News Release (6409 TSE)

[Translation]
May 16, 2022
To whom it may concern:
Company Name:
Representative:
Code Number:
Inquiries:

KITO CORPORATION
Yoshio Kito, President & CEO
6409 (Tokyo Stock Exchange Prime
Market)Masafumi Kokubo Executive Officer
GM, Corporate Planning Division
TEL: 03‐5908‐0161

Announcement of Position Statement on the Planned Commencement of the Tender
Offer for Shares, etc. of KITO by Lifting Holdings BidCo, Inc. in Connection With theBusiness Combination of KITO and Crosby GroupAs notified in the Announcement Regarding the Business Combination of KITOCORPORATION and Crosby Group announced on this day (“Business Combination Press
Release”), KITO (the “Company”) has this day entered into a business combination agreement(the “Business Combination Agreement”) concerning a business combination of the Company
and the Crosby Group (defined below; collectively with the Company, the “Companies”) thatis based on a spirit of equality (the “Business Combination”) with Lifting Holdings Limited(“HoldCo”), which is the parent company holding all of the issued and outstanding shares of
Lifting Holdings BidCo, Inc. (“Offeror”), Crosby US Acquisition Corp., which is a wholly
owned subsidiary of HoldCo (“Crosby US”), and Crosby UK Acquisition Limited, which is awholly owned subsidiary of HoldCo (“Crosby UK”, and HoldCo and its subsidiaries, including
Crosby US and Crosby UK and The Crosby Group LLC, a corporation established under thelaws of Delaware, United States, of which HoldCo indirectly through Crosby US and a numberof its subsidiaries (collectively “Other Crosby US Subsidiaries”) holds all the issued shares(“Crosby”), collectively “Crosby Group”) (for details of the Business Combination Agreement,
see “4. Matters Concerning Tendering in Response to the Tender Offer by the Company’s
Shareholders and Material Agreements Pertaining to the Tender Offer”).
Further, in relation to the tender offer (the “Tender Offer”) for the Company’s common stock(the “Company Shares”) and the Stock Acquisition Rights (as defined in “(2) Stock Acquisition
Rights” under “2. Purchase, etc. Price”) by the Offeror whose shares are all directly held by
HoldCo as part of the Business Combination, at the board of directors meeting held today, aresolution was made stating that if the Tender Offer commences, the position of the company
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News Release (6409 TSE)
as of this date is that it will declare a position in support of the Tender Offer and that it will
recommend that the Company’s shareholders and stock acquisition right holders (the “Stock
Acquisition Right Holders”) accept the Tender Offer. Having done so, the Company announces
the following.
According to the Offeror, because the procedures and steps required under competition laws inJapan, the U.S., China, Australia, Cyprus, and Serbia are expected to take time to complete, theOfferor plans to commence the Tender Offer on the date that the Tender Offer Conditions
Precedent (Note 1), including the completion of such procedures and steps, are satisfied (or ona day that is within 10 business days from the day that they are waived with the consent of allof HoldCo, Crosby US, Crosby UK, and the Company (Note 2) that is a day separately agreed
among HoldCo, Crosby US, Crosby UK, and the Company (the “Tender Offer Commencement
Date”)). We are informed that as of today, the Offeror aims to complete procedures, etc. withregulatory authorities inside and outside Japan in mid-October, 2022, and to commence theTender Offer in late October, 2022, but as it is difficult to accurately predict the time it will
require to deal with regulatory authorities inside and outside Japan, they will provide notice ofa more detailed schedule for the Tender Offer once clearances have been obtained from all
regulatory authorities. (We are informed that any changes to the expected timing of theobtainment of regulatory authorities’ approval and commencement of the Tender Offer as statedabove will be also announced promptly.)
For these reasons, at the aforementioned board of directors meeting it was resolved to take thefollowing steps pertaining to the position statement of the Company. As set out in the section
below titled “(i) Establishment of an independent special committee at the Company” under“(6) Measures to ensure the fairness of the Tender Offer, such as measures to ensure fairness of
the Tender Offer Price and measures to avoid a conflict of interest” of “3. Details of, Grounds,
and Reasons for the Position Regarding the Relevant Tender Offer,” the Company’s board of
directors additionally resolved that when the Tender Offer commences, the special committee
established by the Company will be asked to review whether or not there is any change to thecontents of the report (the “Report”) submitted this day by the special committee to theCompany’s board of directors, and if there is no change, state this fact to the Company’s boardof directors, and if there is a change, to state a position after the change, and based on such
position, the Company will again publish its position on the Tender Offer when the Tender Offer
commences.
The above resolution of the board of directors is made on the premise that a series oftransactions (the “Transactions”) to achieve the Business Combination, including transactions
with the purpose of making the Offeror the only shareholder of the Company’s through theTender Offer and the subsequent series of transactions is contemplated, and that the Company
Shares are scheduled to be delisted.
Note 1: The Business Combination Agreement provides that the commencementof the Tender Offer is subject to the following conditions precedent: (i) theclearances pursuant to competition laws (Note 3) required to execute theBusiness Combination shall have been obtained; (ii) the board of directorsof the Company shall have adopted a resolution expressing its position in
support of the Tender Offer and a recommendation that its shareholders
2

News Release (6409 TSE)and Stock Acquisition Right Holders accept the Tender Offer (collectively,
the “Opinion to Support and Recommend to Tender in the Tender Offer”),
and the Opinion to Support and Recommend to Tender in the Tender Offer
shall remain in effect at the time the Tender Offer is commenced without
amendment, supplement, or modification; (iii) the special committee of theCompany reviewing the Business Combination shall have submitted to theboard of directors of the Company an opinion that it is appropriate for theboard of directors of the Company to issue the Opinion to Support andRecommend to Tender in the Tender offer, and such opinion shall remainin effect at the time the Tender Offer is commenced without amendment,
supplement, or modification; (iv) the Company shall have performed andcomplied with, in all material respects, all obligations under the Business
Combination Agreement (Note 4) that are required to be performed andcomplied with by it on or before the Tender Offer Commencement Date,and the representations and warranties of the Company set forth in theBusiness Combination Agreement (Note 5) shall be true and correct in allmaterial respects as of the date of the Business Combination Agreement
and the Tender Offer Commencement Date; (v) HoldCo, Crosby US, andCrosby UK shall have performed and complied with, in all material
respects, all obligations under the Business Combination Agreement (Note6) that are required to be performed and complied with by it on or before
the Tender Offer Commencement Date, and the representations andwarranties of HoldCo, Crosby US and Crosby UK set forth in the Business
Combination Agreement (Note 7) shall be true and correct in all material
respects as of the date of the Business Combination Agreement and theTender Offer Commencement Date; (vi) no governmental authority of any
competent jurisdiction shall have enacted, issued, promulgated, enforced,
or entered any law or made any final and binding request of a party or
injunction, that is in effect and has the effect of making the Business
Combination illegal or otherwise prohibiting or preventing theconsummation of the Business Combination; (vii) there shall be no“material fact pertaining to the business” (Article 166, Paragraph 2 of the
Financial Instruments and Exchange Act (Act No. 25 of 1948; as amended;
the “Act”) of the Company that has not been “publicized” (Article 166,
Paragraph 4 of the Act) by the Company; (viii) no event or circumstanceshall have occurred since the date of the Business Combination Agreementthat would be a withdrawal event under Article 27-11, Paragraph 1 of the
Act with respect to the Tender Offer should the Tender Offer commence;and (ix) the Business Combination Agreement has not been terminated andremains in full force and effect (collectively, “Tender Offer Conditions
Precedent”).
Note 2: Under the Business Combination Agreement, it is stipulated that, among
the Tender Offer Conditions Precedent, (i) to (iii) and (vi), (vii), and (ix)may be waived by the agreement of all four of HoldCo, Crosby US, Crosby
UK, and the Company if permitted under applicable laws and regulations ,3

News Release (6409 TSE)(v) may be waived by sole discretion of the Company, and (iv) and (viii)
are be waived by sole discretion of HoldCo, Crosby US, or Crosby UK.
Note that, regarding (i), if it is reasonably anticipated that the necessary
regulatory clearances will be obtained during the period for the Tender
Offer purchase, etc. (the “Tender Offer Period”), when it is permitted underapplicable laws and regulations, it is possible that the Tender Offer may
start early upon waiving the relevant preconditions, by agreement of all forof HoldCo, Crosby US, Crosby UK and the Company, for the purposes ofproviding the Company’s shareholders with an early opportunity to tenderin response to the Tender Offer and moving forward swiftly with theBusiness Combination.
Note 3: This means notification under competition laws in Japan, The UnitedStates, China, Austria, Cyprus and Serbia.
Note 4: Please refer to the section below titled “4. Matters Concerning Tenderingin Response to the Tender Offer by the Company’s Shareholders andMaterial Agreements Pertaining to the Tender Offer” for details of theobligations of the Company provided in the Business Combination
Agreement.
Note 5: Please refer to the section below titled “4. Matters Concerning Tenderingin Response to the Tender Offer by the Company’s Shareholders andMaterial Agreements Pertaining to the Tender Offer” for the
representations and warranties of the Company provided in the Business
Combination Agreement.
Note 6: Please refer to the section below titled “4. Matters Concerning Tenderingin Response to the Tender Offer by the Company’s Shareholders andMaterial Agreements Pertaining to the Tender Offer” for details of theobligations of HoldCo, Crosby US, and Crosby UK provided in theBusiness Combination Agreement.
Note 7: Please refer to the section below titled “4. Matters Concerning Tenderingin Response to the Tender Offer by the Company’s Shareholders andMaterial Agreements Pertaining to the Tender Offer” for the
representations and warranties of the HoldCo, Crosby US, and Crosby UKprovided in the Business Combination Agreement.

1. Outline of Offeror
(1)
(2)

Name

(3)

Position, name ofrepresentative(4)

Business details

(5)
(6)

Capital
Incorporation date

Location

Lifting Holdings BidCo, Inc.
Pacific Century Place Marunouchi
11-1 Marunouchi 1-chome, Chiyoda-ku, Tokyo
Robert Desel, Representative Director
Brandon Brahm Representative Director(1) Trading(2) All businesses related or incidental to the preceding item
5,000 yen
April 28, 2022

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News Release (6409 TSE)
(7)
(8)

Major shareholders andshareholding ratio (as of
Lifting Holdings Limited
May 16, 2022)
Relationship between the Company and Offeror
Capital ties
Not applicable.
Personal ties
Not applicable.
Business ties
Not applicable.
Circumstances relevant to
Not applicable.
related parties

100％

2. Purchase, etc. Price(1) Company Shares
2,725 yen per one share of common stock(2) Stock acquisition rights(a) Stock acquisition rights issued pursuant to the resolution at the ordinary
general meeting of shareholders held on June 22, 2012 and theresolution at the board of directors meeting held on May 28, 2013 (the“Tenth Series Stock Acquisition Rights”) (the exercise period is fromMay 29, 2015 to May 28, 2023): 374,400 yen per stock acquisition right(b) Stock acquisition rights issued pursuant to the resolution at the ordinary
general meeting of shareholders held on June 20, 2013 and theresolution at the board of directors meeting held on May 27, 2014 (the“Eleventh Series Stock Acquisition Rights”) (the exercise period isfrom May 28, 2016 to May 27, 2024): 317,000 yen per stock acquisition
right(c) Stock acquisition rights issued pursuant to the resolution at the ordinary
general meeting of shareholders held on June 23, 2015 and theresolution at the board of directors meeting held on May 31, 2016 (the“Thirteenth Series Stock Acquisition Rights”) (the exercise period isfrom June 1, 2018 to May 31, 2026): 366,800 yen per stock acquisitionright(d) Stock acquisition rights issued pursuant to the resolution at the ordinary
general meeting of shareholders held on June 21, 2016 and theresolution at the board of directors meeting held on May 30, 2017 (the“Fourteenth Series Stock Acquisition Rights”) (the exercise period isfrom May 31, 2019 to May 30, 2027): 303,800 yen per stock acquisition
right(e) Stock acquisition rights issued pursuant to the resolution at the ordinary
general meeting of shareholders held on June 21, 2017 and theresolution at the board of directors meeting held on May 29, 2018 (the“Fifteenth Series Stock Acquisition Rights”) (the exercise period isfrom May 30, 2020 to May 29, 2028): 66,200 yen per stock acquisition
right(The Tenth Series Stock Acquisition Rights, the Eleventh Series Stock
Acquisition Rights, the Thirteenth Series Stock Acquisition Rights, the5News Release (6409 TSE)
Fourteenth Series Stock Acquisition Rights, and the Fifteenth Series
Stock Acquisition Rights are hereinafter collectively referred to as the“Stock Acquisition Rights.”)3.

