. Thus, DXC caused DXC US to propose to several
companies a partial transfer of the Company Shares held by DXC and the privatization
thereof from January 2019 in order to examine a new partner from the perspective ofstrengthening its competitiveness and enhancing its corporate value. As a result,since only the Longreach Group made a proposal for privatizing the Company Sharesthrough acquisition of all of the Company Shares on conditions acceptable to DXC,DXC executed a confidentiality agreement with the Longreach Group on March 4,
2019 and had consultations with the Longreach Group regarding the possibility ofprivatizing the Company Shares. Based on the terms of those consultations, theLongreach Group submitted a preliminary letter of intent expressing its intention toacquire the Company Shares to DXC on April 16, 2019. Then, in order to conduct a
more concrete examination of the possibility of collaboration with the Company, inlate May 2019, the Longreach Group executed a confidentiality agreement with theCompany and DXC, received partial disclosure of the financial information andbusiness strategy plans of the Company, and commenced the concrete examination of
the possibility of privatizing the Company Shares and a growth strategy for theenhancement of the Company’s corporate value over the medium to long term to which
the Longreach Group may contribute. The Longreach Group determined that, inorder for the Company to realize further growth in the midst of the current andexpected changes in the business environment going forward, it is essential totransform itself to a system solution provider possessing sophisticated expertise by
actively expanding growth investment in the enhancement of the customer base andproduct development and taking more radical measures with a view to achieving noncontinuous growth, including through M&A. The Longreach Group understands thathuman resources, mainly engineers, are the principal driving force for the future
growth of the businesses conducted by the Company, and it will actively invest in
human resource development, including but not limited to the redesign of personnel
systems, such as a flexible compensation structure including performance- andresponsibility-based incentives and a fair appraisal system, the improvement of theworkplace environment and working styles, the enhancement of internal training
programs and career path programs, and the reinforcement of recruiting activities
including branding and marketing activities for mid- to long-term recruitment.

9

According to the Longreach Group, the specific growth strategies and policies for eachbusiness of the Company are as follows.
1.

Enterprise businessIn addition to further strengthening relationships with major customers, mainly
including the group companies of the NTT DATA Corporation and DXC, andincreasing the value of services to be provided, the Tender Offeror will enhancesolution services focusing mainly on fields in the financial and insurance industry,
telecommunication industry and social infrastructure industry, etc. that require stepby-step modernization (Note 6) of legacy systems (Note 5) in the future by combining
the vast knowledge of the financial and insurance industry held by the Company with
COBOL engineers and open architecture and cloud language engineers. The Tender
Offeror will establish high-quality and stable service functions by designing andimplementing strategic sales and marketing focusing on the needs of customers
requiring modernization by actively leveraging external human resources and byadopting training programs to produce engineers with high expertise. The Tender
Offeror will promptly establish a group of engineers with high expertise and loyalty
by adopting the most appropriate personnel system to keep high retention for excellent
engineers. In addition, the Tender Offeror will make it possible to increase the prime
project percentage (Note 7) to a certain extent and realize high profitability by
aggressively conducting M&A transactions, etc. with companies with services andsoftware for the financial and insurance industry and by establishing a brand as an IT
solution provider with strong characteristics in that industry.
(Note 5): Computer systems that are established based on old technology platforms at
a time when alternative technology has become widely used due totechnological innovation; specifically, systems that are established using
mainframes, which were the basis of companies’ core systems.
(Note 6): The replacement of software and hardware used in companies’ information
systems with the latest products and designs while utilizing assets alreadyin operation.
(Note 7): “Prime project percentage” means the ratio of contracted service projects
performed under agreements executed directly with the user or end customer(prime projects) to all projects.
2.

Public business

The digitalization of administrative services through the establishment of the “Digital
Agency” that is under consideration following the establishment of the new
government administration in September 2020 is a market opportunity, but it may
become a headwind if current products and systems remain unchanged. If the Tender
Offeror cannot standardize FAST, which is the main software product and boasts
strength in its ability to be customized for each customer, nor make it a cloud-based
solution and needs to compete only by using the existing products, there is a possibility
that it will lose much of its customer base. Therefore, it is necessary to leverage its
existing strengths as a basis and radically and aggressively invest in development forstandardizing FAST, which is an existing product, and making it a cloud-based solution
in order to respond to rapid changes in the industry, as well as in order to lead tobusiness opportunities in the future. Further, the Tender Offeror will make efforts toprovide a broad range of services and increase additional value through cross sales tothe existing customer base by expanding FAST, and by expanding the lineup of
10

products with synergy with FAST through in-house development and collaboration or
M&A with competitors. The Tender Offeror aims to further expand market sharethrough finding new customers in unexplored areas particularly focusing on mediumsized or small- to medium-sized local governments by expanding product lineups andstrengthening strategic sales and marketing.
The Tender Offeror will also
aggressively invest in development for standardizing FAST and making it a cloudbased solution and promptly establish status as a leader in the digitalization of local
governments, which is promoted by the national government.
3.

Image processing solution businessIn the medical field, the Tender Offeror intends to expand market share by expanding
and strengthening sales personnel for device manufacturers and medical institutions,to enter into peripheral domains by aggressively developing products. In the security
camera field, the Tender Offeror will expand business scale focusing on security
systems for large infrastructure equipment by further deepening relationships withexisting major good customers. In order to realize the aims above, the Tender Offeror
will expand business by appropriately allocating human and financial resources to
NetCam Systems Corporation, which is a subsidiary of the Company, expanding sales
personnel and engineers and entering into peripheral businesses through softwaredevelopment and M&A, and will create mutual synergies with the Company in thehealthcare and infrastructure fields, which are, in the medium term, behind in terms ofIT development and need to be modernized or digitalized.
Based on the business environment surrounding the Company as described in “(C)Process of and Reasons for the Decision by the Company” below, the LongreachGroup believes that amidst the changing environment, it is necessary for the Company
to aim to realize sustainable growth and enhance its corporate value by promoting
business transformation by transforming itself from a medium-sized system integrator
to an independent solution provider that leads in the modernization of legacy systems
mainly in the financial and insurance industry and that leads in digitalization in the
public domain focusing on public accounting and surrounding domains of mediumlevel or small- to medium-sized local governments through aggressively expanding
growth investment in the establishment of a new customer base, development of new
products and other development of human resources in order to further grow while
continuing relationships with existing customers, as well as through further taking
radical measures, including M&A transactions, with a view to achieving noncontinuous growth.
The Longreach Group considers that the sustainable growth of the Company throughthe implementation of the above measures cannot be achieved as an extension of thebusiness that the Company currently conducts. While the strategy essential forbusiness transformation, the bold restructuring of business structure and aggressive
growth investments are highly likely to cause a short-term decrease in profits, under
the current capital structure where the Company is a listed subsidiary in which DXC
owns a majority stake and is restricted by ensuring profit and handling impairment
risks in its accounts each quarter, the Longreach Group considers that it is difficult toimplement those measures. While it is expected that investments ranging fromseveral hundred-million to several billion yen are regularly required to develop
software for public work projects, taking into account that the development
investments previously made by the Company could not achieve the expected results,
DXC implies the possibility that it cannot allow further investment by continuing
11current investments. Therefore, under those circumstances, the Longreach Groupconsiders that aggressive development investments cannot be expected. Further,with respect to business growth through M&A, because funds and human resources
are insufficient under the current management system of the Company, the LongreachGroup believes that the Company requires its support, such as additional financing andhuman resources, in order to effectively realize such business growth. The
Longreach Group also determined that in the process of conducting that radical
strategy and business structural reform as well as aggressive growth investment, even
if those measures provide opportunities to expect significant growth from a mediumto-long-term perspective, it is difficult to consider that those measures will contributeto the Company’s profits on a short-term basis, and there is a possibility that thosemeasures would decrease the Company’s profit level and harm cash flows. Therefore,
the Longreach Group determined that if those measures are taken while maintaining
the listing of the Company Shares, the possibility of there being a negative effect on
the Company’s share price cannot be denied, and the Longreach Group therefore
concluded that it is difficult for the Company to take those measures while maintaining
the listing of its shares.
In addition to the above, the Longreach Group determined that it is difficult to consider
that when the Company aggressively pursues its growth strategy, the capital structurein which DXC, which is also a large customer of the Company, indirectly holds amajority of the Company Shares is the most appropriate governance structure because
it will be difficult to obtain support and understanding for investment from DXC
particularly in the public business and image solution business, in which there is only
a minimal business relationship with DXC and which require comparatively large
investments in product development, and the possibility that there are currently certain
limitations on the performance of the growth strategy cannot be denied.
However, because DXC is a large customer of the Company that represents
approximately 10-15% of the sales of its entire enterprise business, the LongreachGroup determined that it is essential for the stabilization of the Company’s
management base to maintain a good relationship with DXC after the privatization andconsidered the possibility of a joint investment with the DXC Group (meaning theconsolidated subsidiaries and affiliates of DXC, including DXC US; the same applies
below).
Based on those examinations, the Longreach Group proposed to DXC a more detailedtransaction scheme where the Longreach Group ultimately holds 62% of the Company
Shares and DXC holds 38% of the Company Shares through the acquisition of all of
the Company Shares held by the minority shareholders of the Company through atender offer and subsequent squeeze-out procedures by the Longreach Group, and theacquisition of part of the Company Shares held by DXC through a share repurchaseon October 21, 2019. Then, based on such proposal, the Longreach Group had
consultations with DXC on multiple occasions and made another proposal to DXC
including, but not limited to, a more concrete post-investment growth strategy planand the terms of a governance policy under a co-investment structure in mid-April
2020. With respect to the form of the joint investment, the Longreach Group
proposed a scheme where in order to minimize DXC’s influence on the Company’s
management after the transaction, the Longreach Group would cause a joint
investment fund established and operated by the Longreach Group to receive
contributions from the DXC Pension as a passive co-investor who does not lead
investment decisions or management decisions, and such joint investment fund would
12

ultimately hold all of the Company Shares. As a result, in relation to the privatizationof the Company Shares, the Longreach Group received a response from DXC to theeffect that the proposal of the Longreach Group will contribute to future enhancementof the corporate value of the Company and gives due consideration to the preservationof a good relationship with DXC, and DXC will provide full support. Upon thereceipt of the response, the Longreach Group proposed to the Company theprivatization of the Company Shares on May 15, 2020.
Then, from late May 2020, the Longreach Group conducted due diligence (which wascompleted in mid-July 2020) with respect to the Company’s business, finances, taxes
and legal affairs and held interviews with the Company’s management. In light of
the information obtained in the process of such due diligence and interviews, theLongreach Group further analyzed and examined the significance of the Transactions,the acquisition structure and the feasibility of the Transactions and continued to haveconsultations with DXC on the terms and conditions of the Transactions, including theconsideration for the Transactions. During such consultations, the Longreach Groupand DXC discussed, together with the experts, the options of various schemes,
including a scheme where DXC US offers its Company Shares in the tender offer anda scheme where a tender offer for the purpose of acquiring the Company Shares heldby the minority shareholders of the Company and a tender offer for the purpose of
acquiring the Company Shares held by DXC US are conducted, and the tender offer
price in the tender offer for the purpose of acquiring the Company Shares held by theminority shareholders of the Company is set to be higher than the tender offer price inthe tender offer for the purpose of acquiring the Company Shares held by DXC US,
taking into account the economic interests to be obtained by the Company’s
shareholders from the Transactions, the stability of the Transactions and other matters.
Then, the Longreach Group and DXC determined that they would propose to theCompany a two-step acquisition scheme for the Transactions (the “Acquisition
Scheme”) consisting of (i) the acquisition of all of the Company Shares excluding
treasury shares held by the Company and the Untendered Shares through the Tender
Offer and subsequent Share Consolidation and (ii) the acquisition of the Untendered
Shares through a share repurchase by the Company after the Share Consolidation takes
effect. The Longreach Group and DXC decided to adopt the Acquisition Scheme inlight of the interests of the Company’s minority shareholders, taking into account thefact that despite the disadvantages of more time being required to complete all of thetransactions and there being greater complexity compared to a scheme where DXC US
offers its Company Shares in the tender offer, it is possible to distribute a greater
amount of the funds necessary for the acquisition of all of the Company Shares to theCompany’s minority shareholders and increase the interests of the Company’s
minority shareholders by adopting the Acquisition Scheme and setting the Tender
Offer Price at a price higher than the acquisition price per share upon the Company’s
Share Repurchase (the “Repurchase Price”), the fact that although the price is set
unfavorably to DXC US because DXC US is a foreign corporation and the provisions
on the exclusion of deemed dividends from gross profits prescribed in the Corporation
Tax Act do not apply to DXC US, it will have the opportunity to sell the Untendered
Shares that it holds (13,973,000 shares) at the Repurchase Price, and the fact that there
is a possibility that it will take less time to complete all of the transactions comparedto the scheme where a tender offer for the purpose of acquiring the Company Shares
held by the minority shareholders of the Company and a tender offer for the purposeof acquiring the Company Shares held by DXC US are conducted.
13