Details of, Grounds, and Reasons for the Position Regarding the Relevant Tender Offer(1)

Details of the position regarding the Tender OfferAt the board of directors meeting held today, a resolution was made stating thatbased on the grounds and reasons set out in the section below titled “(2) Grounds andreasons for the position regarding the Tender Offer”, if the Tender Offer is commenced,
the position of the company as of this date is that it will declare a position in support of
the Tender Offer and that it will recommend that all of the Company’s shareholders andStock Acquisition Right Holders accept the Tender Offer.
As set forth above, according to the Offeror, it plans to commence the Tender Offer
promptly upon satisfaction of the Tender Offer Conditions Precedent (or the same arewaived with the consent of all four of HoldCo, Crosby US, Crosby UK, and the Company).
We are informed that as of today, the Offeror is targeting late October 2022 forcommencement of the Tender Offer, but as it is difficult to accurately predict the time itwill require to deal with competition authorities inside and outside Japan, it will provide
notice of a more detailed schedule for the Tender Offer once all regulatory clearances
have been obtained and decided.
For these reasons, at the aforementioned board of directors meeting it was resolved
to take the following steps pertaining to the position statement of the Company. As set
out in the section below titled “(i) Establishment of an independent special committee at
the Company” under “(6) Measures to ensure the fairness of the Tender Offer, such asmeasures to ensure fairness of the Tender Offer Price and measures to avoid a conflict ofinterest,” the Company’s board of directors additionally resolved that when the Tender
Offer commences, the special committee established by the Company will be asked toreview whether or not there is any change to the contents of the Report, and if there is nochange, state this fact to the Company’s board of directors, and if there is a change, tostate a position after the change, and based on such position, the Company will again
publish its position on the Tender Offer when the Tender Offer commences.
The aforementioned board of directors resolution was resolved in the manner set
out in the section below titled “(v) Approval of all directors and opinion of all auditorsthat there is no objection at the Company” under “(6) Measures to ensure the fairness of
the Tender Offer, such as measures to ensure fairness of the Tender Offer Price andmeasures to avoid a conflict of interest”(2)

Grounds and reasons for the position regarding the Tender Offer
6

News Release (6409 TSE)
Statements concerning the Offerors (defined below) that are the grounds andreasons for the position regarding the Tender Offer are based on explanations
received from the Offerors.
(i)

Summary of the Tender Offer

We are informed that the Offeror was established on April 28 2022 for the
primary purpose of controlling and managing the business activities of theCompany through the acquisition of and holding of the Company Shares after thecompletion of the Tender Offer, and, as of today, is a wholly owned subsidiary of
HoldCo, established under the laws of England and Wales with its businesspurposes of holding subsidiary shares and managing its subsidiaries. We areinformed that Ascend Overseas Limited (“Ascend”), established under the laws ofEngland and Wales, with its business purpose of holding shares of HoldCo, holds
approximately 96.7% of the shares of HoldCo (and that the management of HoldCo
holds the remainder), and that funds, investment vehicles and/or separately
managed accounts (Note 1) (“KKR Advised Entities”) advised by Kohlberg Kravis
Roberts & Co. L.P. (together with its affiliates and other related funds, “KKR”), an
investment advisory company established under the laws of Delaware, the UnitedStates, directly or indirectly hold a 100% stake in Ascend. We are informed that
HoldCo directly holds a 100% stake in Crosby US, and Crosby UK, establishedunder the laws of England and Wales, and indirectly holds a 100% stake in Crosby,
established under the laws of Delaware, United States (“Crosby, Crosby US, Crosby
UK, HoldCo, and the Offeror collectively the “Offerors”).We are informed that asof today, the Offerors and KKR do not hold any Company Shares.
Note 1: “Separately managed accounts” are entities structured for investment by
one investor or related investors whereby KKR earns management andincentive fees, pursuant to a single management agreement between KKR
and the investor(s) that are party to that account.
We are informed that the KKR Advised Entities acquired the subsidiaries of
Crosby US and Cosby UK from Melrose Industries Plc through Ascend. Crosby US
and Crosby UK were used as acquisition vehicles in such acquisition, with thecurrent Crosby Group being formed from such acquisition. We are informed that
Crosby Group was founded in 1836 and is headquartered in the United States, andhas been engaged in the lifting and securement hardware (Note 2) industry fornearly two centuries with a focus on safety, quality, training and engineering
leadership. We are informed that Crosby Group maintains a global presence, with
manufacturing and commercial operations across 16 manufacturing sites and 10
distribution centers in North America, Europe, Brazil, and Australia. We areinformed that with an international network of approximately 3,000 authorized
distributors, Crosby Group provides a broad range of products used in a wide
variety of industries and applications. We are informed that given its focus on being
highly responsive to customer needs, Crosby Group has prioritized investment in
7

News Release (6409 TSE)
innovation and new product development in lifting and securement hardware andrelated technology. Additionally, we are informed that it is making significant
investments into the operations of the business, including an investment in a
Longview, Texas, manufacturing facility with the aim of improving employee safety,
increasing output, and bolstering efficiency. Moreover, we are informed that Crosby
Group has also made acquisitions of companies that are complementary with
Crosby Group’s business to support the company’s continued growth and customer
value proposition.
Note 2: “Lifting and securement hardware” are accessories and hardware used tosecure, lift or move equipment, construction components or other assets
usually in conjunction with lifting hardware.
We are informed that KKR is a leading global investment firm that offers
alternative asset management for its investors as well as capital markets andinsurance solutions. We are informed that KKR sponsors investment funds thatinvest in private equity, credit, and real assets and has strategic partners that manage
hedge funds of which KKR is a minority shareholder.
We are informed that since the opening of its Tokyo office in 2006, KKR has
actively expanded its investment activities in the Japanese market, with investment
professionals possessing a thorough understanding of Japanese business practices.
We are informed that since 2010, the KKR Advised Entities have invested in ten
companies headquartered in Japan, including three take-private transactions ofJapanese publicly-listed companies. We are informed that, most recently, examplesof KKR’s main investments targets in Japan include Hitachi Koki Co., Ltd. (2017),
Hitachi Kokusai Electric Inc. (2017), Seiyu Co., Ltd. (2021), and Yayoi Co., Ltd.
(2022). We are informed that through these transactions, KKR has worked and is
working to support investment into and acceleration of growth for Japanesecompanies in various industry sectors, which are expected to achieve high growthin the future through KKR’s capital, resources, and network with such companies.
We are informed that KKR’s investment activities in the Japanese market are further
supported by its global capabilities, with KKR having offices in 21 cities and 109
private equity portfolio companies as of December 31, 2021. More broadly, we areinformed that KKR has a deep history in the industrial machinery sector as
evidenced by the investments in Gardner Denver Inc., a US corporation providing
compressors, blowers, and vacuum pumps (2013), Capital Safety Ltd., a UK
corporation manufacturing fall protection equipment (2011), and Crosby (2013),
etc. We are informed that in total, KKR had a total of US$471 billion in assets undermanagement as of December 31, 2021.
We are informed that today, HoldCo, Crosby US, Crosby UK, and theCompany entered into the Business Combination Agreement regarding theBusiness Combination between Crosby Group and the Company, and on thecondition that the Tender Offer Conditions Precedent are satisfied or waived,
decided that the Offeror will conduct the Tender Offer for the purpose of acquiring
all of the Company Shares listed on the Prime Market of Tokyo Stock Exchange,
8News Release (6409 TSE)
Inc. (“TSE”) as of today and Stock A cquisition Rights (excluding treasury shares
owned by the Company; the same applies hereinafter) as part of the Transactions.
In deciding the Offeror, after the Business Combination (defined in (iii)“Management policy after the Tender Offer”; hereinafter the same), Crosby US and
Crosby UK would become sister companies of the Company, and, in order to enable
the Company Group (27 companies in total, composed of the Company, 25
consolidated subsidiaries, and a non-consolidated subsidiary which is not an
affiliate to which the equity method is applicable; hereinafter the same) and Crosby
Group to enact a smooth business combination and conduct operations in a spirit ofequality to maximize the corporate value of the Combined Group (defined below),
the Offeror is conducting the Tender Offer, rather than subsidiaries including
Crosby US and Crosby UK acting as the tender offeror.
If the total number of share certificates, etc. tendered in response to the Tender
Offer (the “Tendered Share Certificates, Etc.”) is less than the minimum number ofshare certificates, etc. to be purchased (13,817,400 shares, ownership percentage(Note 3): 66.67%) (Note 4), then the Offeror has informed us that they will notpurchase any of the Tendered Share Certificates, Etc. However, we have been
informed that because the purpose is to acquire all of the Company Shares and theStock Acquisition Rights, the Offeror has not set a limit on the maximum numberof share certificates, etc. to be purchased, and if the total number of Tendered Share
Certificates, Etc. is equal to or greater than this minimum number of the sharecertificates, etc. (13,817,400 shares), then the Offeror will purchase all of theTendered Share Certificates, Etc. We are informed that the minimum number ofshare certificates, etc. to be purchased (13,817,400 shares) is to be the product of
two thirds of the number of voting rights relating to the Total Number of Shares
After Considering Potential Shares (defined below) (207,260 voting rights) (thisamounts to 138,174 voting rights; rounded up to the nearest whole number),multiplied by 100 (13,817,400 shares), which is the share unit number of theCompany. We are informed that because the purpose is to acquire all of theCompany Shares and the Stock Acquisition Rights as part of the Transactions, theminimum number has been set to ensure that the Transactions will be carried out
given that a special resolution in the shareholders’ meeting as provided for in Article
309, Paragraph 2 of the Companies Act (Act No. 86 of 2005; as amended; the same
applies hereinafter) is required for carrying out the procedures for the Share
Consolidation as described in the section below titled “(5) Policy for organizationa l
restructuring after the Tender Offer (matters relating to the “Two-Step
Acquisition”)”).
Note 3: “Ownership percentage” means the percentage ratio (rounded to two
decimal places) of the number of shares (20,726,019 shares) (the “Total
Number of Shares After Considering Potential Shares”) equal to the sum(21,196,200 shares) of the total number of issued shares of the Company
as of March 31, 2022 (21,048,200 shares) as stated in the “BusinessResults for the Fiscal Year Ended March 31, 2022 [Japanese GAAP]
9News Release (6409 TSE)
(Consolidated)” submitted by the Company on May 16, 2022 (the“Company’s Business Results”) and (i) the Company Shares (20,000
shares) underlying the Tenth Series Stock Acquisition Rights (100 stockacquisition rights), (ii) the Company Shares (17,000 shares) underlying the
Eleventh Series Stock Acquisition Rights (85 stock acquisition rights), (iii)the Company Shares (20,000 shares) underlying the Thirteenth Series
Stock Acquisition Rights remaining (100 stock acquisition rights), (iv) the
Company Shares (51,000 shares) underlying the Fourteenth Series Stock
Acquisition Rights (255 stock acquisition rights), and (v) the Company
Shares (40,000 shares) underlying the Fifteenth Series Stock Acquisition
Rights (200 stock acquisition rights), in each case remaining as of today
and as reported by the Company, less the treasury shares (470,181 shares)
owned by the Company as of today. This applies hereinafter in thecalculation of the ownership percentage.
Note 4: We are informed that the minimum number of share certificates, etc. to bepurchased is provisional and depends on the information as of today, andthe actual minimum number of share certificates, etc. to be purchased in
the Tender Offer may differ from the number above due to a change ofsituation occurring hereafter. We are informed that the final minimum
number of share certificates, etc. to be purchased is planned to be
determined before the commencement of the Tender Offer, based on thelatest number of treasury shares owned by the Company available as of thecommencement of the Tender Offer.
We are informed that if the Tender Offer has been successfully completed, but
the Offeror is unable to acquire all of the Company Shares and all of the Stock
Acquisition Rights in the Tender Offer, then the Offeror intends to carry out the
Squeeze-Out Procedures (meaning a series of procedures described in the section
below titled “(5) Policy for organizational restructuring after the Tender Offer(matters relating to the “Two-Step Acquisition”)”, hereinafter the “Squeeze-Out
Procedures”) in order for the Offeror to make the Company a wholly-owned
subsidiary of the Offeror after the Tender Offer is concluded.
We are informed that the Offeror intends to cover the funds required for thesettlement of the Tender Offer by equity contributions by HoldCo (the“Contribution”) and by an intercompany loan from Crosby US, a wholly-owned
subsidiary of HoldCo. We are informed that Crosby US intends to borrow the funds
necessary to permit such intercompany loan through incremental borrowings fromfinancial institutions under its existing credit facilities (the “Debt Financing”) inorder to ensure maximum flexibility for the business operations of the Company
Group and reduce transaction costs by securing financing on more favorable terms
that place fewer obligations on the business operations of the Company Group thanfinancing secured by Offeror itself. We are informed that, with respect to the Debt
Financing, it is possible that a security will be established over part of the Company
Shares or the assets of the Company Group or that the Company Group will provide
10News Release (6409 TSE)a joint guarantee. HoldCo also intends to cover a part of the Contribution throughan equity financing by KKR North America Fund XI L.P., a limited partnershipaffiliated with KKR established under the laws of the U.S.
The Transactions, including the Tender Offer, are conducted as part of theBusiness Combination, and the Offerors and the Company plan to change the tradename of the HoldCo promptly after the Squeeze-Out Procedures to Kito | Crosby.
As a result of this series of transactions Kito | Crosby will indirectly hold all of theshares or equity in the Company, Crosby US, and Crosby UK (Kito | Crosby after
the completion of the Business Combination is hereinafter referred to as the“Combined Company” and the Combined Company and its subsidiaries (i.e., theCompany Group and the Crosby Group) are collectively referred to as the“Combined Group”). Please refer to the Business Combination Press Release fordetails regarding the Business Combination.
The following is the broad outline of the Transaction in diagram form.
<Structure diagram of the Transactions (Note 5)>
I. Before Tender Offer implementation (current state)11

News Release (6409 TSE)KKR Advised
Entities

HoldComanagement
team
Approx. 96.7%

Approx. 3.3%

HoldCoOfferorCompany
shareholders

Other Crosby
US
Subsidiaries

II.