As described above, while the Longreach Group and DXC maintain a good
relationship as business partners important to both the Company and DXC, they haveagreed that in order to minimize DXC’s influence on the decision-making of theCompany on future growth strategies, instead of DXC directly holding part of theequity interests of the Tender Offeror, DH Fund to be established and operated by theLongreach Group holds 100% of the equity interests and that DXC Fund, to which
DXC Pension makes capital contributions, will hold 21% of the equity interests in DH
Fund as a passive co-investor who does not lead investment decisions or management
decisions. With respect to the ratio of investment in DH Fund, as a result ofconsultation based on the absolute requirement that the Longreach Group would havea majority of the equity interests, it was agreed that the Longreach Group will hold79% and DXC Fund will hold 21% so as to satisfy both companies’ criteria for theminimum investment amount per transaction.
Based on such decision, the Longreach Group made a proposal on September 1, 2020
to the Company regarding its intention to set the Tender Offer Price at 515 yen, which
represents a premium of 21% on 424 yen, which was the closing price for the Company
Shares on the JASDAQ of the TSE on the previous day (August 31, 2020), and theRepurchase Price at 500 yen, which represents a premium of 18% on 424 yen. Then,after consultations on multiple occasions with the Company and DXC receiving arequest from the Company to increase the price to a level in line with the current stock
price, and taking into account the rapid increase in the stock price of the Company
Shares after September 2020 and past average stock prices, as a result of the LongreachGroup continuing to consult with the Company and DXC, it was agreed with DXC that
the Tender Offer Price would be at 590 yen and, in light of the maximum amount ofinvestment by the Longreach Group based on the corporate value calculated by theLongreach Group, the Company’s Repurchase Price would be kept at 500 yen. The
Longreach Group made a proposal on October 19, 2020 to the Company indicatingthat the Tender Offer Price be increased to 590 yen. Then, from late October 2020 to
mid-November 2020, the Longreach Group held question-and-answer sessions with
the Company about the management system and policy after investment, and it
provided explanations about the management system and policy by meeting with thecurrent executive officers of the Company. In addition, from mid-November 2020,
the Longreach Group provided explanations about its opinions and policy regarding
the intentions of the current executive officers of the Company, held question-andanswer sessions with the Company about these matters, and continued to haveconsultations regarding transaction terms and conditions, including the purchase priceper Company Share. Specifically, although from mid-November 2020, the Company
requested the Tender Offeror to raise the Tender Offer Price to 615 yen or above, whichis the purchase price per share of the New MBO Proposal, the Tender Offeror has notchanged the Tender Offer Price because it considers (i) that there is doubt as to thefeasibility of the New MBO Proposal (for details, please refer to “(ii) Establishmentof a structure for review and process of review” in “(C) Process of and Reasons for theDecision by the Company” below) because it is conditioned on DXC’s approval and(ii) that the Tender Offer Price is the sum of the latest market value of the Company
and a certain premium, is reasonable taking into account the result of the analysis of
the Company’s business and financial status by the Tender Offeror, and will provide
to the Company’s general shareholders a reasonable opportunity to sell shares.
The Tender Offeror considers that the Tender Offer Price is the sum of the latest market
value of the Company and a certain premium, that it is reasonable taking into account14

the result of the analysis of the Company’s business and financial status by the Tender
Offeror, and that it will provide to the Company’s general shareholders a reasonable
opportunity to sell shares. In addition, in the New MBO Proposal (for details, pleaserefer to “(ii) Establishment of a structure for review and process of review” in “(C)Process of and Reasons for the Decision by the Company” below), the Company
received a proposal from Mr. Tomohiro Kawada, the president and representative
director of the Company, that indicated that the offer price for the Company Shares
owned by the general shareholders is 615 yen per share, which exceeds the Tender
Offer Price of 590 yen per share. However, according to Tender Offeror, DXC
determined that the New MBO Proposal would not ensure the enhancement of theCompany’s corporate value and the interests of the general shareholders and clearly
indicated its intention not to support the New MBO Proposal to Mr. Tomohiro Kawada
and the Company on the grounds that (a) DXC highly appraises the past investment
results and experience of the Longreach Group and networks held by the LongreachGroup and considers that support from the Longreach Group is the best option fromthe standpoint of enhancing the corporate value of the Company, which will be abusiness partner of DXC moving forward, and (b) while 615 yen per share is offeredto the general shareholders in the New MBO Proposal on the condition that DXC
accepts the tender offer at a price lower than that of the general shareholders, because
DXC has agreed to sell the Company Shares at a price lower than that of the generalshareholders only under the proposal from the Longreach Group considering that
support from the Longreach Group is the best option from the standpoint of enhancing
the corporate value of the Company, which will be a business partner of DXC moving
forward, and DXC has no intention to sell the Company Shares at a price lower thanthat of the general shareholders in the New MBO Proposal, DXC considers that it is
not realistically possible for the Company Shares to be privatized under the New MBO
Proposal. Although the Tender Offeror has not directly discussed or negotiated the
New MBO Proposal with Mr. Tomohiro Kawada and persons related to the New MBO
Proposal, the Tender Offeror has determined that the above explanations given by
DXC, which is the Company’s parent company and one of its major customers, are notparticularly unreasonable, and it considers that based on the explanations describedabove, the New MBO Proposal will not ensure the enhancement of the Company’s
corporate value and the interests of the general shareholders, and that it has to judge
the feasibility of the New MBO Proposal to be disputable. In light of the mattersdescribed above, as stated above, the Tender Offeror considers that the proposal of theLongreach Group will contribute to future enhancement of the corporate value of theCompany and that it is advisable to implement the Tender Offer in consideration ofincreasing the corporate value and securing the interests of general shareholders of theCompany, and the Tender Offeror has decided to implement the Tender Offer at theTender Offer Price even if the Company does not recommend that the Company Shares
be tendered.
(ii)

Management policy after the Tender Offer and the Transactions, etc.

As set out in “(A) Outline of the Tender Offer” above, after the successful completionof the Tender Offer, the Tender Offeror intends to ultimately make the Company awholly-owned subsidiary of the Tender Offeror through the following procedures:(i)making the Tender Offeror and DXC US the only shareholders of theCompany through the Share Consolidation;
15

(ii)

the Capital Increase by Third-Party Allotment and the Capital Decrease, Etc.
to be conducted by the Company for the purpose of procuring funds and a
distributable amount necessary for conducting the Company’s Share
Repurchase; and(iii)

the Company’s Share Repurchase to be conducted by the Company after the
Capital Increase by Third-Party Allotment and the Capital Decrease, Etc.
have taken effect.

With respect to the management structure after the implementation of the Transactions,
the Tender Offeror will promote measures to enhance the Company’s corporate value
through taking radical measures, including the implementation of strategic M&As, byutilizing the management resources of the Longreach Group and the broad
management personnel networks that the Longreach Group has cultivated, while at thesame time utilizing the business foundation that the Company has built thus far underDXC.
The matters regarding the number of the officers delegated from the Longreach Groupto the Company have not been determined at present, and the policy in regard thereto
will be determined taking into account the Company’s intentions. As stated in “4.
Matters relating to Important Agreements regarding the Tender Offer,” because SIGP
and DXC Pension have agreed in the Partnership Agreement that DXC Pension may
appoint one director of the Company, it is planned that DXC Pension will appoint one
director of the Company. The Tender Offeror will introduce incentive plans such as
stock options and performance-based compensation (specific terms have not been
determined at present) for officers and employees of the Company and will establish
a structure to enhance the corporate value of the Company in the long term.
(C)

Process of and Reasons for the Decision by the Company(i)Business environment surrounding the Company

The Company was established in June 1969 as Tokyo Software Service Co., Ltd. andengaged in the data entry service business before expanding into software contracted
development services in February 1970. It changed its tradename to Japan System
Service Co., Ltd. in April 1970. After the Company changed its tradename to Japan
System Co., Ltd. in June 1978, it expanded its business lines as an independent IT
vendor and as a company promoting computerization in a broad range of both public
and private fields in Japan. It listed its shares on the Tokyo over-the-counter market
in October 1988. The Company Shares were listed on the JASDAQ of the TSE in
July 2013 as a result of subsequent reorganization of the securities market.
In February 1992, the Company came to have financial difficulties due to aggressive
business investments made amid continuing rapid growth as part of a growth industry.
The Company received contributions from Electronic Data Systems Corporation(whose shares were delisted from the New York Stock Exchange in 2008; “EDS”),
which is a leading IT services company in the United States, and EDS thereafter cameto own 51% (shareholding ratio (meaning the percentage (rounded down to the nearest
whole number) of the Company Shares held by EDS to the total number of the issued
shares of the Company less the number of treasury shares held by the Company as ofthe end of the most recent quarter at that time; the same applies below in this16

paragraph)) of the Company Shares through a tender offer bid in October 1993.
(Subsequently, EDS ultimately became the Company’s parent company owning 53.6%(shareholding ratio) of the Company Shares through a capital increase by a third-party
allotment in July 1994.)
Although the ultimate parent company of the Company changed to Hewlett-Packard
Company (in 2008) and then to DXC (in 2017) (both of whose shares are listed on the
New York Stock Exchange) amid subsequent IT industry reorganization in the UnitedStates, for over 25 years, as a listed company in which foreign listed companies holda majority of the shares, the Company has aimed to enhance its corporate value by
realizing its management philosophy, “Continuous Creation of New Value,” and byreceiving assistance and cooperation from its parent companies, such as throughtransfers of directors and business transactions. While the Company is contracted by
DXC Technology Japan, LLC and DXC Technology Japan, Ltd., which are Japanesesubsidiaries of DXC, its ultimate parent company, to perform software development
services and other services, it performs those services on general business conditions
and does not conduct any transaction that creates special profits.
The Company is currently developing the system integration business, which provides
IT solutions to local governments and IT services and solutions to private corporations,based mainly around “FAST,” a financial accounting system. NetCam Systems
Corporation, which is the Company’s subsidiary, is developing the image processing
solution business in which it sells software for network cameras and software formammography that utilizes image processing technology.
Looking back on the management environment for the last 10 years, the Company
acquired the business belonging to the information security business division of Net
Time Co., Ltd.in April 2010, and in March 2012, it established a mid-term businessplan (Reach For 150) aiming to achieve growth of 15 billion yen in annual sales by
2016 by setting the local government business, the system development business andthe solution business as its three major businesses and strengthening measures andconcentrating resources to suit the characteristics of each business domain.
As a result of enhancing capabilities for offering solutions and technical capabilities
to suit the characteristics of each domain under that business plan, the Company
appropriately responded to the needs in each business domain, such as rapidly
increasing its market share in special districts in the local government business,participating in major projects such as financial system integrations and smart grids(Note 8) in the private sector business, and timely releasing a multi-factor
authentication solution in response to the model lead by the Ministry of Internal Affairs
and Communications to improve the resilience of the information systems of local
governments (Note: 9) in the security business. The Company realized sustainablegrowth in its three core businesses for three successive fiscal years from 2012 to 2015,
and in 2015, it obtained a source of new growth by acquiring NetCam Systems
Corporation in July of that year. As a result, in 2016, although the Company did notachieve 15 billion yen in annual sales, it did reach more than 10 billion yen in annual
sales and achieved two-digit growth compared to the previous fiscal year.
(Note 8): “Smart grids” means power grids that can control the amount of electric
power from both the supply side and the demand side through IT technology.
(Note 9): “Model to improve the resilience of the information systems of local
governments” means the security requirements announced by the Ministry17

of Internal Affairs and Communications in 2015 that are proposed tostrengthen the information systems of local governments.
However, after 2017, facing challenges in regard to market maturity and productcompetitiveness, such as the end of one cycle of demand for information system
resilience solutions stated above, intensified price competition due to the participationby competitors in local government financial system solutions, a convergence of major
projects in the private sector, and quality issues with FAST, the Company’s revenue
from sales declined for two successive fiscal years in 2017 and 2018, and its profit
margin was much lower than the average of the service information industry. Basedon the awareness of these conditions, the Company did not establish a new mid-termbusiness plan for 2018 and 2019, designating those years as a period to be dedicatedto reforming its business structure, and decided to make efforts to radically reform its
cost structure and business structure.
The Company decisively took measures such as transferring the security business (inwhich there was a dilemma that while the business had become a red ocean and productlife cycles were shortening, development investment costs were increasing),
integrating product lines of FAST, simplifying (delayering) its organizational structure,and significantly decreasing the number of headquarters and executive officers. As
a result, the Company significantly improved its profit ratio in the settlement ofaccounts in 2019.
Based on the progress of cost structure reforms and the results of the restructuring ofmajor businesses, from the latter half of 2019, the Company began examining a new
mid-term business plan that had been deferred, and in December 2019, it organized a
new mid-term business plan focusing on five basic strategies such as a growth strategy
for sustainable growth and decided to begin efforts to realize that plan from 2020.
Immediately after starting the new system to realize the new mid-term business planin the beginning of 2020, due to the spread of COVID-19, there were significant
restrictions on the activities to create new business discussions, particularly in the threebusinesses of RPA (Note: 10), Business Analytics (Note: 11) and Enterprise CloudApplications (Note: 12), which are considered to be sources of growth. However, inspite of the impact on current business activities, the current coronavirus pandemic has
accelerated administrative digitalization that was previously deferred, and theCompany believes that the pandemic is creating megatrends that will greatly change
the way in which business and transactions are conducted. While the Company
considers that there is a significant potential in its past experience with software
technology and in local governmental and social infrastructure fields as these changes
to social progress, it faces a crucial moment that will determine its survival, where if
it fails to appropriately respond to these change, it will lose what it has built up until
now. The Company considers the current situation to be the very moment that theCompany is required to expeditiously and dramatically expand the domains to whichit contributes by assessing the subtleties of trends in the domestic market and customer
needs and by making decisive business decisions and bold capital investments, and theCompany considers that the current situation presents the greatest chance for it to doso.
(Note 10):

“RPA” stands for Robotic Process Automation and means the use ofIT (robots) for the performance of simple administrative services.

18

(Note 11):

“Business Analytics” means the process of evaluating extensive data
held by companies and making data-driven decisions using the resultsof the evaluation.

(Note 12):

“Enterprise Cloud Applications” means services to establish systems
to serve as foundations of core operations and internal operations ofprivate companies and, in particular, to provide applications that allow
those systems to be used through the cloud.

(ii)

Establishment of a structure for review and process of review

The Company received an initial inquiry from the Longreach Group in late May 2019about privatizing the Company Shares, and thereafter the Company disclosed its
financial information and a part of its business strategy plans to the Longreach Groupafter executing a confidentiality agreement.
Thereafter, the Company received a specific proposal for privatizing the Company
Shares from the Longreach Group on May 15, 2020. Because the proposal statedmatters such as that DXC US, a parent company of the Company, has agreed to theprivatization of the Company Shares by the Longreach Group and that the DXC
Pension, which is an affiliated company pension of DXC, intends to make acontribution to the co-investment fund that the Longreach Group plans to manage for
the Transactions, there was a possibility that the interests of the DXC Group and theCompany’s general shareholders may not necessarily be in line with each other.
Accordingly, in order to address those issues and to ensure the fairness of theTransactions, it immediately started establishing a structure for reviewing, negotiating
and determining the Transactions in consideration of increasing its corporate value andsecuring the interests of general shareholders of the Company from a standpoint
independent from the Tender Offeror and the DXC Group.
Specifically, the Company selected Mizuho Securities Co., Ltd. (“Mizuho
Securities”) as its financial advisor and selected Nagashima Ohno & Tsunematsu as
its legal advisor in mid-May 2020, both of which are independent from itself, theTender Offeror and DXC US. It further established a special committee composedof members independent from itself, the Tender Offeror and DXC US by a resolutionof an extraordinary meeting of its board of directors held on May 25, 2020. For theprocess of the establishment of that special committee, the process of its review, andthe details of determinations made, please refer to “(C) Establishment by the Companyof an Independent Special Committee” in “(6) Measures to Ensure Fairness of theTender Offer, Including Measures to Ensure Fairness of the Tender Offer Price andMeasures to Avoid Conflicts of Interest” below.
The Company has then cooperated with the Longreach Group in its due diligence
investigations with respect to the Company from late May 2020 to mid-July 2020.
The Company then received a written proposal dated September 1, 2020 from theLongreach Group, which included a proposal to set the offer price for the Company
Shares at 515 yen per share and a proposal that DXC US, the parent company of theCompany, would not tender the Company Shares it holds in the Tender Offer andwould sell the Company Shares through the Company’s Share Repurchase after
completing the privatization of the Company Shares. Subsequently, the Company
received advice from a financial point of view, including a report on the result of thevaluation of the Company Shares and advice on the strategy for negotiations with the19Tender Offeror, from Mizuho Securities and received guidance and other legal advice
on measures to secure the fairness of the procedures for the Transactions from
Nagashima Ohno & Tsunematsu, based on which it has carefully considered whether
to implement the Transactions and the appropriateness of the transaction terms andconditions.
Specifically, the Company has deliberated on multiple occasions with the LongreachGroup from early June 2020 to mid-November 2020 and received explanations
regarding, and discussed matters with respect to, the background to reaching thedecision to conduct the Transactions, the significance of the Transactions, the structureof the Transactions, the financing method and the post-Transaction business strategy,
management policy and management structure.
Further, the Company hasdeliberated on multiple occasions with its ultimate parent company, DXC, from late
May 2020 to mid-November 2020 and received explanations and had discussions
regarding the process for reaching the decision to select the Longreach Group as apossible purchaser of the Company Shares, the significance of the Transactions fromthe perspective of DXC, and DXC’s view towards the management conditions of theCompany.
While those deliberations were ongoing, the Company received another proposal (the“MBO Proposal”) with respect to the privatization of the Company Shares from Mr.
Tomohiro Kawada, the president and representative director of the Company, on
October 9, 2020. Subsequently, the Company received explanations regarding theoutline of the MBO Proposal from Mr. Tomohiro Kawada at the extraordinary meetingof the board of directors held on October 13, 2020 and resolved that three directors
who are also audit and supervisory committee members of the Company would
deliberate and decide on both the proposal regarding the Transactions and the MBO
Proposal in order to exclude any influence from the conflicts of interest between Mr.
Tomohiro Kawada, who is the President and Representative Director of the Company,
and the Company’s general shareholders and to ensure the fairness of the procedures.
In addition, the Company received from DXC an opinion that DXC did not support
the MBO Proposal because the MBO Proposal is unlikely to be executed due to reasons
such DXC doubting the likelihood that funds will be raised for the execution of the
MBO Proposal on October 15, 2020.
Then, the Company received a revised written proposal dated October 19, 2020 fromthe Longreach Group, which indicated that the Tender Offer Price for the Company
Shares would be increased to 590 yen per share, the Repurchase Price would beunchanged at 500 yen, and DXC would continue to support the Longreach Group’s
proposal. The Company received another proposal on October 30, 2020 from Mr.
Tomohiro Kawada again regarding the privatization of the Company Shares, which
included the offer price for the Company Shares being 615 yen per share and thepurchase price for the Company Shares owned by DXC US being 510 yen per share(expected to be purchased by the company for purchase to be established by Mr.
Tomohiro Kawada or purchased by other methods) (the “New MBO Proposal”).
Upon the receipt of those proposals, the Company carefully considered whether the
proposal regarding the Transactions and the New MBO Proposal were appropriate andwhether the terms and conditions of the proposals were reasonable, based on legal
advice from Nagashima Ohno & Tsunematsu, and advice from a financial point ofview from Mizuho Securities.

20

Specifically, the Company held question-and-answer sessions on multiple occasions
with DXC about whether to support the proposal regarding the Transactions or the
New MBO Proposal and the reasons therefor from late October 2020 to mid-November
2020. The Company had meetings on multiple occasions with Mr. Tomohiro Kawada
and the sponsor, which will be a joint investor, and received explanations regarding,and held question-and-answer sessions and discussed matters with respect to, thebackground leading up to making the New MBO Proposal, the significance of the New
MBO Proposal, the terms and conditions of the New MBO Proposal including the offer
price of the Company Shares, and the management policy after the privatization of theCompany Shares based on the New MBO Proposal from early November 2020 to midNovember 2020. In addition, because Mr. Kazushi Nakada (the division manager of
the First Business Division), Mr. Nobuhiko Okawa (the division manager of theSecond Business Division) and Mr. Takashi Nakagawa (the division manager of the
Public Sector Business Division), who are executive officers and division managers,
supported the New MBO Proposal, the Company had meetings with those executive
officers and received explanations from the Longreach Group regarding, and held
question-and-answer sessions about, the opinions and policies regarding the intentionsof those executive officers from in early November 2020. Further, the Company had
discussions with the Longreach Group and Mr. Tomohiro Kawada with respect to theterms and conditions including the offer price per Company Share from earlyNovember 2020 to early December 2020.
On November 30, 2020, the Company indicated to Mr. Tomohiro Kawada that there
was doubt regarding the feasibility of the New MBO Proposal because it is conditional
on DXC selling to Mr. Tomohiro Kawada (expected to be the company for purchaseto be established by Mr. Tomohiro Kawada) the Company Shares in order to acquire
100% of the Company Shares based on the New MBO Proposal, meaning that the New
MBO Proposal is conditional on approval by DXC, and requested him to reconsider
the New MBO Proposal by December 7, 2020. On December 7, 2020, the Company
received another proposal from Mr. Tomohiro Kawada indicating the possibility that
although DXC did not approve the New MBO Proposal before December 7, 2020,
while the terms of the proposal described above, which is conditional on approval by
DXC, remain unchanged, if another tender offeror commences a tender offer before
DXC approves the New MBO Proposal, he would implement a tender offer with thepurchase price per Company Share being 615 yen irrespective of whether the board of
directors of the Company supports the New MBO Proposal. Whether Mr. Tomohiro
Kawada or parties connected to him will actually implement such tender offer or not
is left to the judgment of the party making the New MBO Proposal, and the Company
does not express its opinion on the probability thereof.
Under those circumstances, the Company then received a written report (the “Report”)
from the special committee on December 24, 2020 stating that the special committee
believes that (i) the board of directors of the Company should resolve to express an
opinion in support of the Tender Offer and take a neutral position regarding whether
its shareholders tender shares in the Tender Offer, thereby leaving that decision to the
judgment of its shareholders, and (ii) deciding to express an opinion in support of theTender Offer and taking a neutral position regarding whether its shareholders tendershares in the Tender Offer, thereby leaving that decision to the judgment of its
shareholders, at the meeting of the board of directors of the Company would not bedisadvantageous to the minority shareholders of the Company (for details of the Report,
please refer to “(C) Establishment by the Company of an Independent Special
21

Committee” in “(6) Measures to Ensure Fairness of the Tender Offer, Including
Measures to Ensure Fairness of the Tender Offer Price and Measures to Avoid
Conflicts of Interest” below).
(iii)

Determinations

In light of the background described above, the Company carefully discussed andconsidered at the meeting of its board of directors held on December 24, 2020 whether
the Transactions, including the Tender Offer, would contribute to increasing thecorporate value of the Company and whether the terms and conditions of theTransactions, including the Tender Offer Price, are appropriate, based on legal advice
from Nagashima Ohno & Tsunematsu, advice from a financial point of view from
Mizuho Securities, and a share price valuation report on the result of the valuation of
the Company Shares (the “Share Price Valuation Report (Mizuho Securities)”)received from Mizuho Securities on December 24, 2020, giving the highest degree ofrespect to the determinations by the special committee presented in the Report.
As a result, as stated below, the Company came to the conclusion that becoming awholly-owned subsidiary of the Tender Offeror will contribute to increasing its
corporate value.
As stated in “(i) Business environment surrounding the Company” above, after thereform of the business structure in 2018 and 2019, the Company announced at the endof 2019 its growth strategy to aim to achieve 13 billion yen in annual sales by 2022 asa mid-term business plan. While starting the new business system and initiating theexecution of that strategy in full scale from 2020, the Company considers that the
spread of COVID-19 is triggering the creation of megatrends in digitalization, such as
the acceleration of administrative digitalization and changes in the way in whichbusiness and transactions are conducted. Amid the acceleration of these major trends,
while the Company considers that the current situation presents the greatest chance forit to dramatically expand the domains to which it contributes as a company promoting
this innovation by leveraging its unique contribution track record and technicalcapabilities that it has achieved thus far, the Company believes that in order to takeadvantage of this chance, it is essential to make decisive business decisions and boldand expeditious capital investments. However, DXC, which is currently the ultimate
parent company of the Company, is limited in regard to expending resources to makesuch aggressive capital investments in the Company from the perspective of the overallbusiness strategies of DXC, and thus the Company cannot expect to receive support
from the DXC Group necessary and sufficient for further growth. Under the
management system where persons related to the DXC Group occupy half or more of
the board of directors of the Company, while the Company cannot establish a businessstrategy based on aggressive investments because it is expected to achieve short-term
performance goals, DXC is passive in making efforts to make improvements by means
such as radically changing the current composition of the board of directors andactively recruiting human resources from outside the DXC Group. Therefore, theCompany considers that under the current management structure where half or moreof the board of directors consists of related parties of the DXC Group, it will not beable to take advantage of the opportunity described above by the Company
independently making efforts as a corporation and it is considerably difficult toenhance the corporate value of the Company. On the other hand, as stated in “(i)Consultation between the Tender Offeror and the Company and DXC and decision22

making process of the Tender Offeror” in “(B) Background, Purpose, and DecisionMaking Process with respect to the Tender Offeror Conducting the Tender Offer, andManagement Policy After the Tender Offer” above, with respect to the management
structure after the execution of the Transactions, the Company will take radical
measures, including the implementation of strategic M&A, by utilizing themanagement resources of the Longreach Group and the broad management personnel
networks that the Longreach Group has cultivated, while at the same time utilizing thebusiness foundation and resources that the Company has built thus far under DXC.
The Company considers that in the case of cooperation with the Longreach Group, it
will be possible to obtain the support essential for responding to the megatrends
described above and achieving dramatic growth.
Further, while the Longreach Group considers that the specific growth strategies andpolicies for each segment are as stated in “(i) Consultation between the Tender Offeror
and the Company and DXC and decision-making process of the Tender Offeror” in“(B) Background, Purpose, and Decision-Making Process with respect to the Tender
Offeror Conducting the Tender Offer, and Management Policy After the Tender Offer”
above, the Company also considers that the following growth strategies and policies
determined by the Longreach Group embody the understanding of the Company that
it is required to expeditiously and dramatically expand the domains to which it
contributes by making decisive business decisions and bold capital investments. The
Company considers that while it may be possible to execute those growth strategies
on its own, it will be able to execute strategies more quickly by leveraging access to
the Longreach Group’s networks and resources as well as its know-how regarding theanalysis, establishment and execution of business strategies, and the Company will beable to accelerate its growth by executing growth strategies in cooperation with theLongreach Group.
On the other hand, while the offer price (615 yen) per Company Share owned by thegeneral shareholders and the offer price or purchase price (510 yen) per Company
Share owned by DXC as indicated in the New MBO Proposal exceeds the tender offer
price (590 yen) in the Transactions and the Company’s Repurchase Price (510 yen),because DXC has clearly expressed to the Company its intention not to support the
New MBO Proposal, the Company examined the reasonableness of this decision.
DXC supports the Transactions on the ground that (a) DXC highly appraises the past
investment results and experience of the Longreach Group and networks held by theLongreach Group and considers that support from the Longreach Group is the best
option from the standpoint of enhancing the corporate value of the Company, which
will be a business partner of DXC moving forward, and (b) it is not feasible to privatize
the Company though the New MBO Proposal because, while the New MBO Proposal
offers a price of 615 yen per share to general shareholders on the assumption that DXC
will accept the tender offer at a price lower than the price offered to generalshareholders, DXC agreed to sell the Company Shares only to the Longreach Groupby accepting the proposal by the Longreach Group with a price lower than the priceoffered to general shareholders based on its belief that receiving support from theLongreach Group would be the best option from the perspective of enhancing thecorporate value of the Company, which will continue to be a trading partner of DXC
in the future, and thus DXC has no intention to sell the Company Shares at a pricelower than the price offered to general shareholders in the New MBO Proposal. The
Company considers that this decision by DXC is not particularly unreasonable.
23