Company

After Tender Offer and Squeeze Out procedure

12News Release (6409 TSE)KKR Advised
Entities

HoldComanagement
team
Approx. 96.7%

Approx. 3.3%

HoldCoOfferorOther Crosby
US Subsidiaries

Company(Note 5: The values in the diagrams are the direct or indirect holding ratios)(ii)

Background, purpose, and decision-making process leading to the decision byOfferors to conduct the Tender Offer
We have been informed that Crosby has had a highly informed admiration for
the Company’s brands, product innovation, product quality, company leadership,and market reputation. We have been informed that it was the 2014 acquisition by
the Company’s US subsidiary KITO Americas, Inc. of Peerless Industrial Group,
Inc. (“Peerless”), which supplied products to Crosby, in which Peerless introduced
Crosby to the Company, that led to Crosby’s admiration for the Company describedabove. Beyond information gathered through these former supply relationships, wehave been informed that Crosby has deepened its understanding of the business of
the Company since November 2016 through publicly available industry
information and insights gathered from trade shows and industry conferences, andregular interaction with the Company’s management, as part of its efforts to identify
potential partners for M&A transactions or other strategic alliances. Also, we havebeen informed that Crosby has confirmed the Company’s positive reputation in the13News Release (6409 TSE)
industry through the appraisals of reputation by channel participants such as
distributors, end users, and suppliers.
We have been informed that, with this kind of positive reputation of theCompany in the background, Crosby understood that there is favorable demand
globally for the products of the Company Group as manufacturing and otherindustries continue to recover from the impacts of the pandemic of COVID-19 in2020 and 2021. Furthermore, we have been informed that Crosby believes that theCompany and Crosby face similar challenges of, lower capital expenditure in
infrastructure and construction-related industries, etc. due to the spread of COVID19, and navigating material shortages such as steel, and inflationary challenges
leading to increased raw material costs, repair componentry costs, and freight andpackaging costs amid higher costs from the impact of current inflation on personnel
costs, raw material prices and transport costs in the current supply chain
environment, and that the Company also understands the importance of overcoming
these issues. We have been informed that Crosby believes the combination of the
Crosby Group and the Company Group would provide more stable operational
resources and flexibility to help manage these dynamic headwinds in the form ofcapital to invest in the business after the Business Combination, sharing practices
from Crosby Group and the companies in the Company Group to ensure even better
safety practices, and product innovation and sharing of ideas by employees,
positioning the combined company to be better equipped to serve customers,
employees, and communities in the face of supply chain challenges and inflationarypressures. As a result, we are informed that Crosby believes that the CombinedGroup would be able to maintain better quality created from sharing manufacturing
practices, and achieve better customer service from sharing talent and greater
combined experience with servicing customers than either Crosby Group or theCompany Group could achieve on their own. Additionally, we are informed that itis believed that the Combined Group would likely be able to utilize theircomplementary capabilities in new product development to create innovations for
new and existing customers of each of the Crosby Group and the Company Group.
Specifically, we are informed that the Company Group has expertise in craneapplications and Crosby Group has expertise in rigging hardware applications(meaning hardware attached to items used for ensuring safety, lifting, and hosting),
which are complementary product areas within the lifting and securement hardware
industry. Moreover, we are informed that it is believed that the Combined Groupcan also use their complementary geographic presences such as Crosby Group
being headquartered in the U.S. and the Company Group being headquartered inJapan, giving the Combined Group better presence globally to service customers
across the globe to add further value to employees, customers, suppliers andcommunities, and to promote sales of the products across a broader geographic
landscape to better serve customers.
We are informed that since the acquisition of Crosby in 2013, KKR has
closely assisted Crosby in its strategic decision-making processes, including
providing advice on Crosby’s acquisition strategy. We are informed that KKR’s
three senior investment professionals and two senior advisors are members of
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News Release (6409 TSE)
Crosby’s board of directors. We are informed that KKR and Crosby US entered intoa monitoring agreement, and as part of the services under this agreement, that KKR
provides Crosby with (i) identification, support, negotiations, and analysis ofacquisition targets and sales targets, and (ii) support for financing and strategic
support for negotiations and analysis, not limited to those entailed by acquisitions.
We are informed that KKR is in regular discussion with the management team of
Crosby to assist in identifying and evaluating acquisition targets, assisting in due
diligence, and assisting in the integration of acquisition targets into Crosby, as withother investment targets. We are informed that through such discussions, KKR and
Crosby have identified several potential strategic partners including the Company.
We are informed that through the process of due diligence on the Company, KKR
assisted Crosby in its evaluation of the Company and ultimately is providing
support for the Transactions given the strategic merits of the Combined Group.
Informed by the information gathered through research on the Company using
publicly available information and insights gathered from trade shows and industry
conferences as part of its general research to identify potential partners for M&A
transactions including business integration or other strategic alliances andimpressed by its strong franchise and operating performance, we are informed that
Crosby, as one of the specific strategy partner candidates, initiated a dialog with theCompany’s senior management team starting in early June 2021 for the purpose of
seeking possibilities of M&A or other business alliances. On Crosby initiallyintroducing KKR to the Company, KKR agreed with Crosby’s idea of holding
dialogue with the Company. These conversations involved provisional strategic
discussion on the respective businesses and on the structure of an alliance, including
a strategic alliance, minority investments, joint venture and business combination ,which we are informed allowed Crosby to further hone its appreciation for theCompany’s business and how a business combination of Crosby and the Company
would maximize corporate value of both companies and benefit customers andsuppliers by expanding high quality product offerings, increasing service levels for
distributors, and realizing procurement and manufacturing efficiencies. On the basisof discussions relating to those initial strategies, Crosby decided to start talks
relating to a potential business combination with the Company. Thereafter, througha series of touchpoints and check-ins by Crosby with the Company’s senior teamover the subsequent months (early June 2021 to mid-February 2022), we areinformed that Crosby came to gain a strong conviction regarding the strategic meritsof a business combination between the Company and Crosby as Crosby was able tounderstand and appreciate the Company’s management philosophy, corporate
culture, business operation focusing on the quality and safety of its products anddeepened discussions regarding the viability of synergy creation opportunities , andthat it would unlock significant value for all stakeholders in a way that is materiallydifferent from alternative partners which Crosby considered and examined as
potential partners or standalone options by expanding high-quality products,
improving service levels to distributors and streamlining procurement andproduction. We are informed that Crosby examined transaction schemes to achieve
the Business Combination with advisors. We are informed that Crosby sought the15

News Release (6409 TSE)
advice of KKR as KKR has experience of multiple transactions, KKR provided
business management strategy to Crosby, and senior investment professionals andsenior advisors of KKR were members of the board of directors of Crosby. We areinformed that, based on advice from experts and KKR, Crosby reached a conclusionthat a tender offer followed by squeeze-out procedures would be the mostappropriate structure to choose for the Transactions, considering that (i) the Offeror
can make the Company its wholly-owned company and conduct the Business
Combination between the Company Group and Crosby Group, (ii) the structure andprocedure of the transaction are simple compared to conducting a corporate
reorganization under the Companies Act of Japan or other transactions, given that
the Offerors are foreign entities and have no existing capital relationship with theCompany, (iii) the transaction could offer the shareholders of the Company anopportunity to sell their shares with premiums if the transaction terms areappropriate, and (iv) it is a common method of taking a Japanese listed company
private. We are informed that KKR supported the selection of this structure for thesame reasons. We are informed that it was concluded that after the Business
Combination, as stated in (i) “Outline of the Tender Offer”, Crosby US and Crosby
UK would become sister companies of the Company, and that, in order to enable
the Combined Group and Crosby Group to enact a smooth business combinationand conduct operations in a spirit of equality to maximize the corporate value of the
Combined Company group, the Offeror would conduct the Tender Offer, rather thansubsidiaries including Crosby US and Crosby UK acting as the tender offeror.
Ultimately, we are informed that Crosby submitted a legally non-binding letter ofintent to the Company on February 14, 2022 proposing a business integration of theCompany Group and the Crosby Group through a Tender Offer for Company Sharesfollowed by a squeeze out (the “Letter of Intent”). We are informed that the timingof the submission of the Letter of Intent to the Company was motivated by thecurrent macroeconomic environment such as material shortages and inflationarypressures described above, which we are informed that Crosby believes to be wellsuited to bring together the Companies because the Combined Group will haveaccess to more resources to solve these challenges. Specifically, we are informedthat Crosby believes the increased focus on infrastructure spending and safety – asdemonstrated by the passing in the U.S. of the $550 billion Infrastructure
Investment and Jobs Act signed on November 15, 2021 – highlights the need for
the Combined Group to invest in innovation, quality, and customer service for theCompany Group and Crosby Group product categories. As described previously,
we are informed that Crosby believes the combined businesses will be better able
to support customers in the global infrastructure, wind energy, and entertainment
industries through enhanced investment in new products, a more responsive supply
chain and product delivery mechanism, and broader access to end-user training. We
are informed that these initiatives would be lesser served by Crosby Group and theCompany Group separately because the individual entities would have fewer
resources, in the form of capital for investment, people engaged in research anddevelopment, and ideas for improving safety, and thus would not be able to expand
the product portfolio and develop a stronger supply chain. We are informed that this16

News Release (6409 TSE)
is viewed as particularly important given the difficult supply chain environment
businesses are currently facing, making the benefits of a combination compellingat this time.
The Company responded to the Letter of Intent on February 25, 2022,
allowing Crosby to initiate due diligence. Also, in this response, it was stated thatthe board of directors of the Company discussed the Letter of Intent, including thestrategic merit presented by Crosby, and approved establishing a special committee
to evaluate the proposal.
Crosby and the Company commenced due diligence mutually from aroundearly March 2022 and we are informed that Crosby focused on developing a deeper
understanding of the Company’s mid-term financial plan as well as confirmatory
due diligence concerning areas such as accounting, tax, legal, information
technology, benefits, insurance, and environmental topics. Through discussions
with Company related to its mid-term financial plan, we are informed that Crosby
developed a deeper understanding of the standalone objectives of the Company,
which further affirmed the potential for value creation of the combined entity.
We are informed that through such diligence and various analysis anddiscussions, Crosby reconfirmed its belief that the Business Combination would
unlock significant value for all stakeholders in a way that is materially different
from alternative partners which Crosby considered and examined as potential
partners or standalone options by expanding high-quality products, improving
service levels to distributors and streamlining procurement and production. We areinformed that Crosby believes that the Business Combination would result in strong
value delivered to both companies’ end-users, employees, channel partners,
suppliers, and shareholders. We are informed that based on having completed the
majority of due diligence in mid-April 2022, Crosby is convinced that the Company
Group and Capella Group, through the Business Combination, will be best
positioned to deliver increased value across a wide range of areas and generatesynergies, including the matters stated below.
• Higher investment in areas such as product development, market research, andexpertise in core areas such as metallurgy, additive manufacturing, andtechnology to drive continued leadership in innovation and safety. Superior
product innovation will, we are informed, be driven by the ability to enhanceinvestment in engineering and product design, yielding benefits across a larger
portfolio of products to best serve the joint end-user base of the Company
Group and Crosby Group. In addition, we are informed that the Company
Group and Crosby Group can bring complementary engineering and productcapabilities to this combination; specifically, the Company Group’s corecapability being in mechanical and electro-mechanical disciplines while
Crosby Group brings its capabilities in metallurgy and metal forming
technologies and products, together these areas of competencies will enable
new and innovative products that blend both disciplines. We are informed that
the Company Group and Crosby Group each contribute mutually to the
profitability that enables efficient investments in product development andmarket research, which can be shared across both teams.
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News Release (6409 TSE)•••