In addition, taking into account that the current three executive officers and division
managers (the division manager of the First Business Division, the division managerof the Second Business Division, and the division manager of the Public Sector
Business Division) supported the New MBO Proposal, in order to examine thepossibility of the resignation of the executive officers described above after the
implementation of the Transactions and the influence of that resignation on thecorporate value of the Company, the Company had meetings with the executive
officers described above on multiple occasions and had a meeting between theLongreach Group and those executive officers in early November 2020. However,
the Company understood that it could not obtain support from the executive officers
described above for the Transactions through those meetings, and in mid-November
2020, it proposed to the executive officers described above having another discussion
with the Longreach Group with respect to the executive structure in the case where theTransactions are implemented. However, such discussions have not been held as oftoday. In regard to this matter, the Longreach Group intends to make further
explanations to the executive officers described above with respect to the purpose of
the Transactions. On the other hand, when the Company confirmed with theLongreach Group the policy of the treatment of employees after the implementationof the Transactions in order to examine such treatment, the Company received
explanations from the Longreach Group that (a) the Longreach Group basically had
no intention to change the current executive structure and intended to continue
consultations with those executive officers to request them to play principal roles in
the management, (b) the Longreach Group intended to establish relationships of trustwith the Company’s employees by giving careful explanations and proactively
investing in the redesign of a fair compensation structure and personnel systems, theimprovement of the working environment and working styles, and the enhancement ofinternal training programs and career path programs as one of the material growthstrategies, and (c) it would be possible to enhance the corporate value of the Company
by taking various measures such as internal promotion and external recruitment ofalternative human resources even if the executive officers described above leave theCompany. While the Company considers that it is necessary for the LongreachGroup to continue discussions with the executive officers described above, based on
the explanations by the Longreach Group, the Company has determined that the factthat the executive officers described above have indicated their intention to support the
New MBO Proposal does not constitute a reason to deny the support for theTransactions.
In the process of reviewing the Transactions, the Company also considered thepossibility of maintaining its listing. However, because (a) as described above, themid-to long-term enhancement of the corporate value of the Company is reasonably
expected by implementing growth strategies in cooperation with the Tender Offeror
and the Longreach Group, (b) in light of the relationships between the Company andits customers and the management policies, etc. of the Company after the Transactions
by the Tender Offeror, the social credibility, maintaining and improvement ofrecognition, and business relationships with customers achieved through maintaining
its listing will not be immediately lost due to the Transactions, and (c) it is notnecessary for the Company to be able to directly procure funds from the market when
implementing measures to enhance the corporate value of the Company, the Company
has determined that the Transactions would contribute to enhancing the corporate24

value of the Company compared to other transaction schemes that are based on
maintaining its listing.
The Company also determined, based on the following, that while 590 yen per share,
which is the Tender Offer Price, is determined to be sufficiently valuated based on theprocess of past negotiations, the results of calculation by the third-party appraiser andthe premium that is not inferior compared to similar transactions, (i) the offer price perCompany Share in the tender offer as indicated in the New MBO Proposal is 615 yen,and the New MBO Proposal implied the possibility of implementing a competitive
tender offer in the case of the implementation of the tender offer as a part of theTransactions (however, because whether such tender offer will actually be
implemented or not will be determined by the party making the New MBO Proposal,
the Company does not express its opinion on the probability thereof; in addition, DXC
has expressed its intention not to support or tender shares in such tender offer even if
it is actually implemented) and (ii) although the Company does not express its opinion
on the probability of the MBO Proposal being implemented, because the Company
thought that if it recommends that its shareholders tender shares in the Tender Offer
under the present circumstances where Mr. Tomohiro Kawada has implied thepossibility of implementing a competitive tender offer in the event of theimplementation of the Tender Offer, it is likely that such recommendation could invitea misunderstanding that the Company has made a decision regarding the case of theimplementation of a competitive tender offer despite the fact that the Company has notmade any decision on whether or not to support the MBO Proposal as of today.
Therefore, taking into account that there is a possibility that the Company’s
shareholders may be able to sell shares of the Company at a price higher than theTender Offer Price depending on the specific conditions if the tender offer under the
New MBO Proposal is actually implemented, the Company determined that it isreasonable to take a neutral position regarding whether or not to recommend that theCompany’s shareholders tender shares in the Tender Offer, thereby ultimately leavingthat decision to the judgment of its shareholders.
(a)

The fact that the price has been presented to the Tender Offeror based on
sufficient negotiations conducted on multiple occasions with the Tender
Offeror, in which the special committee was substantially involved, andafter the Company taking sufficient measures to ensure the fairness of theterms and conditions of the Transactions, including the Tender Offer Price,stated in “(6) Measures to Ensure Fairness of the Tender Offer, Including
Measures to Ensure Fairness of the Tender Offer Price and Measures to
Avoid Conflicts of Interest” below;(b)

the fact that the price exceeds the range of the results of the valuation using
the market price method, and it is within the ranges of the results of thevaluation using the comparable company method and a discounted cash
flow analysis (the “DCF analysis”) according to the result of the valuationof the Company Shares by Mizuho Securities as stated in the Share Price
Valuation Report (Mizuho Securities) stated in “(A) Obtainment by theCompany of a Share Price Valuation Report from an Independent ThirdParty Appraiser” in “(3) Matters relating to Valuation” below;(c)the fact that the price is within the range of the result of the valuation by
DCF analysis according to the result of the valuation of the Company Sharesby Stand by C as stated in the share price valuation report with respect to25

the result of the valuation of the Company Shares that the special committee
received from Stand by C on December 23, 2020 (the “Share Price
Valuation Report (Stand by C)” stated in “(B) Obtainment by the Special
Committee of a Share Price Valuation Report from an Independent ThirdParty Appraiser” in “(3) Matters relating to Valuation” below;(d)the fact that the price is calculated inclusive of a premium of 44.25%(rounded to the second decimal place; the same applies for each calculationof the premium rates on the share prices below) on 409 yen, the closing priceon December 23, 2020, which is the Business Day immediately preceding
the announcement date of the implementation of the Tender Offer, 31.70%
on 448 yen, the simple average closing price (rounded to the nearest one
yen; the same applies for each calculation of the simple average closing
prices below) for the one-month period ending on December 23, 2020,
16.37% on 507 yen, the simple average closing price for the three-month
period ending on December 23, 2020, and 21.90% on 484 yen, the simple
average closing price for the six-month period ending on December 23,
2020 of the Company Shares respectively on the JASDAQ of the TSE, andtaking into consideration that the increase in the stock price from late
September 2020 to late October 2020 was temporary, the price cannot be
said to be inferior compared to other tender offer transactions whose purpose
is to privatize shares, and it is considered that a reasonable premium isadded; and(e)the fact that, as stated in “(C) Establishment by the Company of an
Independent Special Committee” in “(6) Measures to Ensure Fairness of theTender Offer, Including Measures to Ensure Fairness of the Tender Offer
Price and Measures to Avoid Conflicts of Interest” below, the special
committee has determined that it is reasonable to take a neutral position
regarding whether or not to recommend that the Company’s shareholders
tender shares in the Tender Offer, thereby ultimately leaving that decision to
the judgment of its shareholders.

Based on the facts above, the Company determined that while the Transactions are
considered to contribute to increasing the corporate value of the Company, it isreasonable to take a neutral position regarding whether or not to recommend that theCompany’s shareholders tender shares in the Tender Offer, thereby ultimately leavingthat decision to the judgment of its shareholders. Therefore, the Company resolved
at the meeting of its board of directors held on December 24, 2020 to express its
opinion in support of the Tender Offer and to take a neutral position regarding whether
the shareholders of the Company tender shares in the Tender Offer, thereby leavingthat decision to the judgment of the shareholders of the Company.
For details of the method of the resolution by the board of directors of the Company
described above, please refer to “(E) Approval of All Disinterested Directors of theCompany” in “(6) Measures to Ensure Fairness of the Tender Offer, Including
Measures to Ensure Fairness of the Tender Offer Price and Measures to Avoid
Conflicts of Interest” below.
(3)

Matters relating to Valuation
26

(A) Obtainment by the Company of a Share Price Valuation Report from an Independent
Third-Party Appraiser
When examining the appropriateness of the terms and conditions of the Transactions,
including the Tender Offer Price, and conducting negotiations and making
determinations regarding the terms and conditions, in order to ensure the fairness
thereof, the Company requested Mizuho Securities, which is a financial advisor andthird-party appraiser independent from the Company, the Tender Offeror, and DXC
US, to evaluate the Company Shares and conduct financial analysis incidental thereto
and obtained the Share Price Valuation Report (Mizuho Securities) on December 24,
2020.
Mizuho Securities is not a party affiliated with the Company, the Tender Offeror, or
DXC and does not have a material interest in the Transactions, including the Tender
Offer.
The fees payable to Mizuho Securities for the Transactions include
contingency fees to be paid subject to the completion of the Tender Offer. The
Company did not obtain an opinion letter regarding the fairness of the price of theTender Offer (a fairness opinion).
Based on Mizuho Securities’ belief that it is appropriate to evaluate the Company
Shares from various aspects after examining factors such as the financial condition of
the Company and trends in the market prices of the Company Shares, it consideredwhich of several share value calculation methods should be used and, as a result,conducted evaluation of the Company Shares using the market price method because
the Company Shares are listed on the JASDAQ of the TSE and have a market price,
the comparable company method because there are several listed companies engaged
in businesses that are relatively similar to those that the Company operates and it ispossible to analogize stock prices in comparison to similar companies, and DCF
analysis in order to reflect future business activity conditions of the Company in thecalculation. The range of values per Company Share calculated by each of the above
methods is as follows.
Market price method: From 409 yen to 507 yen
Comparable company method: From 388 yen to 602 yen
DCF Analysis: From 526 yen to 847 yen
The range of values per Company Share obtained from the market price method is 409
yen to 507 yen, which is calculated based on 409 yen, the closing price of the Company
Shares quoted on the JASDAQ of the TSE as of the evaluation reference date ofDecember 23, 2020 (the business day before the announcement date of the Tender
Offer) and 448 yen, 507 yen, and 484 yen, the simple average closing prices for theCompany Shares quoted on the JASDAQ of the TSE over the preceding one-month,three-month, and six-month periods, respectively.
The range of values per Company Share obtained from the comparable company
method is 388 yen to 602 yen, which is derived by evaluating the Company’s sharevalue by selecting Ad-Sol Nissin Corporation, System Information Co., Ltd., Cube
System Inc., SOLXYZ Co., Ltd., Toho System Science Co., Ltd., Cross Cat Co., Ltd.,R&D Computer Co., Ltd., Needs Well Inc. and Techfirm Holdings Inc. as listedcompanies engaged in businesses that are relatively similar to those that the Company
operates and using a multiple of EBITDA to the corporate value.

27

The range of values per Company Share obtained from the DCF Analysis is 526 yen
to 847 yen, which is derived by evaluating the Company’s corporate value and sharevalue as calculated by discounting to the present value at a certain discount rate thefree cash flow that the Company is expected to generate from the fourth quarter of Y.E.
December 2020 based on revenue forecasts and investment plans set out in thebusiness plan prepared by the Company for the three years from Y.E. December 2020
(from October 2020) to Y.E. December 2022, as well as other factors such as publicly
released information. 5.75% to 7.75% is adopted as the discount ratio, the perpetuity
growth rate method is adopted for the calculation of continuous value, and theperpetuity growth rate is determined to be -1.00% to 1.00%.
The business plan (consolidated) prepared by the Company, which is used by Mizuho
Securities in the DCF analysis, covers a certain fiscal year in which significant
increases or decreases in profits year-on-year are expected. Specifically, the forecast
for operating profit for Y.E. December 2021 is 1,000 million yen, a 56.5% increaseyear-on-year, while the forecast for EBITDA is 1,261 million yen, a 40.8% increaseyear-on-year, and these are mainly caused by the effects of an increase in sales due tothe negative impact of the spread of COVID-19 being mitigated and to the expanded
sales of strategic products such as BI and RPA. The financial forecast in the businessplan does not necessarily assume that the Tender Offer will be executed.
The specific figures of the Company’s financial forecast (consolidated) based on which
Mizuho Securities made calculations by the DCF analysis are as follows:(Unit: million yen)

Sales
Operating profit

Y.E. December 2020
(3 months)
2,186
110

Y.E. December
2021
11,241
1,000

Y.E. December
2022
12,976
1,223

EBITDA

174

1,261

1,484

Free cash flow

166

684

839

(Note): In calculating the share value of the Company Shares, Mizuho Securities has,in principle, used data such as information provided to it by the Company and publicly
available information as presented; Mizuho Securities has assumed that all of thosematerials, information, and the like are accurate and complete and did not
independently verify the accuracy and completeness of such materials and information.
In addition, Mizuho Securities has assumed that information regarding the financial
forecasts of the Company has been reasonably prepared based on the best forecasts
and judgments obtainable from the management of the Company at present. Also,
Mizuho Securities has not conducted an independent evaluation or assessment, nor has
it made any request to a third-party institution for any appraisal or assessment, inconnection with any assets or liabilities (including off-balance-sheet assets andliabilities and other contingent liabilities) of the Company and any of its affiliates.
The calculation by Mizuho Securities reflects the above information up to December
23, 2020.
(B)

Obtainment by the Special Committee of a Share Price Valuation Report from an
Independent Third-Party Appraiser
28

In examining the Delegated Matters (as defined below), in order to ensure the fairnessof the terms and conditions of the Transactions, including the Tender Offer Price, thespecial committee requested Stand by C, which is an independent financial advisor
and a third-party appraiser that is independent from the Company, the Tender Offeror,and DXC US, to evaluate the value of the Company Shares and to conduct financial
analysis incidental thereto, and the special committee obtained the Share Price
Valuation Report (Stand by C) on December 23, 2020.
As stated in “(C) Process of and Reasons for the Decision by the Company” of “(2)Grounds and Reasons for the Opinion on the Tender Offer” above, the Company’sboard of directors received the Share Price Valuation Report (Stand by C) at the sametime it received the Report submitted by the special committee on December 24, 2020,
and, based on the contents thereof, passed a resolution as stated in “(E) Approval of
All Disinterested Directors of the Company” in “(6) Measures to Ensure Fairness of
the Tender Offer, Including Measures to Ensure Fairness of the Tender Offer Price andMeasures to Avoid Conflicts of Interest” below.
Stand by C is not a party affiliated with the Company, the Tender Offeror, or DXC US
and does not have a material interest in the Transactions, including the Tender Offer.
The remuneration of Stand by C for the Transactions is solely composed of fixed-rate
fees to be paid irrespective of whether the Transactions are completed or not and does
not include any contingency fees to be paid on the condition that the Transactions arecompleted or the like.
Stand by C used the DCF Analysis in order to evaluate the share value of the Company
while reflecting the Company’s future cash flow to be generated by its businessactivities because it is expected that the Company will continue its business activities
and achieve a certain amount of revenue, and it used the market price method because
the Company Shares are listed on the JASDAQ of the TSE and therefore have a market
value. The ranges of values per Company Share calculated by each of those methods
are as follows.
Market price method: From 409 yen to 507 yen
DCF Analysis: From 522 yen to 634 yen
The range of values per Company Share obtained from the market price method is 409
yen to 507 yen, which is calculated based on 409 yen, the closing price of the Company
Shares quoted on the JASDAQ of the TSE as of the evaluation reference date ofDecember 23, 2020 (the Business Day before the announcement date of the Tender
Offer) and 448 yen, 507 yen, and 484 yen, the simple average closing prices for theCompany Shares quoted on the JASDAQ of TSE over the preceding one-month, threemonth, and six-month periods, respectively.
The range of values per Company Share obtained from the DCF Analysis is 522 yen
to 634 yen, which is derived by evaluating the Company’s corporate value and sharevalue as calculated by discounting to the present value at a certain discount rate thefree cash flow that the Company is expected to generate from the fourth quarter of Y.E.
December 2020 based on revenue forecasts and investment plans set out in thebusiness plan prepared by the Company for the three years from Y.E. December 2020
(from October 2020) to Y.E. December 2022, as well as other factors such as publicly
released information. 8.5% to 9.5% are adopted as the discount ratio, and the29perpetuity growth rate method is adopted for calculation of continuous value and theperpetuity growth rate is determined to be 1.0% to 2.0%.
The business plan (consolidated) prepared by the Company that was used by Stand by
C for its analysis through the DCF Analysis is the same as the business plan used by
Mizuho Securities for its evaluation of share values as described above.
(Note): In calculating the share value of the Company Shares, Stand by C has, inprinciple, used data such as information provided to it by the Company and publicly
available information as presented; Stand by C has assumed that all of those materials,
information, and the like are accurate and complete and did not independently verify
the accuracy and completeness of such materials and information. In addition, Standby C has assumed that information regarding the financial forecasts of the Company
has been reasonably prepared based on the best forecasts and judgments obtainablefrom the management of the Company at present. Also, Stand by C has notconducted an independent evaluation or assessment, nor has it made any request to athird-party institution for any appraisal or assessment, in connection with any assets
or liabilities (including off-balance-sheet assets and liabilities and other contingent
liabilities) of the Company and any of its affiliates. The calculation by Stand by C
reflects the above information up to December 23, 2020.
(4)

Prospects and Reasons for Delisting
The Company Shares are currently listed on the JASDAQ of the TSE as of today.
However, since the Tender Offeror has not set a maximum number of shares to bepurchased in the Tender Offer, the Company Shares may be delisted through prescribed
procedures in accordance with the delisting criteria set out by the TSE, depending on
the results of the Tender Offer.
Also, even in the case that the delisting criteria are not met upon completion of theTender Offer, the Tender Offeror plans to make the Tender Offeror and DXC US the
only shareholders of the Company and privatize the Company in accordance with theprocedures stated in “(5) Policy for Organizational Restructuring, Etc. after the Tender
Offer (Matters relating to the “Two-Step Acquisition”)” below upon the successful
completion of the Tender Offer, in which case the Company Shares will be delisted
through the prescribed procedures in accordance with the delisting criteria of the TSE.
After delisting, the Company Shares will no longer be traded on the JASDAQ of theTSE. The reasons why delisting is a purpose of the Tender Offer and the impact ofthe delisting on minority shareholders, as well as the Company’s views thereon, are asstated in “(ii) Establishment of a structure for review and process of review” and “(iii)
Determinations” in “(C) Process of and Reasons for the Decision by the Company” of“(2) Grounds and Reasons for the Opinion on the Tender Offer” above.

(5)

Policy for Organizational Restructuring, Etc. after the Tender Offer (Matters relating
to the “Two-Step Acquisition”)
As stated in “(A) Outline of the Tender Offer” in “(2) Grounds and Reasons for theOpinion on the Tender Offer,” if the Tender Offeror is unable to obtain all of theCompany Shares (excluding treasury shares held by the Company and the Untendered
Shares) under the Tender Offer, the Tender Offeror intends, after the successful
completion of the Tender Offer, to request the Company to implement the following
30

procedures and carry out a set of procedures necessary for making the Tender Offeror
and DXC US the only shareholders of the Company.
Specifically, the Tender Offeror will, promptly after the completion of the settlementof the Tender Offer, pursuant to Article 180 of the Companies Act, request theCompany to hold an extraordinary shareholders’ meeting at which the Share
Consolidation and an amendment to the Company’s Articles of Incorporation thatwould abolish the share unit number provisions on the condition that the Share
Consolidation is conducted and the Share Consolidation becomes effective will be
proposed (the “Extraordinary Shareholders’ Meeting”). The Tender Offeror and
DXC US intend to approve the proposal at the Extraordinary Shareholders’ Meeting.
Also, the Tender Offeror believes that it is preferable to hold the Extraordinary
Shareholders’ Meeting as promptly as possible in the interest of enhancing thecorporate value of the Company, and it plans to request the Company to give public
notice regarding setting a record date during the tender offer period in the Tender Offer(the “Tender Offer Period”) in order to set a day (as of today, this date is planned to
be in early March, 2021) soon after the commencement date of the settlement of theTender Offer as the record date for the Extraordinary Shareholders’ Meeting.
If the proposal for the Share Consolidation is approved at the Extraordinary
Shareholders’ Meeting, the shareholders of the Company will, on the effective date of
the Share Consolidation, hold the number of Company Shares proportionate to theratio of the Share Consolidation that is approved at the Extraordinary Shareholders’Meeting. If, due to the Share Consolidation, the number is a fraction less than one,each such shareholder of the Company will receive an amount of cash obtained byselling the Company Shares equivalent to the total number of shares less than one unit
(with such aggregate sum rounded down to the nearest whole number; the same applies
hereinafter) to the Company or the Tender Offeror as per the procedures specified in
Article 235 of the Companies Act and other applicable laws and regulations. The
purchase price for the aggregate sum of shares less than one unit in the Company
Shares will be valued so that the amount of cash received by each shareholder who did
not tender its shares in the Tender Offer (excluding the Tender Offeror, DXC US andthe Company) as a result of the sale will be equal to the price obtained by multiplying
the Tender Offer Price by the number of Company Shares held by each suchshareholder. The Tender Offeror intends to request the Company to file a petition to
the court for permission to purchase such Company Shares on this basis.
Although the ratio of the Share Consolidation of the Company Shares has not been
determined as of today, it is intended that shareholders (excluding the Tender Offeror,
DXC US and the Company) who hold shares in the Company and do not tender in theTender Offer will have their shares classified as shares less than one unit in order for
the Tender Offeror and DXC US to become the only owners of all of the Company
Shares (excluding treasury shares held by the Company).
In the interest of protecting the rights of minority shareholders in circumstances
involving the Share Consolidation, the Companies Act provides that if the Share
Consolidation occurs and there are shares less than one unit as a result thereof, eachshareholder may request that the Company purchase all such shares less than one unit
at a fair price, and such shareholders may file a petition to the court to determine theprice of the Company Shares in accordance with Articles 182-4 and 182-5 of theCompanies Act and other applicable laws and regulations. As stated above, because
the number of the Company Shares held by the shareholders who do not tender their
31

shares in the Tender Offer (excluding the Tender Offeror, DXC US and the Company)
will be less than one unit, the shareholders of the Company objecting to the Share
Consolidation may file a petition described above.
With regard to the above procedure, it is possible that, depending on amendments toor the implementation and interpretation of the relevant laws and regulations byauthorities, the shareholding percentage of the Tender Offeror and DXC US after theTender Offer, and the ownership of Company Shares by shareholders other than theTender Offeror, it will require time to implement the procedure or the methods of
implementation may be altered. However, even in such a case, upon completion of
the Tender Offer, it is intended that a method will be used whereby the shareholders of
the Company who do not tender their shares in the Tender Offer (excluding the Tender
Offeror, DXC US and the Company) will ultimately receive cash consideration equal
to the number of Company Shares held by such shareholder multiplied by the Tender
Offer Price in exchange for their shares. If a petition for determination of a priceregarding a share purchase demand in relation to the Share Consolidation is filed, thecourt will finally determine the sale price of the Company Shares or a price regarding
the share purchase demand.
The specific details and expected timing for the procedures described above will be
determined through consultation with the Tender Offeror and then promptly
announced by the Company.
It is further noted that shareholders of the Company will not be solicited to agree tothe Tender Offer at the Extraordinary Shareholders’ Meeting. All shareholders of theCompany are solely responsible for seeking their own specialist tax advice with regard
to the tax consequences of tendering their shares in the Tender Offer or the procedures
outlined above.
(6)

Measures to Ensure Fairness of the Tender Offer, Including Measures to Ensure
Fairness of the Tender Offer Price and Measures to Avoid Conflicts of Interest
Taking into account factors such as that the Transactions are intended to include (x)the Company acquiring the Untendered Shares held by DXC US through theCompany’s Share Repurchase after the Tender Offer and the Share Consolidation
following the Tender Offeror executing the Transaction Agreement with theCompany’s controlling shareholder (i.e., its parent company), DXC US, as well as (y)the DXC Pension making a contribution to the co-investment fund to be managed for
the Transactions, the Company and the Tender Offeror decided to take the following
measures in order to ensure the fairness of the Tender Offer Price, eliminate arbitrary
decision-making regarding the Transactions, ensure the fairness, transparency, andobjectivity of the decision-making process of the Company, and avoid any conflicts ofinterest.
In the Tender Offer, the Tender Offeror does not set the minimum number of Share
Certificates, Etc. to be purchased to the “majority of minority.” Although theCompany requested to set the minimum number of Share Certificates, Etc. to bepurchased at the level of the “majority of minority” in the discussions with theLongreach Group stated in “(C) Process of and Reasons for the Decision by theCompany” in “(2) Grounds and Reasons for the Opinion on the Tender Offer,” theTender Offeror believes that, if the minimum number of Share Certificates, Etc. to bepurchased is set at that level, it would increase the uncertainty as to whether the Tender
Offer will be completed and, on the contrary, it would not contribute to the interests of32

minority shareholders who wish to tender their shares in response to the Tender Offer.
For this reason, in the Tender Offer, the Tender Offeror does not set the minimum
number of Share Certificates, Etc. to be purchased to the “majority of minority.”
While leaving the decision on whether or not to tender shares in the Tender Offer tothe judgment of the shareholders, taking into account the existence of the New MBO
Proposal, the Company expresses its opinion in favor of the Tender Offer and believes
that the tender offer price in the Tender Offer may be considered to be reasonable fromthe perspective of providing the general shareholders of the Company with anopportunity to recover their investments and can be determined to have been
sufficiently valuated, and that not deliberately making the completion of the Tender
Offer uncertain is reasonable to a certain degree. In addition, the Tender Offeror andthe Company have implemented the measures described below as measures to ensure
fairness of the Tender Offer Price and measures to avoid conflicts of interest, and thus
the Company does not believe that not setting the minimum number of Share
Certificates, Etc. to be purchased to the “majority of minority” will damage the fairnessof the terms and conditions of the Transactions.
Statements regarding the measures taken on the part of the Tender Offeror are basedon explanations given by the Tender Offeror.
(A) Obtainment by the Company of a Share Price Valuation Report from an Independent
Financial Advisor and Third-Party Appraiser
When determining the opinion on the Tender Offer, the Company appointed Mizuho
Securities as a financial advisor and third-party appraiser independent from theCompany, the Tender Offeror, and DXC US, and the Company received advice andsupport from a financial perspective, including advice on the evaluation of the valueof the Company Shares and the negotiation policies with the Tender Offeror, andobtained the Share Price Valuation Report (Mizuho Securities) on December 24, 2020.
For the outline of the Share Price Valuation Report (Mizuho Securities), please referto “(A) Obtainment by the Company of a Share Price Valuation Report from an
Independent Third-Party Appraiser” of “(3) Matters relating to Valuation” above.
(B)

Obtainment by the Company of Advice from an Independent Legal Advisor
In order to ensure the fairness and appropriateness of the decision-making of theCompany’s board of directors, the Company appointed Nagashima Ohno &Tsunematsu as a legal advisor independent from the Company, the Tender Offeror, andDXC US and received legal advice, including advice on matters such as measures tobe taken to ensure the fairness of the procedures for the Transactions, the proceduresfor the Transactions, methods of decision-making of the Company regarding theTransactions, and its decision-making process.
Nagashima Ohno & Tsunematsu is not a party affiliated with the Company, the Tender
Offeror, or DXC and does not have a material interest in the Transactions, including
the Tender Offer.