Continued advancements in the safety culture shared by the Parties byimplementation of a global safety council, leveraging best practices andincreased financial resources for greater investment in safety initiatives. We areinformed that the Company Group and Crosby Group both have a safety
mindset, which is evidenced by the fact that both companies received the
Associated Wire Rope Fabricators (AWRF) Safety Award in North America in2020 and will share such mindset in the combined business. We are told thatwhile the Companies each have some unique core manufacturing processes(e.g., forging for Crosby Group, machining and robotics for the Company
Group), their somewhat different sets of safety practices can be shared acrossthe combined business to create a single set of best practices, which will
ultimately drive increased worker safety.
Increase in opportunities for all employees through expanded and diverse
career and development paths which would be achieved through more diverse
international rotational assignments, as well as the overall increased size andscope of activities that allow for new opportunities within local regions. We
have been informed that broader and more diversified career paths in the
Combined Group will enable attraction and retention of the best available talent
in the market driving innovation and productivity. We are informed that theCompany Group and Crosby Group both equally bring a focus on the treatmentof team members to the Business Combination. We are informed that theincreased size and scope of the combined business allows for team members
from both businesses to have an opportunity for larger roles in the combined
business. We are informed that it is considered that the Company Group and
Crosby Group each contributing mutually to profitability will enable efficientinvestments in training, development of rotational programs or temporary
overseas assignments.
Improved ability to invest in and deliver on ESG (Environment, Social, andGovernance) metrics such as environmental stewardship, a diverse andengaged workforce, and a strong focus on governance and corporate social
responsibility. We are informed that examples of Crosby Group’s
environmental stewardship include installation of LED lighting at
manufacturing facilities, inclusion of EVs in the corporate leasing program,and EV charging stations at select locations, we are informed. We are informedthat Crosby is in the process of creating an environmental CAPEX subcommittee to prioritize further investments in ESG, irrespective of short-term
financial returns. We are informed that Crosby Group has also focused its M&A
strategy on the renewable energy market, such as the 2021 acquisition of Airpes
Sistemas Integrales de Manutencion Y Pesaje S.L., established in Spain and aleader in lifting tools used during the erection of wind turbines, and that forevery transaction completed, a comprehensive environmental audit isconducted by third parties. We are informed that the Companies value ESG
initiatives, as further evidenced by Crosby’s provision of the UpLift Women’s
network, which is an internal organization to connect the female officers andemployees of Crosby through regular meetings and speaker series that provide
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News Release (6409 TSE)••

leadership and developmental training; investment in the community throughpartnerships with Children of Fallen Patriots, a foundation in the United Statesthat provides college scholarships and educational counseling to militarychildren who have lost a parent in the line of duty, investments in local society
through Bridges to Prosperity, a nonprofit organization in the United States thatworks to eliminate rural isolation through the building of bridges, andinvestments in improving the work environment and worker welfare, and by
the Company’s “A” rating for ESG Management by Mitsubishi UFJ Researchand Consulting, supported by the Japan Credit Agency, introduction ofeffective zero CO2 energy at the Company’s manufacturing facilities(announced March 31, 2022), provision of products for wind power generators,
and disabled employee ratio of close to 7%, well above and beyond thestatutory rate of 2.2%. We are informed that the Company Group and Crosby
Group bring complementary areas of focus for investing in the communities inwhich they operate. We are informed that the Company Group’s higher levelof focus and experience in areas such as environmental issues and employment
of disabled persons is complementary with Crosby Group’s historical focus on
higher education and hands on building and construction for underprivileged
communities. We are informed that, through cooperation by both companies,
there is the potential to enhance their communities in a broader array of areas
than either company could on its own.
Expansion of high-quality products and solutions to efficiently allow end-users
and channel partners to procure from a trusted provider. We are informed that
it is considered that end-users will be able to experience higher levels of
efficiency and safety in their organizations through better technical, application,and training support from the Combined Group, as well as through increased
product innovation.
Increase in commitment to the local communities in which the Company Groupand Crosby Group operate by expanding opportunities for community service,
engagement, and support of causes important to local populations. We areinformed that both the Company Group and Crosby Group independently havevolunteering and community outreach programs that it is considered can be
expanded through the Business Combination due to increased availability ofresources. We are informed that Crosby Group’s community involvement
includes a partnership with Bridges to Prosperity, an organization that works toeliminate rural isolation through the building of pedestrian bridges. We areinformed that Crosby Group donates products and provides training andexpertise required for the construction of pedestrian bridges throughout Eastern
Africa, and sends team members to Uganda to assist in the construction ofpedestrian bridges.

We are informed that in order to achieve the above, Crosby believes that it isessential to privatize the Company through the Business Combination. We are toldthat the reason is that Crosby believes that by privatizing the Company, it will
become possible to create an environment in which the management will have the19News Release (6409 TSE)
flexibility to make decisions and investments that will yield long-term benefits forthe business, customers, team members, and communities. We are informed that
Crosby also believes that it is necessary to privatize the Company because
frictionless exchange of information and ideas would not be possible in a minority
investment or making the Company a subsidiary whose shares remain listed, given
the practical and legal limitations on integration of teams and business strategy
deployment for public companies with minority shareholders, as well as
communication channels and day-to-day cooperation that are limited from theperspective of confidentiality, and potential conflicts of interests with minority
shareholders that can occur even with optimized decision making as the CombinedGroup. We are informed that by making the Company a wholly owned subsidiaryof the Tender Offeror and creating an integrated group, the Combined Group would
be able to have management team members and the broader employee base movefreely between organizations to openly share best practices, support investment inproduct innovation and intellectual property development, and invest in growth
without practical and legal hindrance or conflicts of interest. We are informed thatsince it will become easier to communicate without conflicts of interest andinterests will become aligned after making the Company a wholly-owned subsidiary,
this type of open exchange of information without restriction and support ofinvestment in product innovation and intellectual property development would be
extremely difficult in a minority investment or making the Company a subsidiary
whose shares remain listed.
We are informed that, based on the review process above and consultationand negotiation with the Company, KKR decided to support Crosby in its decision
to pursue the Transactions, and that Crosby has been in discussions and negotiations
with the Company and the special committee regarding whether to implement theTransactions and the terms and conditions including the details of the transaction
structure, as well as the management and operational plans after the Business
Combination, and Crosby submitted a non-binding proposal on April 27, 2022
regarding the tender offer price in the Tender Offer (the “Tender Offer Price”) (the“First Proposal”).
We are informed that Crosby conducted a comprehensive and multifaceted
analysis of the Company’s business, financial status, and future plan, and made theTender Offer Price in the First Proposal JPY 2,400, considering that (i) Crosby
believed the price would not cause any disadvantages to the shareholders of theCompany, given the premiums of the Tender Offer Price to market prices of theCompany Shares as of April 26, 2022 were (a) 39.70% to the simple average closing
prices of the Company Shares over the preceding one-month period of JPY 1,718,(b) 41.34% to the simple average closing prices of the Company Shares over thepreceding three-month period of JPY 1,698, and (c) 36.21% to the simple averageclosing prices of the Company Shares over the preceding six-month period of JPY
1,762, and (ii) Crosby could provide the shareholders that purchased the Company
Shares at a higher price than the current price over the past three years with anopportunity to sell the Company Shares at a higher price than the purchase prices
for such shareholders, given the highest closing price of the Company Shares over20

News Release (6409 TSE)
the past three years was JPY 2,055. We are informed that there was no specificproposal for the purchase price of the stock acquisition rights of the Company(“Stock Acquisition Rights Tender Offer Price”) in the First Proposal because theTender Offer Price was proposed on a fully diluted basis assuming all Stock
Acquisition Rights have been fully exercised (i.e., the total number of shares is
20,724,019 shares (note)).
Note: Based on information obtained by Crosby as of the submission date of theFirst Proposal (April 27, 2022), the sum of the total number of issued sharesof the Company as of December 31, 2021 (21,048,200 shares) as stated in the“Business Results for the Third Quarter For the Year Ending March 31, 2022
[Japanese GAAP] (Consolidated)” submitted by the Company on February 8,2022 and (i) the Company Shares (20,000 shares) underlying the Tenth Series
Stock Acquisition Rights (100 stock acquisition rights), (ii) the Company
Shares (17,000 shares) underlying the Eleventh Series Stock Acquisition
Rights (85 stock acquisition rights), (iii) the Company Shares (20,000 shares)
underlying the Thirteenth Series Stock Acquisition Rights remaining (100stock acquisition rights), (iv) the Company Shares (51,000 shares) underlying
the Fourteenth Series Stock Acquisition Rights (255 stock acquisition rights),and (v) the Company Shares (40,000 shares) underlying the Fifteenth Series
Stock Acquisition Rights (200 stock acquisition rights), in each caseremaining as of February 28, 2022 and as reported by the Company, less thetreasury shares (472,181 shares) owned by the Company as of December 31,
2021.
On May 2, 2022 after the submission of the First Proposal, Crosby received
a request from the Company to raise the Tender Offer Price to JPY 3,000 on thebasis that the Tender Offer Price did not sufficiently reflect the corporate value of
the Company in light of consultation with the special committee. Crosby also
received a request to submit the Stock Acquisition Rights Tender Offer Price.
On receiving the request from the Company, Crosby examined raising theprice, and on May 5, 2022 submitted a non-binding proposal (“Second Proposal”)
with the Tender Offer Price of JPY 2,550 (the premiums of the Tender Offer Price
to market prices of the Company Shares as of May 2, 2022 were (a) 50.71% to thesimple average closing prices of the Company Shares over the preceding one-month
period of JPY 1,692, (b) 50.18% to the simple average closing prices of theCompany Shares over the preceding three-month period of JPY 1,698, and (c)44.39% to the simple average closing prices of the Company Shares over thepreceding six-month period of JPY 1,766 ) and the Stock Acquisition Rights Tender
Offer Price of the product of the difference between the Tender Offer Price and theexercise price per Company Share for each Stock Acquisition Right multiplied by
the 200 Company Shares that underlie each such Stock Acquisition Right.
On May 10, 2022 after the submission of the Second Proposal, Crosby
received a request from the Company to raise the Tender Offer Price to JPY 2,900
on the basis that the Tender Offer Price did not sufficiently reflect the corporate
value of the Company in light of consultation with the special committee.
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News Release (6409 TSE)
On receiving the request from the Company, Crosby examined raising theprice, and on May 10, 2022 submitted a non-binding proposal (“Third Proposal”)
with the Tender Offer Price of JPY 2,650 (the premiums of the Tender Offer Price
to market prices of the Company Shares as of May 9, 2022 were (a) 58.11% to thesimple average closing prices of the Company Shares over the preceding one-month
period of JPY 1,676, (b) 56.25% to the simple average closing prices of theCompany Shares over the preceding three-month period of JPY 1,696, and (c)50.14% to the simple average closing prices of the Company Shares over thepreceding six-month period of JPY 1,765 ).
On May 11, 2022 after the submission of the Third Proposal, Crosby received
another request from the Company to raise the Tender Offer Price to JPY 2,900 on
the basis that the Tender Offer Price did not sufficiently reflect the corporate valueof the Company in light of consultation with the special committee.
On receiving the request from the Company, Crosby examined raising theprice, and on May 13, 2022 submitted a proposal (“Fourth Proposal”) with theTender Offer Price of JPY 2,725 (the premiums of the Tender Offer Price to market
prices of the Company Shares as of May 12, 2022 were (a) 63.08% to the simple
average closing prices of the Company Shares over the preceding one-month periodof JPY 1,671, (b) 60.96% to the simple average closing prices of the Company
Shares over the preceding three-month period of JPY 1,693, and (c) 54.57% to thesimple average closing prices of the Company Shares over the preceding six-month
period of JPY 1,763 ). We are informed that as a result, Crosby received a responseto accept the Tender Offer Price under the Fourth Proposal from the Company on
the condition that Crosby submits a binding final offer setting the Tender Offer Priceat JPY 2,725. Based on such response from the Company, on May 14, 2022, Crosby
submitted a final binding proposal that the Tender Offer Price shall be JPY 2,725
and the Stock Acquisition Rights Tender Offer Price shall be the amount obtainedby multiplying 200, which is the number of the Company Shares represented byeach of such stock option, by the difference between the Tender Offer Price and theexercise price of each stock option per the Company’s common shares and, on thesame date, the Company agreed on such final offer.
We are informed that based on the response from the Company describedabove, on May 16, 2022, Crosby finally determined the Tender Offer Price to be
JPY 2,725 and the Stock Acquisition Rights Tender Offer Price to be the product ofthe difference between the Tender Offer Price and the exercise price per Company
Share for each Stock Acquisition Right multiplied by the 200 Company Shares that
underlie each such Stock Acquisition Right, and the Offerors determined today tocommence the Tender Offer on the condition that the Tender Offer Conditions
Precedent are satisfied or waived, with the Offerors having considered alternatives
to maximizing corporate value, management and operational plans, the recent
performance of the Company, key takeaways from due diligence conducted by
Crosby (including growth trends in the U.S. and Asia, future investment plans into
the business, and potential for synergy creation through complementary products) ,the price trend of the Company’s shares, economic sentiment, whether theCompany’s management and the special committee would endorse the transaction,
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and the prospect of the shareholders accepting the Tender Offer.,(iii)

Management policy after the Tender Offer
We are informed that if the Tender Offer has been successfully completed, theOfferor intends to make the Offeror the sole shareholder of the Company as statedin the section above titled “(1) Summary of the Tender Offer.” We are informed thatafter the completion of the Squeeze-Out Procedures, an absorption-type merger (the“Merger”) is scheduled to be implemented between the Company and the Offeror,
with the Company as the surviving company. After the Merger takes effect, theHoldCo will directly own all shares of the Company. Note that, as of today, theHoldCo does not have specific plans to assign the Company’s shares to a third partyor regarding reinvestment in the Company by a third party through the HoldCo.
We are informed that after completion of the Transactions, the CombinedGroup will be operated with the purpose of achieving a smooth integration andmaximizing the corporate value of the Combined Group in a spirit of cooperation,
valuing the brands, employees, customers, suppliers, communities, and plantfacilities of Crosby Group and the Company Group as "One Company, One Teamand One Mission" on an equal footing, and balance certain levels of autonomy of
the businesses of the Company and Crosby Group with the harmony andconsistency of Kito | Crosby as a whole. The Combined Group will also implement
measures to enhance the Company’s corporate value with a view to further growand globalize the Company by deploying and utilizing management resources,
global industry knowledge, and a global network that Crosby Group can provide,
as well as utilizing the solid business foundation that the Company has built to date.
Under the Business Combination Agreement, HoldCo, Crosby US, Crosby
UK, and the Company have also agreed on the governance and operation of the
Combined Company. Please refer to the section below titled “4. Matters Concerning
Tendering in Response to the Tender Offer by the Company’s Shareholders andMaterial Agreements Pertaining to the Tender Offer” for the details of the Business
Combination Agreement.
(iv)

Decision-making process and reasons leading to Company approval of theTender Offer
Business environment for the Company and the Company’s
management challenges
Since the Company was founded in November 1932 by its founder,
Miyoshi Kito, in Omori (Ota Ward, Tokyo) as The Kito Manufacturing
Company, it has earned deep trust for its development of a business
manufacturing and selling material handling devices (Note) that are vital for
lifting, carrying and immobilizing items. The Company began overseas
expansion in earnest with the creation of a US subsidiary in 1990, and today
has 17 business subsidiaries operating in 15 countries, including in North
America, Asia, and European countries, with revenue outside Japan
responsible for around 75% of the total revenue of the Company group. The(a)

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Company’s products and services demonstrate high levels of durability andsafety to meet sustained demand at all levels of economic development, andmoreover have evolved to meet the needs of the wide range of industries thatneed a high level of safety and efficiency in handling heavy items. The
Company’s biggest management challenge continues to be to always look at
problems from the customer’s perspective on-site for those in material
handling around the world, making new proposals, earning the trust of themarket by providing products and services that achieve those proposals, andbecoming “the world’s best hoist manufacturer” by supporting the conduct ofsafe and productive activities in society by customers and adding value tosociety. The Company has as its corporate mission, “KITO’s Mission: Deliver
Unmatched Satisfaction to Our Customers”, “KITO’s Quality: Our Driving“Spirit” is “Quality””, “KITO’s Innovation: Change and Challenge Always”,
and “Value of KITO People: Integrity, Honesty Pride and Gratitude.” Basedon this, the Company is achieving support for safe and efficient social
activities by providing high quality products and services from the customer’s
point of view and is aiming for corporate management that earns the trust ofsociety while building relationships with shareholders, investors and all
stakeholders in the Company Group.
(Note) “Material handling devices” means chain blocks, lever blocks, rope
hoists, cranes, and other handling devices used to make the storage,transportation, and immobilizing of heavy items and other logistics
business more efficient.
After its founding, the Company carried out an entity conversion to alimited partnership company in June 1937, and then in July 1944, it bothcarried out an entity conversion to a joint stock company and changed its tradename to Kito Kousa Kiki Kogyo Co., Ltd. It changed its trade name to The
KITO Manufacturing Company in November 1945, and then changed its
trade name to the current KITO CORPORATION in November 1970.
Thereafter, it listed its shares as over-the-counter registered stock with theJapan Securities Dealers Association in October 1980. Since then, theCompany’s earnings and profits continued to trend upwards and it expanded
the size of its business, but with a prolonged domestic economic slowdown
in Japan after the collapse of the 1990’s bubble economy and difficult
financial circumstances, the Company aimed for an overseas expansion
centered on the U.S. and a fundamental reform of its financial footing. In July
2003, with the backing of the Carlyle Group, a private equity fundheadquartered in the U.S., the company announced a management buyout,which involved execution of a tender offer for the Company Shares by Carlyle
Japan Holdings 3 Co., Ltd. ("CJP3”), wholly owned by Carlyle Group, a shareexchange for cash consideration, and an absorption-type merger that made theCompany the surviving company and CJP3 the disappearing company, andwhich led to the delisting its shares as over-the-counter registered stock in
October 2003. After de-listing, in collaboration with Carlyle Group, the24News Release (6409 TSE)
Company on the one hand developed a swift decision-making system andstrengthened its business foundation, and as one aspect of strengthening themanagement of its overseas businesses, worked to strengthen and expand its
overseas business primarily in the US and China markets, strengthen its
finances, and execute mergers and acquisitions transactions to divest
unprofitable businesses and acquire or form business alliances, etc. with local
companies overseas. As a result, it built a strong base for business growth, ascompared to the Company’s sales of JPY 20,759 million and operating profitof JPY 1,002 million in the fiscal year to March 2003 before the de-listing ,both sales and operating profit grew to JPY 24,244 million yen and 3,207
million yen, respectively, in the fiscal year to March 2007 after the de-listingof the Company Shares but before their re-listing on a financial instrument
exchange market. Thereafter, in order to achieve the Company’s own targetof becoming “the world’s best hoist manufacturer,” and given the equity
funding needs to invest in growth and the fact that the Company had built aframework to seek to stabilize its business and finances and make possible
realization of sustainable income and expenditures as a result of a series ofstructural reforms, to secure access to the stock market, gain societal trust andfurther raise brand awareness, the Company listed on the first section of themarket established by TSE in August 2007. As of today, based on
restructuring of the market divisions of the TSE, the Company is listed on thePrime Market, a new market segment of the TSE.
As of today, the Company Group’s primary business is the development,
manufacture and sales of material handling equipment such as hoists, cranes
and peripheral devices.
Based on the aforementioned management policy, in its five-year
medium-term management plan from the fiscal year to March 2017 until thefiscal year to March 2021, the Company aimed for further expansion of thescale of profits, listing a return to high profitability, an expanded productportfolio, and conversion to a global organization. Some success wasachieved towards these goals, and the Company achieved its highest sales
figure yet in the fiscal year to March 2022. However, there was also an impact
from external factors such as weakened demand for material handling devices,which was affected by the slowdown in capital expenditure in automobilerelated industries, etc. due to the extended Coronavirus pandemic, with theactual value of EBITDA for the fiscal year to March 2021, which had beentargeted to double to JPY 13 billion in five years, being JPY 7.5 billion, andas a result the Company was not able to achieve the targeted expansion of thescale of profits. Going forward, in addition to steadily capturing the increasein demand resulting from a return to economic activity as the Coronavirus
pandemic subsides, the Company is aware of the urgent task of secure
profitability growth exceeding the cost increases resulting from personnel
expenses and raw materials prices affected by inflation pressures and soaring
transportation expenses and the like, and of achieving profit growth through25

News Release (6409 TSE)
expansion of its Europe business.
In the medium term, the Company believes that in order to achieve
further growth globally in the hoist and crane industry in which the Company
operates, it is essential for it to win greater business in the material handlingfield in which the Company has a strong position, and maximize added value
for customers by expanding the product line up and fields of services. Basedon the ongoing hoist and crane industry changes and accelerating moves by
the Company’s competitors to peripheral businesses, in order for theCompany group to raise its overall business to the next stage without being
buffeted by the business environment or social circumstances and to ensure
medium and long-term growth, the Company understands the current
circumstances to require agile and rapid expansion of its business domain
through decisive management actions and bold investments in resources.
Given these management challenges and business environment, theCompany has considered various management strategies the Company could
take to enhance corporate value, and among those, has heretofore repeatedly
considered measures with respect to a business alliance or a businessintegration, and as one aspect of that, an M&A transaction, with a partner who
will promote globalization of the business and organization and who will
supplement expansion of the product lineup.
(b)

Background to formulation of examination framework
Given this situation, as described in the section above titled “(ii)Background, purpose, and decision-making process leading to the decision
by Offerors to conduct the Tender Offer,” since early June 2021, theCompany’s senior management team and Crosby held repeated discussions
aimed at realizing the enhancement of the corporate value of both companies,
and then in October 2021, the Company appointed the law firm Nishimura &Asahi as legal counsel independent from the Offerors, KKR, and theCompany and from the success or failure of the Business Combination(including the Transactions), and began consultations on a response to thediscussions with the Offerors. Then, on February 14, 2022, in order to achievea business combination of the Company and Crosby Group, Crosby
communicated to the Company the formal Letter of Intent regarding
implementation of the Business Combination, its intention of wishing tocommence substantive examination of the Business Combination, together
with the background leading to the proposal of the Business Combination andthe purpose and intentions behind the Business Combination. In response toreceiving the Letter of Intent, in order to seriously examine the Business
Combination, including the Transactions, in mid-February 2022 the Company
appointed Nomura Securities, Co., Ltd. ("Nomura Securities”) as a financial
adviser independent from the Offerors, KKR, and the Company and from thesuccess or failure of the Business Combination (including the Transactions),
embarked on an examination aimed at growth in competitiveness in the global
market and the scale of profits over the longer term through corporate
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News Release (6409 TSE)
reorganization, and conducted a careful examination from the perspective of
the interests of stakeholders to various ways in which the corporate value of
the Company can be enhanced, including by a business combination by meansof privatization or reorganization through a tender offer.
The Business Combination (including the Transactions) does notconstitute a transaction, etc. with a controlling shareholder, but from theperspective of exercising the utmost care to ensure the fairness of theTransactions, based on the advice of Nishimura & Asahi, the Company
immediately formulated a framework for examining and determining whether
to proceed with the Business Combination (including the Transactions) andthe appropriateness of its transaction terms and conditions and the fairness ofprocedures from the perspective of seeking enhancement of corporate value
and benefiting general shareholders independently from the Offerors, theCompany and the success or failure of the Business Combination (including
the Transactions). Specifically, at a board of directors meeting of theCompany held on February 21, 2022, along with resolving to create a special
committee comprised of three of the Company’s outside directors Katsumi
Nakamura, Takashi Hirai, and Koji Osawa, the Company’s board of directors
resolved to pay maximum respect to the findings of the special committee,
including on whether to approve or disapprove the Tender Offer, when
making decisions regarding the Business Combination (including theTransactions), and if the special committee were to determine that thetransaction terms and conditions of the Business Combination (including theTender Offer) are not appropriate, the Company’s board of directors resolved
not approve the Business Combination (including the Tender Offer). As notedin the section below titled “(i) Establishment of an independent special
committee at the Company” under “(6) Measures to ensure the fairness of theTender Offer, such as measures to ensure fairness of the Tender Offer Priceand measures to avoid a conflict of interest”, as well as approving theappointment of Nomura Securities as the Company’s financial advisor andthird-party appraiser and the appointment of Nishimura & Asahi as theCompany’s legal advisor upon confirming their independence, expertise, andtrack record, etc., the Company also appointed the law firm Anderson Mori
& Tomotsune as independent legal advisor to the special committee upon
confirming their independence, expertise, and track record, etc.
Please refer to the section below titled “(i) Establishment of an
independent special committee at the Company” under “(6) Measures toensure the fairness of the Tender Offer, such as measures to ensure fairness of
the Tender Offer Price and measures to avoid a conflict of interest” for details
regarding the background to the establishment, etc. of the special committee ,its structure, process for examination, and details of decisions, etc.
(c)