(C)

Establishment by the Company of an Independent Special Committee(i)

Process of establishment, etc.

33

In order to ensure the fairness of the Tender Offer Price, eliminate arbitrary decisionmaking regarding the Transactions, ensure the fairness, transparency, and objectivityof the decision-making process of the Company, and avoid any conflicts of interest,
the Company’s board of directors established, by its resolution at an extraordinary
meeting held on May 25, 2020, a special committee independent from the Company,
the Tender Offeror, and the DXC Group, which is composed of three members, namely,
Mr. Satoshi Soga (a substitute director and a member of the audit and supervisorycommittee of the Company and the representative director of Xiidea Consulting, Ltd.),
who has many years of business experience and results in the information systems
business as well as abundant experience and knowledge as a company manger, Ms.
Yuri Tatsuta (an outside director and a member of the audit and supervisory committeeof the Company, a certified public accountant and the representative of Yuri Tatsuta
Tax Accounting Office), who has abundant experience, expertise, and the like withregard to the provision of advice from a financial perspective as a certified public
accountant, and another person who has knowledge on legal affairs (whose
appointment was to be determined by the special committee; accordingly, Mr. Zen
Tatsumura (attorney-at-law, Tatsumura Law Office), who has long been involved incorporate legal affairs and has abundant experience, expertise, and the like as a lawyer,
was appointed at the first meeting of the special committee held on June 8, 2020).
The members of the special committee have not changed since their initial appointment.
Then, the Company’s board of directors delegated the special committee to examineand provide its opinion to the Company’s board of directors regarding (i) whether or
not the Company’s board of directors should support the Transactions and recommendthat the Company Shares be tendered and (ii) whether or not the Company’s board of
directors’ decision on the Transactions is disadvantageous to general shareholders(collectively, the “Delegated Matters”). In addition, the Company’s board of
directors resolved (i) to give the highest degree of respect to the determinations of thespecial committee when making decisions on the Transactions, (ii) if the special
committee determines that the implementation of the Transactions or the terms andconditions of the Transactions are not appropriate, not to approve the Transactions
under those terms and conditions, and (iii) to authorize the special committee (a) to be
substantially involved in negotiations about terms and conditions and other mattersrelated to the Transactions (including giving instructions and making requests to theCompany about the Company’s negotiation policy and engaging in negotiations itself
as necessary), (b) to appoint its own external advisors if necessary when examining
the Delegated Matters (any expenses incurred in this case are to be borne by theCompany) and to designate or approve (including ex post facto approval) external
advisors of the Company, and (c) to receive from the Company’s officers andemployees any information necessary for conducting the examination and making
determinations regarding the Transactions.
The special committee decided to appoint Stand by C as its own financial advisor andthird-party appraiser independent from the Company, the Tender Offeror, and DXC
US.
Further, the special committee approved the appointment by the Company of Mizuho
Securities as its financial advisor and third-party appraiser and Nagashima Ohno &Tsunematsu as its legal advisor after confirming that there were no issues concerning
the independence and expertise of Mizuho Securities and Nagashima Ohno &Tsunematsu and confirmed that the special committee itself may receive professional
advice as necessary from Nagashima Ohno & Tsunematsu, the legal advisor. The
34

special committee received legal advice, including advice on matters such as measures
to be taken to ensure the fairness of the procedures for the Transactions, the methodsof deliberations on the Transactions by the special committee, and the process of thedeliberations from Nagashima Ohno & Tsunematsu, the legal advisor.
Each of the members of the special committee will be paid remuneration calculated
based on the actual hours worked multiplied by the hourly rate of that member as
consideration for his/her duties, irrespective of the matters reported.
(ii)

Process of review

The special committee held meetings 27 times in total (approximately 40 hours intotal) during the period from June 8, 2020 to December 23, 2020, and the members of
the special committee performed their duties for the Delegated Matters by, among
other actions, reporting to and sharing information with other members as well as
deliberating and making decisions on the relevant matters through frequent emails
during periods in between those meetings.
Specifically, the special committee received explanations from and held question-andanswer sessions with Nagashima Ohno & Tsunematsu about matters such as (i) the
scheme of the Transactions proposed by the Tender Offeror and the expected schedule
for the Transactions, (ii) the necessity to ensure the fairness of the procedures for theTransactions and measures to be taken for that purpose, (iii) roles that the members of
the special committee are requested to perform, and (iv) whether it is necessary toobtain a fairness opinion.
In addition, the special committee received explanations from and held question-andanswer sessions with the Company about matters such as (i) the course of events
leading to the Transactions, (ii) its views on the significance of the Transactions andthe matters proposed by the Tender Offeror, (iii) the business environment surrounding
the Company, (iv) management issues concerning the Company and its current
measures and business strategy to address those issues, (v) the Company’s
management policy after the Transactions, (vi) the status of the Company’s
examination of the Transactions, and (vii) matters discussed with the Tender Offeror
and DXC US. Additionally, the special committee received explanations from andheld question-and-answer sessions with the Company about the process of preparing
the business plan approved by the Company’s board of directors on November 29,
2019 (the “Business Plan”) and the mid-term management plan, the contents thereof,
and the reasonableness of material assumptions or the like.
Further, the special committee received explanations directly from and held questionand-answer sessions with the Longreach Group about matters such as (i) the purposesof and reasons for conducting the Transactions, (ii) the background that led theCompany to choose to conduct the Transactions at this time and reasons therefor, (iii)the Company’s management policy and management structure after the Transactions,(iv) advantages and disadvantages of the Transactions, (v) the details of businessstrategies and specific measures after the Transactions and the feasibility thereof, and(vi) the procedures and terms and conditions regarding the Transactions.
Also, the special committee confirmed the reasonableness of the details of the Business
Plan based on the explanations from the Company and advice given by Stand by Cfrom a financial perspective. Then, as described in “(A) Obtainment by the Company
of a Share Price Valuation Report from an Independent Third-Party Appraiser” and“(B) Obtainment by the Special Committee of a Share Price Valuation Report from an
35Independent Third-Party Appraiser” of “(3) Matters relating to Valuation” above,
Stand by C and Mizuho Securities conducted evaluations of the Company Shares basedon the Business Plan, and the special committee received explanations from and held
question-and-answer sessions with Stand by C and Mizuho Securities about (i) the
calculation methods used by them for their evaluations of the Company Shares, (ii) the
reasons for using those calculation methods, and (iii) the details of calculations andmaterial assumptions for each calculation method (including the basis of thecalculation of the discount rate used in the DCF analysis and the reasons for selecting
the comparable companies referred to in the comparative company method orcomparative company analysis), and then deliberated on and examined these mattersto confirm that they are reasonable.
Furthermore, the special committee received explanations from Nagashima Ohno &Tsunematsu about the matters stated in the drafts of the press release and the opinion
statement regarding the Tender Offer to be released or filed by the Company, as wellas the matters stated in the draft of the tender offer registration statement for the Tender
Offer to be filed by the Tender Offeror, thereby confirming that a substantial amountof information will be disclosed.
(iii)

Determinations

Following the process described above, the special committee submitted the Reportmainly stating the matters set out below on December 24 2020 to the Company’s boardof directors with the unanimous approval of all members of the special committee asa result of careful and repeated discussions and examination of the Delegated Mattersbased on the legal advice from Nagashima Ohno & Tsunematsu, advice from Stand by
C from a financial perspective, and the matters stated in the Share Price Valuation
Report (Mizuho Securities) submitted on December 24 2020 and in the Share Price
Valuation Report (Stand by C) submitted on December 23, 2020.
(a)Matters reported-

The Company’s board of directors should support the Transactions but take aneutral position regarding whether the shareholders of the Company tendershares in the Tender Offer, thereby leaving that decision to the judgment of its
shareholders.

-

The special committee believes that the Company’s board of directors’ decision
to express an opinion in support of the Tender Offer and to take a neutral position
regarding whether the shareholders of the Company tender shares in the Tender
Offer, thereby leaving that decision to the judgment of its shareholders, would
not be disadvantageous to the minority shareholders of the Company. In
addition, the special committee believes that the determination of the board of
directors of the Company as to making the Company a wholly-owned subsidiaryof the Tender Offeror after the completion of the Tender Offer would not bedisadvantageous to the minority shareholders of the Company.

(b)

Reasons for giving the above opinions in the Reporti.
Whether the Transactions will contribute to the enhancement of theCompany’s corporate value
The special committee determined that the Transactions are likely to contribute to theenhancement of the corporate value of the Company based on the following reasons.
36The special committee has the same awareness as that of the Company and
the Tender Offeror regarding the current status of the business environment
surrounding the Company and the management issues concerning the Company
described in “(B) Background, Purpose, and Decision-Making Process with respect to
the Tender Offeror Conducting the Tender Offer, and Management Policy After theTender Offer” and “(C) Process of and Reasons for the Decision by the Company” of“(2) Grounds and Reasons for the Opinion on the Tender Offer” above, and it has no
objection to these matters.
The special committee believes that the Tender Offeror provided explanations
about the significance and purpose of the Transactions, the advantages of theTransactions, and the management structure after the Transactions described in “(B)Background, Purpose, and Decision-Making Process with respect to the Tender
Offeror Conducting the Tender Offer, and Management Policy After the Tender Offer”
and “(C) Process of and Reasons for the Decision by the Company” of “(2) Grounds
and Reasons for the Opinion on the Tender Offer” above in certain concrete terms
based on the business environment surrounding the Company and the management
issues concerning the Company and that it can be determined to be necessary andreasonable to implement the Transactions in order to attempt to achieve the growthand increased competitiveness of the Company.
The business plan prepared by the Longreach Group can be evaluated highlyin that (a) it was formulated after appropriately analyzing the current status and issuesof the Company, (b) it specifically states that it will not be possible to prevail against
competition by merely continuing the current form of business and thus the LongreachGroup will carry out aggressive investment, (c) it commits to procuring necessary
funds and human resources to achieve the growth strategy, and (d) it aims to pushahead with reform in cooperation with the employees of the Company, not by relying
only on external forces.
Although the special committee believes that the Transactions have somedisadvantages in that (a) they could decrease the name recognition of the Company
and have a negative impact on its sales and recruitment as a result of privatization, (b)there is a possibility that the Company could lose local governments and the like asclients due to the fact that the Company will become a subsidiary of a private equity
fund, and (c) appeal for employees could decrease due to changes in the management
structure, it is considered that all of these issues are merely abstract concerns and theirimpact on the Company’s corporate value would be limited. In addition, as describedin “(C) Process of and Reasons for the Decision by the Company” of “(2) Grounds andReasons for the Opinion on the Tender Offer” above, the Longreach Group plans totake various measures for the employees of the Company, and this would significantly
reduce the level of concern that the Company’s corporate value could be adversely
affected by employees leaving the Company, and the special committee infers fromthese facts that the advantages of the Transactions will surpass the disadvantages of
the Transactions to a considerable degree.
ii.
Fairness of process of negotiations leading to the Transactions and otherrelated procedures
The special committee determined that the process of negotiations leading to theTransactions and other related procedures are likely to be fair based on the following
reasons.
37