Background of examination and negotiations
Having formulated the examination framework described in (b) above,
the Company received a report on results of the valuation of the Company
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News Release (6409 TSE)
Shares, advice on the negotiation stance with the Offerors, and other advice
from a financial perspective from Nomura Securities, and received guidance
and other legal advice from Nishimura Asahi on ensuring the fairness of theprocedures for the Business Combination (including the Transactions), andbased on this, the company conducted a careful examination of whether toproceed with the Business Combination (including the Transactions) and theappropriateness of the transaction terms and conditions.
Since mid-April 2022, the Company has held repeated consultations andnegotiations with Crosby regarding the implementation of the Transaction,transaction terms including details of the transaction structure, and the
management and business operation plan after the Business Combination.
Specifically, on April 27, 2022, as a result of due diligence conducted on the
Company from mid-March 2022 through the beginning of April 2022, theCompany received the First Proposal from Crosby after it comprehensively
considered whether the Company’s board of directors would endorse theTender Offer and the prospect of the shareholders accepting the Tender Offer,etc. In the First Proposal, there was no specific proposal for the Stock
Acquisition Rights Tender Offer Price because the Tender Offer Price wasproposed on a fully diluted basis assuming all Stock Acquisition Rights havebeen fully exercised (i.e., the total number of shares is 20,724,019 shares).
On May 2, 2022, after the submission of the First Proposal, Crosby
received a request from the Company to raise the Tender Offer Price to JPY
3,000 on the basis that the Tender Offer Price did not sufficiently reflect thecorporate value of the Company in light of consultation with the special
committee. Crosby also received a request to submit the Stock Acquisition
Rights Tender Offer Price.
After receiving the request from the Company, Crosby examinedraising the price, and on May 5, 2022 submitted the Second Proposal, which
is a non-binding proposal.
On May 10, 2022, after the receipt of the Second Proposal, Crosby
received a request from the Company to raise the Tender Offer Price to JPY
2,900 on the basis that the Tender Offer Price did not sufficiently reflect thecorporate value of the Company in light of consultation with the special
committee.
After receiving the request from the Company, Crosby examinedraising the price, and on May 10, 2022 submitted the Third Proposal, which
is a non-binding proposal.
On May 11, 2022, after the receipt of the Third Proposal, Crosby
received another request from the Company to raise the Tender Offer Price to
JPY 2,900 on the basis that the Tender Offer Price did not sufficiently reflect
the corporate value of the Company in light of consultation with the special
committee.
On receiving the request from the Company, on May 13, 2022, Crosby
submitted the Fourth Proposal, which is a non-binding proposal, and theCompany reached the conclusion that that price was also appropriate from the28

News Release (6409 TSE)
perspective of the interests of minority shareholders. The Company accepted
the Tender Offer Price in the Fourth Proposal on the condition that Crosby
will make a binding proposal with a Tender Offer Price of JPY 2,725.
As a result of this response by the Company, on May 14, 2022, Crosby
submitted a final binding proposal, proposing the Tender Offer Price of JPY
2,725 and the Stock Acquisition Rights Tender Offer Price of the amountfound by multiplying the difference between the Tender Offer Price and theexercise price per Company Share for each Stock Acquisition Right
multiplied by the 200 Company Shares that underlie each such Stock
Acquisition Right. In response, after consultation with the special committee,
on the same date, because the Company agreed with Crosby on the approachthat the best method of realizing a quick response to the changes in thebusiness environment facing the Company and contributing to theenhancement of the Company’s corporate value would be to implement theBusiness Combination by making the Offeror the sole shareholder of theCompany and de-listing the Company Shares, it accepted the content of that
final proposal.
Based on the background set forth above, at the board of directors
meeting of the Company held today, a resolution was made that if the Tender
Offer commences, the position of the company as of this date is that it will
declare a position in support of the Tender Offer and that it will recommendthat the Company’s shareholders and Stock Acquisition Right Holders accept
the Tender Offer.
In the process of the aforementioned examinations and negotiations, theCompany has continually reported important matters to the special committee ,and where necessary has received its approval. Specifically, the special
committee has confirmed and approved the reasonableness of the content,material conditions precedent, and background to its preparation, etc. of theBusiness Plan (defined below in the section below titled “(ii) Outline of the
Calculations” under “(3)Calculations)”; same hereinafter) that forms thebasis of the valuation of the Company Shares by Nomura Securities and thatwas presented to Crosby. Furthermore, in negotiating with Crosby, theCompany has handled these negotiations based on the negotiation stancediscussed and determined by the special committee in advance, and when
proposals were received from Crosby regarding the Tender Offer Price andStock Acquisition Rights Tender Offer Price, these were each reported
immediately to the special committee and handled based on the special
committee’s opinions.
Finally, the Company has today received from the special committee
the Report to the effect that (a) the Business Combination (including theTender Offer) will contribute to enhancement of the corporate value and that
purpose can be found to be reasonable, (b) the terms and conditions of theTransactions (including the Tender Offer) can be found to be appropriate, (c)the fairness of procedures pertaining to the Business Combination (including
the Tender Offer) can be found to be assured, (d) based on (a) through (c)29News Release (6409 TSE)
above, it can be found that the Business Combination is not disadvantageous
to general shareholders of the Company, and (e) it concludes that it isappropriate for the Company’s board of directors to resolve to declare aposition in support of the Tender Offer and to recommend that the Company’s
shareholders and Stock Acquisition Right Holders accept the Tender Offer, atthe time of the announcement of the Tender Offer. (Please refer to the section
below titled “(i) Establishment of an independent special committee at theCompany” under “(6) Measures to ensure the fairness of the Tender Offer,such as measures to ensure fairness of the Tender Offer Price and measures
to avoid a conflict of interest” for an outline of the Report.)(d)Decision details
Based on the background set forth above, at the meeting of the board of
directors of the Company held today, the Company carried out a careful
discussion and examination of whether the Business Combination (including
the Tender Offer) will contribute to enhancement of the corporate value of theCompany and whether the terms and conditions (including those agreed to in
the Business Combination Agreement) pertaining to the Transactions(including the Tender Offer Price) are appropriate, which while based on legal
advice received from Nishimura & Asahi, advice received from a financial
standpoint from Nomura Securities, and the content of the share valuation
report it provided on May 16, 2022 concerning the results of the valuation of
the Company Shares (the “Share Valuation Report”), paid maximum respect
to the findings of the special committee presented in the Report.
As a result, the Company came to understand that (i) the realization of
the synergies set forth in the section above titled “(ii) Background, purpose,and decision-making process leading to the decision by Offerors to conduct
the Tender Offer” could be expected from Crosby Group and the Company
integrating their respective management resources and utilizing the businessknow-how, etc. that is each other’s strong point, and that (ii) the Business
Combination Agreement that sets forth the business operations andmanagement structure of the Company and the Offerors after the Tender Offer
should be executed with the intention of the Offerors and the Company
coming together as one to conduct business operations and quickly realize
synergies with a sense of speed after the Offeror makes the Company its
subsidiary through the Tender Offer.
By de-listing the Company Shares, the Company will no longer be able
to raise funds from capital markets through equity financing, and it will lose
the benefit it has enjoyed as a listed company to date, namely the enhancedsocial credibility that comes with being a listed company. However,considering the current financial condition of the Company and the recent low
interest rate environment for indirect financing among other factors, theCompany believes that there is a limited need to continue to maintain thelisting of the Company Shares in the future since, for the time being, there is
not a great need for equity financing, the Company’s brand power and social
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News Release (6409 TSE)
credibility are being acquired and maintained through business activities inmost respects, and, on the hiring side, it is not necessarily the case that beinga listed company is a wellspring for personnel procurement.
Based on the foregoing, the Company reached the conclusion that, for
the Company as well, executing the Business Combination Agreement, whichsets forth the policy for business operations after the Business Combination,
between the Company, Crosby US, Crosby UK, and HoldCo and thenimplementing the Business Combination can be expected to create thesynergies set forth in the section above titled “(ii) Background, purpose, anddecision-making process leading to the decision by Offerors to conduct theTender Offer,” and contribute to the enhancement of the Company’s corporate
value.
In addition, in consideration of the circumstances set forth in thefollowing items, etc., the Company decided that the Tender Offer Price of JPY
2,725 per share is an appropriate price that ensures the benefits that should beenjoyed by the Company’s general shareholders and that the Tender Offer
provides a reasonable opportunity for the Company’s general shareholders tosell the Company Shares at a price with an appropriate premium.
a.
The Tender Offer Price is a price that was agreed to after sufficientnegotiations were held repeatedly between the Company and Crosby
after the Company took sufficient measures to ensure the fairness ofthe terms and conditions for the Transactions (including the Tender
Offer Price) set forth in the section below titled “(6) Measures toensure the fairness of the Tender Offer, such as measures to ensure
fairness of the Tender Offer Price and measures to avoid a conflict ofinterest”;b.
The Tender Offer Price was decided to be appropriate in the Reportobtained from the special committee, as set forth in the section below
titled “(i) Establishment of an independent special committee at theCompany” under “(6) Measures to ensure the fairness of the Tender
Offer, such as measures to ensure fairness of the Tender Offer Priceand measures to avoid a conflict of interest”;
c.
The Tender Offer Price is a price that respectively adds a premiumof 64.26% (rounded to two decimal places; the same applies
hereinafter for the percentage values of premiums on share prices) tothe closing price of JPY 1,659 of the Company Shares on the Prime
Market of TSE on May 13, 2022, which is the business day preceding
the announcement date of the Transactions, 63.08% to the simple
average closing price over the preceding one-month period until May
13, 2022 of JPY 1,671 (rounded to two decimal places; the same
applies hereinafter for the calculation of simple average closing
prices), 61.06% to the simple average closing price over thepreceding three-month period until May 13, 2022 of JPY 1,692, and54.67% to the simple average closing price over the preceding six31

News Release (6409 TSE)d.

month period until May 13, 2022 of JPY 1,762, and when comparedto the premium levels in 13 deals (excluding MBO deals, and deals
where a certain capital relationship between the offeror and the target
company exist) announced on or after June 28, 2019 in which adomestic listed company was made a wholly owned subsidiarythrough a tender offer and squeeze-out procedure without amaximum limit (the median and average premium on the simple
average on the business day preceding the announcement date
(44.58%, 50.97%), the median and average premium on the simple
average closing prices over the preceding one-month period (41.67%,
49.63%), the median and average premium on the simple averageclosing prices over the preceding three-month period (41.69% ,52.19%), and the median and average premium on the simple
average closing prices over the preceding six-month period (32.52% ,51.67%), and in comparison with such other deals, it can be foundthat the premium secured in the Tender Offer is not inferior to that ofother deals and the level of the Tender Offer Price can be said to bereasonable; andOut of the results of the valuation of the Company Shares by Nomura
Securities set forth in the section below titled “(3) Calculations,” theTender Offer Price is a level that is above the upper limit of the range
based on the average market price analysis method and falls within
the range based on the comparable company analysis method and thediscounted cash flow analysis method (“DCF analysis”).

Similarly, the Company also decided that the Tender Offer provides areasonable opportunity for the Company’s Stock Acquisition Right Holders
to sell their Stock Acquisition Rights because the Stock Acquisition Rights
Tender Offer Price is also calculated based on the amount found by
multiplying the difference between the Tender Offer Price and the exercise
price per Company Share for each Stock Acquisition Right by the number ofCompany Shares that underlie each such Stock Acquisition Right (200 per
stock acquisition right).
Therefore, the Company decided that the Business Combination(including the Transactions) would contribute to enhancing the corporate
value of the Company and that the terms and conditions for the Transactions(including the Tender Offer Price) are appropriate, and at the meeting of theCompany’s board of directors held today, it was resolved both to approve
execution of the Business Combination Agreement, and that if the Tender
Offer is commenced, the position of the Company as of this date is that it will
declare a position in support of the Tender Offer and that it will recommendthat the Company’s shareholders and Stock Acquisition Right Holders accept
the Tender Offer.
In addition, at the aforementioned board of directors meeting it was
additionally resolved that when the Tender Offer commences, the special
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News Release (6409 TSE)
committee established by the Company will be asked to review whether or
not there is any change to the contents of the Report, and if there is no change,
state this fact to the Company’s board of directors, and if there is a change, tostate a position after the change, and based on such position, the Company
will again publish its position on the Tender Offer when the Tender Offer
commences. Please see the section below titled “(v) Approval of all directors
and opinion of all auditors that there is no objection at the Company” under“(6) Measures to ensure the fairness of the Tender Offer, such as measures toensure fairness of the Tender Offer Price and measures to avoid a conflict ofinterest” for the details of the process of decision making at the Company’sboard of directors.
(3)

Calculations(i) Name of appraiser and relationship to the Company and the Offerors
When examining, negotiating, and deciding on the appropriateness of theterms and conditions of the Transactions (including the Tender Offer Price), in orderto ensure the fairness of those transaction terms and conditions, the Company asked
Nomura Securities, a financial advisor and third-party appraiser that is independent
from the Offerors, KKR, the Company and the success or failure of the Business
Combination (including the Transactions) for a share valuation report with afinancial analysis, and on May 16, 2022, the Company received the Share Valuation
Report.
Nomura Securities is not a related party of the Offerors, KKR, or theCompany, and has no material interest in the Business Combination (including theTender Offer).
Fees received by Nomura Securities in connection with the Business
Combination (including the Transactions) include a success fee payable on thecondition of completion of the Tender Offer. The Company has appointed Nomura
Securities as its financial advisor and third-party appraiser using the
aforementioned fee structure having determined that, if general practices for similartransactions and also the appropriateness of a fee structure that would generate aconsiderable financial burden on the Company in the event that the Transaction
does not close, etc. are considered, it is not as though independence can be ruledout by the inclusion of a success fee payable on condition of closing of the Tender
Offer.
(ii)

Outline of calculations(a) Outline of the calculations regarding the Company Shares
Nomura Securities calculated the share value of the Company using the
average market price analysis method given that the Company is listed on thePrime Market of the TSE which provides market pricing, using thecomparable company analysis method given that there are several listedcompanies that engage in businesses that are relatively similar to theCompany’s and an analogy of share prices by comparison with similar
33

News Release (6409 TSE)
companies is possible, and using discounted cash flow analysis in order toreflect the impact of future business activities on the valuation. The Company
has not obtained an opinion on the fairness of the price of the Tender Offer (afairness opinion) from Nomura Securities. In terms of the reason for notacquiring a fairness opinion, the function of a fairness opinion is to prevent
managers and major shareholders, who typically have an information
advantage, from exploiting the asymmetry of information to acquire shares ofa target company from general shareholders at less than fair value, but in thismatter the Tender Offer is being implemented for the purpose of a businesscombination with a third party and the circumstances are different from an
ordinary MBO or the like, so the Company decided that rather than separately
acquiring a fairness opinion, it could be addressed by granting a certain
premium on the current share price based on a share valuation by a third-party
assessment body.
The Share Valuation Report sets out a range of values for one share of
the Company Shares based on each of the above calculation methods, as
follows:
Average market price analysis:
Comparable company analysis:
DCF analysis:

Between JPY 1,647 and JPY 1,762
Between JPY 2,052 and JPY 3,196
Between JPY 1,886 and JPY 3,974

Under the average market price analysis method, the valuation date forcalculation is set to May 13, 2022, the business day preceding theannouncement date of the Tender Offer, and the per share value of one share
the Company Shares is calculated to be in a range between JPY 1,647 and
JPY 1,762 based on the TSE Prime Market valuation date closing price for
the Company’s shares of JPY 1,659, the simple average of the closing prices
during the immediately preceding five business days, equal to JPY 1,647, thesimple average of the closing prices during the immediately preceding one
month, equal to JPY 1,671, the simple average of the closing prices during
the immediately preceding three months, equal to JPY 1,692, and the simple
average of the closing prices during the preceding six months, equal to JPY
1,762.
Under the comparable company analysis method, the per share value of
the Company Shares is calculated to be in a range between JPY 2,052 andJPY 3,196 by calculating the Company’s share value through a comparison
with the market share price and financial statements showing earnings, etc. oflisted companies engaged in businesses determined to be comparable to theCompany.
Under the DCF analysis, the share value per one share is calculated to
be in a range between JPY 1,886 and JPY 3,974 by valuing enterprise value
and share price derived from the discounted present value of the forecast free
cash flow expected to be generated by the Company from the fiscal year
ending March 2023 onwards, taking into consideration assumptions
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News Release (6409 TSE)
considered to be reasonable such as profit forecasts and investment plans
based on financial forecasts for the fiscal years ending March 2023 to March
2027 as prepared by the Company (the “Business Plan”). Given the difficultyat this point of concretely forecasting expected synergies from the Business
Combination (including the Transactions), these have not been included in
the Business Plan. In the Business Plan on which the DCF analysis is based,
there are no fiscal years in which significant year-on-year increases ordecreases are forecast.
As noted in the section below titled “(i) Establishment of an
independent special committee at the Company” under “(6) Measures toensure the fairness of the Tender Offer, such as measures to ensure fairness of
the Tender Offer Price and measures to avoid a conflict of interest,” thespecial committee has received an explanation from the Company on theassumptions set in formulating the financial forecasts and conditions thatform the basis of the Business Plan and has conducted a Q&A on theseassumptions and values, and has not found any points to be particularly
unreasonable. The special committee has confirmed that these calculation
methods and calculation outcomes are reasonable.
Note: Nomura Securities, has calculated the share value of the Company
Shares on the assumption that all of the information either publicly
available or provided to Nomura Securities is accurate and complete,and has not conducted any independent investigations to verify theaccuracy or completeness thereof. Nomura Securities has notindependently appraised, valued or investigated the assets and liabilit iesof the Company including any analysis and valuation of individua lassets and liabilities (including financial derivatives, off-balance sheet
assets and liabilities, and other contingent liabilities), and no third party
has been requested to make any appraisal or investigation thereof. The
Company’s financial forecasts (including profit forecasts and otherinformation) are assumed to be reasonably considered and preparedbased on the best and good faith forecasts and decisions of theCompany’s management at this point in time. Nomura Securities ’calculations reflect information and economic conditions obtained by
Nomura Securities up to May 13, 2022, and are prepared for the sole
purpose of providing a reference to the board of directors of theCompany in examining the share value of the Company Shares.
(b)

Outline of the calculations regarding the Stock Acquisition Rights
Since the offer price for the Stock Acquisition Rights has been
calculated based on the amount found by multiplying the difference between
the Tender Offer Price and the exercise price per Company Share for each
Stock Acquisition Right by the number of Company Shares that underlie eachsuch Stock Acquisition Right (200 per stock acquisition right), it wasdetermined that the Tender Offer provides a reasonable opportunity for all
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News Release (6409 TSE)
Stock Acquisition Right Holders to sell their Stock Acquisition Rights.
The Offeror has not obtained a calculation report from the third-party
appraiser when determining the Stock Acquisition Rights Tender Offer Price,as it is based on the Tender Offer Price.
(4)

Expected delisting and reasons therefor
As of today the Company Shares are listed on the Prime Market of the TSE.
However, since the Offerors has not set a limit on the maximum number of sharecertificates, etc. to be purchased in the Tender Offer, depending on the results of theTender Offer, it is possible that the Company Shares will be delisted throughprescribed procedures in accordance with the stock delisting criteria of the TSE.
Also, in the event that the Tender Offer is concluded, even if the delisting standards
are not met, the Offeror plans to thereafter own all of the Company Shares inaccordance with applicable laws and regulations and the procedures stated below
in the section titled “(5) Policy for organizational restructuring after the Tender
Offer (matters relating to the “Two-Step Acquisition”),” so in that case, theCompany Shares will be delisted after going through prescribed procedures inaccordance with the stock delisting criteria. If the Company Shares are delisted, it
will no longer be possible to trade them on the Prime Market of the TSE. For details
regarding the reasons for aiming for de-listing, the impact on general shareholders
and approaches thereto, see the section above titled “(d) Decision details” under“(iv) Decision-making process and reasons leading to the Company supporting theTender Offer” of “(2) Grounds and reasons for the position regarding the Tender
Offer.”(5)

Policy for organizational restructuring after the Tender Offer (matters relating to the“Two-Step Acquisition”)
We are informed that if the Tender Offer has been successfully completed,but the Offeror is unable to acquire all of the Company Shares and all of the Stock
Acquisition Rights through the Tender Offer, then the Offeror intends to make theCompany a wholly-owned subsidiary of the Offeror by some method after
conclusion of the Tender Offer, as described in the section above titled “(i)Summary of the Tender Offer” under “(2) Grounds and reasons for the position
regarding the Tender Offer”.
(i)Demand for the Sale of Shares, Etc.
If the total number of voting rights represented by shares owned by theOfferor is equal to or exceeds 90% of the total number of voting rights of allshareholders of the Company after conclusion of the Tender Offer, we areinformed that the Offeror intends to demand, promptly after the settlement of
the Tender Offer, that all shareholders of the Company (excluding the Offeror
and the Company) (“Selling Shareholders”) sell all of the Company Sharesthat they own (“Shares to be Sold”) to the Offeror (the “Demand for the Saleof Shares”) and demand that all of the holders of the Stock Acquisition Rights
36

News Release (6409 TSE)
(excluding the Offeror) (the “Selling Stock Acquisition Right Holders”) sell
all of the Stock Acquisition Rights that they own (“Selling Stock Acquisition
Rights”) to the Offeror (the “Demand for the Sale of Stock Acquisition
Rights”; together with the Demand for the Sale of Shares, the “Demand for
the Sale of Shares, Etc.”), pursuant to the provisions of Article 179,
Paragraphs 1 and 2 of the Companies Act. In the event of a Demand for theSale of Shares, the Offeror intends to stipulate that each of the Selling Shares
owned by the Selling Shareholders will be exchanged for cash in an amountequal to the Tender Offer Price, and in the event of a Demand for the Sale of
Stock Acquisition Rights, the Offeror intends to stipulate that each of the
Selling Stock Acquisition Rights owned by the Selling Stock Acquisition
Right Holders will be exchanged for cash in an amount equal to the Stock
Acquisition Rights Tender Offer Price. In such an event, we are informed that
the Offeror will notify the Company of the Demand for the Sale of Shares,
Etc. and seek the Company’s approval thereof. We are informed that if theCompany approves the Demand for the Sale of Shares, Etc. by a resolution of
the board of directors, then, in accordance with the procedures provided forin relevant laws and regulations and without requiring the individual consent
of the Selling Shareholders and the Selling Stock Acquisition Right Holders,the Offeror will acquire all of the Selling Shares from the Selling
Shareholders and all of the Selling Stock Acquisition Rights from the Selling
Stock Acquisition Right Holders on the acquisition date stipulated by the
Demand for the Sale of Shares, Etc. In this case, we are informed that theOfferor will deliver an amount of cash consideration per Company Shareequal to the Tender Offer Price to each Selling Shareholder and an amount ofcash consideration per unit of the Stock Acquisition Right equal to the Stock
Acquisition Rights Tender Offer Price to each Selling Stock Acquisition Right
Holder in exchange for the Company Shares owned by the Selling
Shareholders and the Selling Stock Acquisition Rights owned by the Selling
Acquisition Right Holders.
If the Offeror makes a Demand for the Sale of Shares, Etc., theCompany intends to approve the Demand for the Sale of Shares, Etc.
As provisions under the Companies Act that aim to protect the rights ofminority shareholders in relation to the above, in accordance with Article 1798 of the Companies Act and other related laws and regulations, it is provided
that the Selling Shareholders and the Selling Stock Acquisition Right Holders
may file a petition with the court for a determination of the sale price for the
Selling Shares and the Selling Stock Acquisition Rights. The sale price for
the Selling Shares and Selling Stock Acquisition Rights by this method will
be finally determined by the court.
(ii)

Share consolidation
If the total number of voting rights represented by shares owned by theOfferor is less than 90% of the total number of voting rights of allshareholders of the Company after the conclusion of the Tender Offer, we are37