The Company’s board of directors established a special committee
independent from the Company and the Tender Offeror.
The Company ensured a system under which the special committee is able tobe substantially involved in negotiations with the Tender Offeror, and negotiations
with the Tender Offeror can be regarded as having been conducted with the substantial
involvement of the special committee.
The Company’s examination and decision-making regarding the Transactions
were conducted by disinterested directors.
The Company received legal advice from Nagashima Ohno & Tsunematsu,
an independent legal advisor.
The Company obtained a share price valuation report from Mizuho Securities,
an independent financial advisor and third-party appraiser.
The special committee obtained a share price valuation report from Stand byC, who is the special committee’s own financial advisor and third-party appraiser.
The special committee believes that DXC conducted active market checks as
stated in “(B) Background, Purpose, and Decision-Making Process with respect to theTender Offeror Conducting the Tender Offer, and Management Policy After the Tender
Offer” of “(2) Grounds and Reasons for the Opinion on the Tender Offer” above. In
addition, the Company and the Tender Offeror have not entered into any agreementthat restricts the Company from contacting counter offerors other than the Tender
Offeror, and the tender offer period of the Tender Offer has been set to a longer period(31 Business Days) than the minimum tender offer period under laws and ordinances(20 Business Days).
The special committee believes that although it is planned that the tenderingof shares by the majority of minority will not be a precondition for the Tender Offer,
it is possible to determine that the Transactions are likely to contribute to theenhancement of the Company’s corporate value, and the tender offer price in theTender Offer may be considered to be reasonable from the perspective of providing
the general shareholders of the Company with an opportunity to recover theirinvestments and can be determined to have been sufficiently valuated. Therefore, it
is believed that not setting the tendering of shares by the majority of minority as aprecondition for the Tender Offer, thereby not deliberately making the completion of
the Tender Offer uncertain, is reasonable to a certain degree.
It is planned that appropriate information will be disclosed to minority
shareholders.
It may be determined that measures to eliminate any coerciveness in theTransactions have been taken as much as possible.
iii
Appropriateness of the Tender Offer Price and other terms and conditions for
the Tender Offer
The special committee determined that the Tender Offer Price and other terms andconditions for the Tender Offer are reasonable and appropriate from the perspective ofproviding the general shareholders of the Company with an opportunity to recover
their investments based on the following reasons. However, because the purchaseprice per Company Share for the tender offer in the New MBO Proposal is 615 yen,
and it is implied that there is a possibility of implementing a competitive tender offer38

in the case of the implementation of the tender offer as a part of the Transactions, if
such competitive tender offer were to be actually implemented, there would be apossibility that the shareholders of the Company would be able to sell their shares in
the Company at a price higher than the Tender Offer Price depending on the specificterms and conditions of the competitive tender offer. In light of this fact and othercircumstances, the special committee determined that it is reasonable to take a neutral
position regarding whether or not to recommend that the Company’s shareholders
tender shares in the Tender Offer, thereby ultimately leaving that decision to the
judgment of its shareholders.
The process of negotiations regarding the Tender Offer Price stated in “(C)Process of and Reasons for the Decision by the Company” of “(2) Grounds andReasons for the Opinion on the Tender Offer” above may be regarded as being
conducted with the substantial involvement of the special committee.
The special committee did not find anything particularly unreasonable withregard to the methods and details of calculation in the Share Price Valuation Report(Mizuho Securities), and the Tender Offer Price is at a level within the range of theresults of the calculation of the value per share using the DCF Analysis (from 526 yen
to 847 yen) in the Share Price Valuation Report (Mizuho Securities) and is also at alevel within the range of the results of the calculation of the value per share using thecomparable company method (from 388 yen to 602 yen) in the Share Price Valuation
Report (Mizuho Securities).
The special committee did not find anything particularly unreasonable withregard to the methods and details of calculation in the Share Price Valuation Report(Stand by C), and the Tender Offer Price is at a level within the range of the results ofthe calculation of the value per share using the DCF Analysis (from 522 yen to 634
yen) in the Share Price Valuation Report (Stand by C).
It can be determined that the level of the premium of the Tender Offer Priceover the market price is not necessarily low compared to the examples of the levels ofpremiums added to offer prices in tender offers conducted in the past for the purposeof privatization of the target companies.
The Tender Offer Price exceeds the purchase price for the Company Shares
owned by DXC US, which would contribute to the interests of minority shareholdersof the Company in principle.
It can be determined that the purchase price for the aggregate sum of sharesless than one unit in the Company as a result of the Share Consolidation (equality
between the amount of cash to be delivered to shareholders who do not tender sharesin the Tender Offer and the Tender Offer Price) and other transaction terms andconditions are similar as compared to those of transactions of similar type and size.
(D) Obtainment by the Special Committee of a Share Price Valuation Report from an
Independent Financial Advisor and Third-Party Appraiser
The special committee appointed Stand by C as an independent financial advisor anda third-party appraiser that is independent from the Company, the Tender Offeror, andDXC US, received advice from a financial perspective, including advice on theevaluation of the value of the Company Shares and the negotiation policies with theTender Offeror, and obtained the Share Price Valuation Report (Stand by C) on
39

December 23, 2020. For the outline of the Share Price Valuation Report (Stand by
C), please refer to “(B) Obtainment by the Special Committee of a Share Price
Valuation Report from an Independent Third-Party Appraiser” of “(3) Matters relating
to Valuation” above.
(E)

Approval of All Disinterested Directors of the Company
Taking into account the legal advice from Nagashima Ohno & Tsunematsu, advice
from a financial perspective and the Share Price Valuation Report (Mizuho Securities)
obtained from Mizuho Securities, and the contents of the Share Price Valuation Report(Stand by C) submitted through the special committee, and respecting to the maximum
extent the determinations of the special committee indicated in the Report, theCompany’s board of directors conducted careful discussions and examinations
regarding whether the Transactions, including the Tender Offer, would contribute to
the enhancement of the Company’s corporate value and whether the terms andconditions of the Transactions, including the Tender Offer Price, were appropriate, as
stated in “(C) Process of and Reasons for the Decision by the Company” of “(2)Grounds and Reasons for the Opinion on the Tender Offer” above.
As a result, the Company judged that (i) the Transactions, including the Tender Offer,would contribute to the enhancement of the Company’s corporate value and (ii) theterms and conditions of the Transactions, including the Tender Offer Price, wereappropriate and secured the interests that should be enjoyed by the Company’s generalshareholders, and the Tender Offer would provide the Company’s general shareholders
with a reasonable opportunity to sell the Company Shares; accordingly, the Company
resolved at its board of directors meeting held on December 24, 2020, with unanimous
approval of the Company’s directors who participated in the deliberations andresolutions, to express its opinion in favor of the Tender Offer and to take a neutral
position regarding whether the shareholders of the Company tender shares in theTender Offer, thereby leaving that decision to the judgment of its shareholders, as
stated in “(C) Process of and Reasons for the Decision by the Company” of “(2)Grounds and Reasons for the Opinion on the Tender Offer” above.
Of the eight directors of the Company (Mr. Takatsugu Ebi resigned from his position
as a director on December 20, 2020), Mr. Nozomu Nishikawa, Mr. Lilian FurnoSchneider, and Mr. Dai Kirisawa serve as the representative director, the CFO, and theManager of the Delivery Management Division of DXC’s Japanese corporations
respectively, Mr. Eizo Takami had a position as an executive officer of DXC’s Japanese
corporations, and Mr. Tomohiro Kawada made a separate proposal for privatizing theCompany Shares; therefore, from the standpoint of eliminating the possibility of thedeliberations and resolutions at the board of directors meeting being affected byproblems with structural conflicts of interests and problems with asymmetric
information in the Transactions, the Company’s board of directors meeting held on
December 24, 2020 stated above was two-tiered: first, (i) the three directors other than
Mr. Nozomu Nishikawa, Mr. Lilian Furno-Schneider, Mr. Dai Kirisawa, Mr. Eizo
Takami, and Mr. Tomohiro Kawada participated in deliberations and passed a
resolution as stated above by unanimous approval; and further, in order to exercise theutmost prudence, (ii) five directors (those three directors participating in (i) above plus
Mr. Dai Kirisawa and Mr. Eizo Takami) once again passed a resolution as stated above
by unanimous approval.
40

(F)

Measures for Securing Opportunities for Purchase by Other Tender Offerors
DXC, which is the ultimate parent company of the Company, implemented a selection
process in which it approached multiple companies regarding the transfer of theCompany Shares held by DXC, as stated in “(B) Background, Purpose, and theDecision-Making Process with respect to the Tender Offeror Conducting the Tender
Offer, and Management Policy After the Tender Offer” of “(2) Grounds and Reasonsfor the Opinion on the Tender Offer” above.
The Tender Offeror and the Company have not agreed to any transaction protection
clause that prohibits the Company from contacting counter offerors or made any otheragreement on any matter that would restrict counter offerors from contacting or
performing other acts with the Company.
In addition, although the shortest tender offer period under laws and ordinances is 20
business days, the Tender Offeror has set the Tender Offer Period for the Tender Offer
to 31 business days. The Tender Offeror has set a comparatively long tender offer
period to ensure an appropriate opportunity for the shareholders of the Company tomake a decision about the tendering of shares in response to the Tender Offer while
ensuring an opportunity for counter offers by parties other than the Tender Offeror asa means to guarantee the fairness of the Tender Offer.

4.

Matters relating to Important Agreements regarding the Tender Offer(A) The Transaction Agreement
Upon conducting the Tender Offer, the Tender Offeror executed with DXC US theTransaction Agreement dated December 24, 2020 under which DXC US agreed not totender the Untendered Shares (13,973,000 shares) in the Tender Offer.
Under the Transaction Agreement, the Tender Offeror and DXC US have agreed that(i) they shall request the Company to conduct the Share Consolidation after thecompletion of the settlement of the Tender Offer, (ii) they shall request the Company
to conduct the Capital Increase by Third-Party Allotment and the Capital Decrease,
Etc. after the completion of the Squeeze-Out, and (iii) DXC US shall transfer the
Untendered Shares to the Company for the total consideration amount of
6,986,500,000 yen through the Company’s Share Repurchase after the effective dateof the Capital Increase by Third-Party Allotment and the Capital Decrease, Etc.
(B)

The Partnership Agreement
Upon conducting the Tender Offer, SIGP and DXC Pension have executed thePartnership Agreement dated September 1, 2020 and agreed to the following matters:(i)

DXC Pension may appoint one director of the Company;(ii)

If SI Fund directly or indirectly disposes of the Company Shares, DXC Fundshall have a tag-along right; and(iii)

If SI Fund directly or indirectly disposes of the Company Shares, SI Fundshall have a right to request DXC Fund to participate in the sale.
41

5.

Details of Benefits Received from the Tender Offeror or its Specially Related Parties
Not applicable.

6.

Response Policy Regarding Basic Policies Relating to Control of the Company
Not applicable.

7.

Questions to the Tender Offeror
Not applicable.

8.

Request for Extension of the Tender Offer Period
Not applicable.

9.

Future Prospects
Please refer to “(4) Prospects and Reasons for Delisting” and “(5) Policy for
Organizational Restructuring, Etc. after the Tender Offer (Matters relating to the “TwoStep Acquisition”)” under “(B) Background, Purpose, and Decision-Making Processwith respect to the Tender Offeror Conducting the Tender Offer, and Management
Policy After the Tender Offer” of “(2) Grounds and Reasons for the Opinion on theTender Offer” in “3. Details of Opinion on the Tender Offer and Grounds and Reasons
Therefor” above.

10.
(1)

Matters Relating to Transactions, Etc. with a Controlling Shareholder
Transactions, etc. with a Controlling Shareholder and Status of Conformity with Policy
Regarding Measures to Protect Minority Shareholders
The Company determined that the expression of an opinion by the Company’s boardof directors regarding the Tender Offer constitutes a transaction, etc. with a controllingshareholder since the Transactions include (x) the plan for the Company to acquire theUntendered Shares held by DXC US through the Company’s Share Repurchase after
the Tender Offer and the Share Consolidation following the Tender Offeror executing
the Transaction Agreement with the Company’s controlling shareholder (i.e., its parent
company), DXC US, as well as (y) the DXC Pension making a contribution to the coinvestment fund to be managed for the Transactions. Additionally, the Company
determined that the procedures for the Share Consolidation and the Company’s Share
Repurchase that are planned to be conducted after the completion of the Tender Offer
for the purpose of making the Company a wholly-owned subsidiary constitute atransaction, etc. with a controlling shareholder. The status of conformity with the“Guidelines for Policies to Protect Minority Shareholders in the Event of a Transaction,
Etc. with a Controlling Shareholder” set out by the Company in its Corporate
Governance Report disclosed on April 7, 2020 is as described below.
The “Guidelines for Policies to Protect Minority Shareholders in the Event of aTransaction, Etc. with a Controlling Shareholder” set out by the Company in its
Corporate Governance Report disclosed on April 7, 2020 stated that “when entering
42

into a transaction, etc. with DXC, the parent company, or with other entities in the
DXC Group, the Company will take into account factors such as the contract
conditions or quoted market values in the same way as in the case of an ordinarytransaction with other companies and thereby make the transaction fair and proper.”With respect to the Transactions, the Company has implemented measures to ensure
fairness and avoid conflicts of interest as stated in “(6) Measures to Ensure Fairness of
the Tender Offer, Including Measures to Ensure Fairness of the Tender Offer Price andMeasures to Avoid Conflicts of Interest” in “3. Details of Opinion on the Tender Offer
and Grounds and Reasons Therefor” above, and the Company believes these measures
are consistent with the policy stated above.
(2)

Details of Measures to Ensure Fairness and Measures to Avoid Conflicts of Interest
Please refer to “(6) Measures to Ensure Fairness of the Tender Offer, Including
Measures to Ensure Fairness of the Tender Offer Price and Measures to Avoid
Conflicts of Interest” in “3. Details of Opinion on the Tender Offer and Grounds andReasons Therefor” above.

(3)

Outline of Opinion Obtained from a Party Who Has No Interest in the Controlling
Shareholder that Conducting the Transactions (Including the Company’s Board of
Directors Expressing Its Opinion in Favor of the Tender Offer and Taking a Neutral
Position Regarding Whether its Shareholders Tender Shares in the Tender Offer,
Thereby Leaving that Decision to the Judgment of its Shareholders) Would Not be
Disadvantageous to the Minority Shareholders
On December 24, 2020, the Company received the Report from the special committeethat includes a statement that the special committee believes that the board of directorsof the Company expressing an opinion in support of the Tender Offer andrecommending that the shareholders of the Company tender the Company Shares in
the Tender Offer would not be disadvantageous to the minority shareholders of theCompany. Please refer to “(C) Establishment by the Company of an Independent
Special Committee” of “(6) Measures to Ensure Fairness of the Tender Offer, Including
Measures to Ensure Fairness of the Tender Offer Price and Measures to Avoid
Conflicts of Interest” in “3. Details of Opinion on the Tender Offer and Grounds andReasons Therefor” above for details.

11.

Other Matters Necessary for Investors to Properly Understand the Information of theCompany and Make an Appropriate Decision
The Company resolved at its board of directors meeting held today to revise its
dividend forecast for the Y.E. December 2020 and not to declare a year-end dividend
for the Y.E. December 2020. For details, see “Announcement of Revision of
Dividend Forecast for Y.E. December 2020 (Cancellation of Dividend)” released by
the Company today.
In addition, the Company released an “Announcement of Revision of Performance
Forecast for the Y.E. December 2020” today. For details, see the contents of thatpress release.

43

End
Reference: Please refer to “Announcement of Commencement of Tender Offer for Shares
Certificates in Japan Systems Co., Ltd. (Securities Code: 9758) by JSL Holdings LLC” dated
December 24, 2020 (as attached)44

US Regulations
The Tender Offer will be conducted in compliance with the procedures and information
disclosure standards provided under the Financial Instruments and Exchange Act of Japan, andthose procedures and standards are not always the same as those applicable in the United States.
In particular, neither Section 13(e) nor Section 14(d) of the U.S. Securities Exchange Act of1934 (as amended, the “U.S. Securities Exchange Act of 1934”) or the rules under these sections
apply to the Tender Offer; therefore, the Tender Offer is not conducted in accordance with those
procedures or standards. The financial information included in this press release do notconform to the U.S. accounting standards and may not be equivalent to the financial statementsof a company in the United States. Also, because the Tender Offeror and the Company arecorporations incorporated outside the United States and some or all of their directors are nonU.S. residents, it may be difficult to exercise rights or demands against them under the U.S.
securities laws. It also may be impossible to bring an action against a company that is basedoutside of the United States or its directors in a court outside of the United States on the groundsof a violation of the federal securities laws of the United States. There is also no guarantee thata company that is based outside of the United States or its subsidiaries or affiliates may becompelled to submit themselves to the jurisdiction of a U.S. court.
All procedures regarding the Tender Offer will be conducted in Japanese unless specifically set
forth otherwise. All or part of the documents regarding the Tender Offer will be prepared in
English. However, if there is any discrepancy between the documents in English and those inJapanese, the documents in Japanese shall prevail.
Before the commencement of the Tender Offer or during the purchase period of the Tender
Offer, the Tender Offeror and its affiliate, and the affiliates of the financial advisor of each of
the Tender Offeror and the Company might purchase by means other than the Tender Offer or
conduct an act aimed at such a purchase of the Company Shares on their own account or theaccount of their client to the extent permitted by Japanese laws and regulations related tofinancial instruments transactions and other applicable laws and regulations in the scope of theirordinary business and in accordance with the requirements of Rule 14e-5(b) of the U.S.
Securities Exchange Act of 1934. If information regarding such a purchase is disclosed inJapan, that information will also be disclosed in the English language on a website of the personthat conducted that purchase.
Prediction of the FutureThis press release includes forward-looking statements as defined in Section 27A of the U.S.
Securities Act of 1933 (as amended, the “U.S. Securities Exchange Act of 1933”) and Section
21E of the U.S. Securities Exchange Act of 1934. The actual results may be significantly
different from the predictions expressly or impliedly indicated in the forward-looking
statements, due to known or unknown risks, uncertainty, or other factors. The Tender Offeror
or its affiliates do not guarantee that the predictions expressly or impliedly indicated as theforward-looking statements will turn out to be correct. The forward-looking statements
included in this press release were prepared based on the information held by the Tender Offeror
as of the date hereof, and unless obligated by laws or regulations or the rules of a financial
instruments exchange, the Tender Offeror, the Company or their affiliates shall not be obligatedto update or revise the statements to reflect future incidents or situations.
45

[Translation]
December 24, 2020
To whom it may concern:
Company Name
Name ofRepresentative
Contact

Company Name
Name ofRepresentative

Japan Systems Co., Ltd.
Tomohiro Kawada, President and Representative Director(Code: 9758, JASDAQ)
Jun Maejima, Corporate Planning Section Manager(Telephone: +81-3-5309-0300)
JSL Holdings LLC
Law Thin Ken, Operating Officer

Announcement of Commencement of Tender Offer for Shares in Japan Systems Co.,
Ltd. (Securities Code: 9758) by JSL Holdings LLC
JSL Holdings LLC (the “Tender Offeror”) hereby announces that it decided on December 24,
2020 to acquire shares in Japan Systems Co., Ltd. through a tender offer with the details as
described in the attachment.
End

These materials are disclosed in accordance with Article 30, Paragraph 1, Item (4) of the
Financial Instruments and Exchange Act Enforcement Order upon the request of JSL
Holdings LLC (the Tender Offeror) to Japan Systems Co., Ltd. (company subject to theTender Offer).
Attached materials:
Announcement of Commencement of Tender Offer for Common Shares in Japan Systems Co.,
Ltd. (Securities Code: 9758) dated December 24, 2020

46

December 24, 2020
To whom it may concern:
Company Name
Name ofRepresentative

JSL Holdings LLC
Law Thin Ken, Operating Officer

Announcement of Commencement of Tender Offer for Common Shares in Japan
Systems Co., Ltd. (Securities Code: 9758)
JSL Holdings LLC (the “Tender Offeror”) hereby announces that it decided on December 24,
2020 to acquire shares of common stock in Japan Systems Co., Ltd. (the “Target Company”)(the “Target Company Shares”) listed on the JASDAQ Standard Market (“JASDAQ”) of theTokyo Stock Exchange, Inc. (the “TSE”) through a tender offer under the Financial Instruments
and Exchange Act (Act No. 25 of 1948, as amended) (the “Tender Offer”) with the details as
described below.
The Tender Offeror is a godo kaisha established on July 15, 2020 for the main purpose of
acquiring and holding all of the Target Company Shares listed on JASDAQ of the TSE, and allof its equity interests are held by Daylight Holding L.P. (“DH Fund”) as of today. As of today,(i) Sunlight Investment L.P., which is held and managed as an investment fund by the LongreachGroup (meaning, collectively, the investment entities to which The Longreach Group Inc.,
which engages in the business of research and analysis of strategic private equity investment inJapan and Asia, and The Longreach Group Limited based in Hong Kong provide services, andall entities affiliated with any of the above; the same applies below), holds 79% of the equity
interests of DH Fund, and (ii) Longreach-DXC Co-Investment Fund, L.P., in which DXC
Pension Trust e.V. (which is an affiliated company pension of DXC Technology Company(collectively meaning the corporate entities that provide next-generation IT services andsolutions to more than 6,000 customers in 70 countries worldwide and develop businesses inJapan through DXC Technology Japan, LLC and DXC Technology Japan, Ltd.; “DXC”)) holds
all of the equity interests, holds 21% of the equity interests of DH Fund. The Tender Offeror
does not hold any Target Company Shares as of today.
The Longreach Group was established in October 2003 for the purpose of providing Japaneseand other Asian corporations with strategic capital and management advice with the aim ofrealizing perpetual business growth and securing international competitiveness. One of thefeatures of the Longreach Group is a fusion of the “ability to offer added value on a global scale”
and “trusted management based on the understanding of Japanese culture,” and the LongreachGroup provides support for realizing corporate growth by offering global-level solutions thatare required by Japanese corporations for value creation, such as support for medium-scale
corporations in strengthening competitiveness and for large-scale corporations in optimizing
business portfolios. Since its establishment, the Longreach Group has made 16 investments
in total (cumulatively, approximately 140 billion yen), which were mainly domestic ones, andits major investments include: a tender offer for shares in, and the privatization of, SANYOElectric Logistics, Co., Ltd.; strategic investment in McDonald’s Holdings Company (Japan),Ltd.; acquisition of 100% of shares in Hitachi Via Mechanics, Ltd.; acquisition of 100% of47

shares in NOC Japan Outsourcing Inc.; investment in Wendy’s Japan LLC to make First KitchenCo., Ltd. a wholly-owned subsidiary of Wendy’s Japan LLC; acquisition of 100% of shares in
Kohikan Corporation, Ltd.; a tender offer for shares in, and the privatization of, Fujitsu
Component Limited; and investment in CHAT NOIR Co., Ltd.
The Tender Offeror will implement the Tender Offer as part of the transactions for the purposeof acquiring all of the Target Company Shares (excluding treasury shares held by the Target
Company and the Target Company Shares held by DXC US (Netherlands) LLC (“DXC US”),
which is a wholly-owned subsidiary of DXC and the parent company of the Target Company(number of shares owned: 13,973,000 shares (Note 1); ownership ratio (Note 2): 53.67%)), andmaking the Target Company a wholly-owned subsidiary of the Tender Offeror.
(Note 1): The number of shares owned is the number of shares held by DXC US statedin the Report of Change (henko houkoku sho) (No. 2) regarding the Target
Company Shares held by DXC US on November 9, 2020.
(Note 2): “Ownership ratio” means the percentage (rounded up or down to the nearest
two decimal places) of the difference (26,036,005 shares) of the total number
of issued shares of the Target Company as of September 30, 2020 (26,051,832
shares) stated in the Q3 Report for the 52nd fiscal year filed by the Target
Company on November 13, 2020 less the number of treasury shares held by
the Target Company as of September 30, 2020 (15,827 shares) stated in the
Q3 Financial Statement (Japanese GAAP) (consolidated) for Y.E. December
2020 released by the Target Company on November 12, 2020; the same
applies to statements regarding ownership ratios below.
The outline of Tender Offer is as follows.
(1) Name of the Target Company
Japan Systems Co., Ltd.
(2) Period of Purchase
From December 25, 2020 (Friday) to February 15, 2021 (Monday) (31 Business Days)(3) Type of Share Certificates, Etc. to Be Purchased and Price of Purchase
Common shares

590 yen per share(4) Number of Share Certificates, Etc. to be Purchased
Number of sharecertificates, etc. to bepurchased

Minimum number ofshare certificates, etc. tobe purchased

Maximum number ofshare certificates, etc. tobe purchased

3,384,400 shares– shares12,063,005 shares(5) Commencement Date of Settlement
February 22, 2021 (Monday)(6) Tender Offer Agent
Nomura Securities Co., Ltd.

13-1, Nihombashi 1-chome, Chuo-ku, Tokyo

48

For the specific details of the Tender Offer, please refer to the Tender Offer Registration
Statement to be submitted by the Tender Offeror for the Tender Offer on December 25,
2020.
End

49

Restrictions on Solicitation
This press release is 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 carefully read the Tender Offer Explanatory Statement for theTender Offer and make their own independent decision. This press release does not constitute,nor form part of, any offer to sell, solicitation of a sale of, or any solicitation of any offer to buy,
any securities. In addition, neither this press release (or any part of it) nor the fact of its
distribution shall form the basis for any agreement on the Tender Offer or be relied on when
executing such an agreement.
US Regulations
The Tender Offer will be conducted in compliance with the procedures and information
disclosure standards provided under the Financial Instruments and Exchange Act of Japan, andthose procedures and standards are not always the same as those applicable in the United States.
In particular, neither Section 13(e) nor Section 14(d) of the U.S. Securities Exchange Act of1934 (as amended, the “U.S. Securities Exchange Act of 1934”) or the rules under these sections
apply to the Tender Offer; therefore, the Tender Offer is not conducted in accordance with those
procedures or standards. The financial information included in this press release do notconform to the U.S. accounting standards and may not be equivalent to the financial statementsof a company in the United States. Also, because the Tender Offeror and the Target Company
are corporations incorporated outside the United States and some or all of their directors are
non-U.S. residents, it may be difficult to exercise rights or demands against them under the U.S.
securities laws. It also may be impossible to bring an action against a company that is basedoutside of the United States or its directors in a court outside of the United States on the groundsof a violation of the federal securities laws of the United States. There is also no guarantee thata company that is based outside of the United States or its subsidiaries or affiliates may becompelled to submit themselves to the jurisdiction of a U.S. court.
All procedures regarding the Tender Offer will be conducted in Japanese unless specifically set
forth otherwise. All or part of the documents regarding the Tender Offer will be prepared in
English. However, if there is any discrepancy between the documents in English and those inJapanese, the documents in Japanese shall prevail.
Before the commencement of the Tender Offer or during the purchase period of the Tender
Offer, the Tender Offeror and its affiliate, and the affiliates of the financial advisor of each of
the Tender Offeror and the Target Company might purchase by means other than the Tender
Offer or conduct an act aimed at such a purchase of the Target Company Shares on their own
account or the account of their client to the extent permitted by Japanese laws and regulations
related to financial instruments transactions and other applicable laws and regulations in thescope of their ordinary business and in accordance with the requirements of Rule 14e-5(b) of
the U.S. Securities Exchange Act of 1934. If information regarding such a purchase isdisclosed in Japan, that information will also be disclosed in the English language on a websiteof the person that conducted that purchase.
Prediction of the Future50This press release includes forward-looking statements as defined in Section 27A of the U.S.
Securities Act of 1933 (as amended, the “U.S. Securities Exchange Act of 1933”) and Section
21E of the U.S. Securities Exchange Act of 1934. The actual results may be significantly
different from the predictions expressly or impliedly indicated in the forward-looking
statements, due to known or unknown risks, uncertainty, or other factors. The Tender Offeror
or its affiliates do not guarantee that the predictions expressly or impliedly indicated as theforward-looking statements will turn out to be correct. The forward-looking statements
included in this press release were prepared based on the information held by the Tender Offeror
as of the date hereof, and unless obligated by laws or regulations or the rules of a financial
instruments exchange, the Tender Offeror, the Target Company or their affiliates shall not be
obligated to update or revise the statements to reflect future incidents or situations.
In other countries
Some countries or regions may impose restrictions on the announcement, issue, or distributionof this press release. In such cases, please take note of such restrictions and comply with them.
The announcement, issue, or distribution of this press release shall not constitute a solicitationof an offer to sell or an offer to buy shares relating to the Tender Offer and shall be deemed a
distribution of materials for informative purposes only.

51