News Release (6409 TSE)
informed that the Offeror will request the Company to hold an extraordinary
shareholders’ meeting at which the following proposals will be submitted (the“Extraordinary Shareholders’ Meeting”): (i) to conduct a consolidation of theCompany Shares (the “Share Consolidation”), and (ii) to make a partial
amendment to the Company’s articles of incorporation to abolish the shareunit number provisions on the condition that the Share Consolidat ion
becomes effective. We are informed that the Offeror intends to approve eachof those proposals at the Extraordinary Shareholders’ Meeting. If the proposal
for the Share Consolidation is approved at the Extraordinary Shareholders ’Meeting, the shareholders of the Company will come to own the number ofCompany Shares proportionate to the ratio of the Share Consolidation that is
approved at the Extraordinary Shareholders’ Meeting as of the effective dateof the Share Consolidation. In such case, if due to the Share Consolidation,
there is a number of shares that is a fraction less than one share, theshareholders of the Company holding such fractional shares will receive anamount of cash obtained by selling the Company Shares equivalent to thetotal number of such fractional shares (if there is a fraction of less than one
share in that total number, rounded down to the nearest whole number; thesame applies hereinafter) to the Company or the Offeror as per the procedures
specified in Article 235 of the Companies Act and other relevant laws andregulations. The sale price of the Company Shares corresponding to that total
number of fractional shares will be valued so that the amount of cash received
by each shareholder who did not tender its shares in the Tender Offer as aresult of the sale will be equal to the price obtained by multiplying the Tender
Offer Price by the number of Company Shares owned by each suchshareholder, and then it is planned that a petition to the court will be made for
permission to purchase such Company Shares on this basis. We are informedthat although the ratio of the consolidation of the Company Shares has notbeen determined as of today, it is intended that the shares of shareholders who
did not tender their shares in the Tender Offer (excluding the Offeror and theCompany) will be classified as a fraction of less than one share in order for
the Offeror to become the sole owner of all of the Company Shares.
According to the provisions of the Companies Act that aim to protect
the rights of minority shareholders in relation to the Share Consolidation, theCompanies Act provides that if the Share Consolidation occurs and there areshares less than one unit as a result thereof, each shareholder of the Company
may request that the Company purchase all such shares less than one unit ata fair price, and such shareholders may file a petition to the court to determine
the price of the Company Shares in accordance with Articles 182-4 and 1825 of the Companies Act and other relevant laws and regulations. The purchaseprice per share by this method will be finally determined by the court.
If the Tender Offer has been concluded but the Offeror does not own atleast 90% of the number of the voting rights of all shareholders of theCompany, and if the Offeror is unable to acquire all of the Stock Acquisition
Rights in the Tender Offer and any Stock Acquisition Rights remain
38

News Release (6409 TSE)
unexercised, then we are informed that the Offeror plans either to request theCompany to implement, or to itself implement, the procedures reasonably
required for carrying out the Transactions, such as the acquisition of the Stock
Acquisition Rights by the Company or a recommendation by the Company tothe holders of the Stock Acquisition Rights to waive their Stock Acquisition
Rights.
With regard to the procedures described in (i) and (ii) above, it ispossible that, depending on circumstances such as the interpretation of therelevant laws and regulations by authorities, more time may be required oralternative methods may be utilized to implement the procedures. However,even in such a case, the Offeror intends to make the Company a whollyowned subsidiary of the Offeror by a method whereby the shareholders of theCompany who do not tender their shares in the Tender Offer (excluding theCompany) will ultimately receive cash. The amount of cash paid to suchshareholders of the Company is expected to be calculated so that such amountis equal to the amount obtained by multiplying the Tender Offer Price by the
number of the Company Shares owned by each such shareholder. If cash is
paid to the holders of Stock Acquisition Rights of the Company who did nottender their Stock Acquisition Rights in the Tender Offer, the amount of cash
to be paid to each of those holders of the Stock Acquisition Rights is expected
to be calculated so that such amount is equal to the amount obtained bymultiplying the Stock Acquisition Rights Tender Offer Price by the numberof such Stock Acquisition Rights owned by each such holder of the Stock
Acquisition Rights. The specific procedures in this case and timing thereof,etc., are expected to be announced promptly by the Company after they are
determined upon discussion with the Offeror.
The Tender Offer is not a solicitation for shareholder approval at an
extraordinary shareholders’ meeting. The Company’s shareholders all should
confirm the tax implications of accepting the Tender Offer and the various
procedures described above with a tax professional on their own
responsibility.
(6)

Measures to ensure the fairness of the Tender Offer, such as measures to ensure
fairness of the Tender Offer Price and measures to avoid a conflict of interest
As of today, the Offerors do not hold the Company Shares, the Tender Offer
does not constitute a tender offer by a controlling shareholder, all or some of theCompany’s management do not plan to directly or indirectly invest in the Offeror,
and the Transactions (including the Tender Offer) do not constitute a so-called
management buyout transaction.
Moreover, from the perspective of exercising the utmost care to ensure thefairness of the Business Combination (including the Tender Offer Price), theCompany has implemented the following measures. In addition, the following
descriptions of measures implemented at the Offerors are based on explanations
received from the Offerors.
39

News Release (6409 TSE)(i)

Establishment of an independent special committee at the Company(a) Background to establishment, etc.
As stated above in “(iv) Decision-making process and reasonsleading to the Company supporting the Tender Offer” under “(2) Grounds
and reasons for the position regarding the Tender Offer,” pursuant to a
resolution of a meeting of the board of directors on February 21, 2022,
the Company established a special committee composed of threemembers without an interest in the Offerors, KKR, the Company, or theoutcome of the Business Combination (including the Transactions):
Katsumi Nakamura, Takashi Hirai, and Koji Osawa (the members of thespecial committee have been those three persons since it was firstestablished and there has been no change in the members).
Prior to the establishment of that special committee, after receiving
the Letter of Intent regarding the Business Combination from Crosby on
February 14, 2022, while receiving advice from Nishimura & Asahi inorder to build a framework to examine, negotiate, and assess the Business
Combination (including the Transactions) from the perspective ofenhancing the corporate value of the Company and ensuring the interestsof general shareholders of the Company independently from the Offerors,
KKR, the Company, and the outcome of the Business Combination(including the Transactions), the Company immediately provided
explanations to all of the Company’s independent outside directors
including the fact that a Letter of Intent had been received from Crosby
and that it is necessary to implement thorough measures to ensure thefairness of the decision-making process for the Business Combination(including the Transactions) when examining and negotiating, etc. theBusiness Combination (including the Transactions), including theestablishment of the special committee. In parallel with this, whileobtaining the advice of Nishimura & Asahi, the Company confirmed thatthe independent outside directors of the Company who comprise thecandidates for membership of the special committee were independentand eligible, etc. and that they had no special interest regarding theoutcome of the Business Combination (including the Transactions), held
discussions with the Company’s independent outside directors, andappointed Katsumi Nakamura, Takashi Hirai, and Koji Osawa ascandidate members for the special committee.
Katsumi Nakamura was appointed as the chair of the special
committee based on factors such as his holding a position where he isdirectly involved in management decisions as a member of theCompany’s board of directors, his having considerable knowledge
regarding the Company’s business, and his expertise and eligibility to
examine the Business Combination (including the Tender Offer).
Furthermore, members of the special committee are paid only fixedmonthly officer compensation irrespective of the outcome of theBusiness Combination (including the Transactions) or the content of the40

News Release (6409 TSE)
opinion, and the compensation does not include contingency
compensation conditioned on an announcement or success, etc. of theBusiness Combination (including the Transactions).
(b)

Background to examination
The Company asked the special committee (i) whether theBusiness Combination (including the Tender Offer) would serve toenhance corporate value and whether that goal can be found to bereasonable, (ii) whether the appropriateness of the terms and conditionsof the Transactions (including the Tender Offer) is ensured (including theTender Offer Price), (iii) whether the fairness of procedures for theBusiness Combination (including the Tender Offer) is ensured, (iv) basedon (i) through (iii) above, whether it can be concluded that the Business
Combination is not disadvantageous for the Company’s generalshareholders, and (v) whether it can be concluded that it is reasonable for
the Company’s board of directors to announce a position in support of
the Tender Offer and recommend that the Company’s shareholders andStock Acquisition Right Holders tender their shares and acquisition rights
in the Tender Offer (the “Inquiry Matters”), and commissioned thecommittee to report on such matters. The Company’s board of directors
has resolved to give maximum deference to the details of the special
committee’s judgment when the Company’s board of directors makes adecision regarding the Business Combination (including Tender Offer),and to not support the Business Combination (including the Tender offer)
if the special committee judges that the transaction terms and conditionsof the Business Combination (including the Tender Offer) are notappropriate. In addition, pursuant to the board of directors’ resolution
regarding the establishment of the special committee, the Company’sboard of directors granted the special committee (x) authority to appoint
the special committee’s financial advisor, third-party appraiser, and legal
advisor (“Advisors, etc.”) or to nominate or approve (including after-thefact approval) the Company’s Advisors, etc. as the special committee’s
Advisors, etc., (y) authority to require the Company’s directors,
employees, or any other parties deemed necessary by the special
committee to attend a meeting of the special committee and to demand
explanations of necessary information, and (z) authority to be
substantively involved in the negotiation process for the Transactions ’terms and conditions by means such as confirming in advance thenegotiation policy of the Company for the transaction terms andconditions, etc. for the Business Combination (including the Tender
Offer), receiving timely reports on the status of negotiations, stating its
opinion on important aspects, and issuing directions and making requests.
From February 22, 2022 to May 14, 2022, the special committee
held a total of 15 meetings and discussed and studied the Inquiry Matters.
Specifically, in early March 2022, the special committee confirmed that41

News Release (6409 TSE)
as there were no issues with the expertise and independence of Nomura
Securities appointed by the Company as its financial advisor and thirdparty appraiser and Nishimura & Asahi appointed as the Company’s legal
advisor, the special committee had no objection to the Company
receiving expert advice from these advisors. Based on examination of the
independence, expertise, and track record, etc. of multiple candidate legal
advisors, in early March 2022 the special committee appointed Anderson
Mori & Tomotsune as its own legal advisor independent from theOfferors, KKR, the Company, and the Business Combination (including
the Transactions). Additionally, the special committee approved theCompany’s directors involved in examining, negotiating, anddetermining the Business Combination after confirming that they have
no issues in terms of having interests in the Offerors, KKR, the Company,
and the outcome of the Business Combination (including theTransactions). As there were no issues with either the expertise or
independence of Nomura Securities appointed by the Company as its
financial advisor and third-party appraiser, it was confirmed that aseparate financial advisor and third-party appraiser other than Nomura
Securities would not be appointed solely for the special committee.
Subsequently, based on materials submitted by the Company, thespecial committee received explanations from the Company of thecontent of Crosby’s proposal, the purpose and reasons for implementing
the Business Combination (including the Transactions), the effect of theBusiness Combination (including the Transactions) on the Company’s
corporate value, the matters that the Company would request of Crosby
when implementing the Business Combination (including theTransactions), the formulation process and plan content of the Business
Plan (including its rationality and preparation background), the terms andconditions of the Business Combination (including the Transactions) andthe decision-making process therefor, and the disclosed documents, etc.
pertaining to the Business Combination (including the Transactions) , andconducted Q&As regarding the same. By sending questionnaires to KKR
and Crosby on March 25, 2022 and April 14, 2022 and interviewing
Crosby and KKR on April 22, 2022, the special committee confirmed
matters such as the overview of the business of Crosby and KKR andtheir awareness of the Company’s operational challenges/market value,
the background leading to the proposal regarding the Tender Offer andthe content of the proposal including the anticipated structure, and theeffect of the Tender Offer on measures to enhance the Company’s
corporate value after the Business Combination (including theTransactions).
Based on the advice from a financial perspective received from
Nomura Securities, along with deliberating on and examining anegotiation policy to elicit a higher price from Crosby, the Company
received a timely report each time that a proposal regarding the tender42

News Release (6409 TSE)
offer price was received from the Offerors, and it conducted discussions
and negotiations with Crosby regarding the tender offer price such as bydeliberating on and examining the policy for negotiations with Crosby
based on the advice from a financial perspective received from Nomura
Securities. Please see the section above titled “(iii) Background of
examinations and negotiations” under “(iv) Decision-making process andreasons leading to the Company supporting the Tender Offer” of “(2)Grounds and reasons for the position regarding the Tender Offer” fordetails regarding the background to tender offer price negotiations.
Based on the foregoing background, as a result of repeated careful
discussion and examination of the Inquiry Matters and pursuant to aunanimous resolution of the special committee, the special committee
submitted the Report on the Inquiry Matters with generally the following
content to the Company’s board of directors on May 16, 2022.
(c) Content of determination(A) Content of findingsi. The Business Combination (including the Tender Offer) serves toenhance corporate value and that goal can be found to be reasonable
ii. The appropriateness of the terms and conditions of the Transactions(including the Tender Offer) can be found to be ensured (including theTender Offer Price)iii. The fairness of procedures for the Business Combination (including theTender Offer) can be found to be ensured
iv. Based on i. through iii. above, it can be found that the Business
Combination is not disadvantageous for the Company’s generalshareholders
v. It can be found that it is reasonable for the Company’s board of directors
to announce a position in support of the Tender Offer and recommendthat the Company’s shareholders and Stock Acquisition Right Holders
tender their shares and acquisition rights in the Tender Offer(B) Reasons for findingsi. Whether the Business Combination (including the Tender Offer) serves
to enhance corporate value and whether that goal can be found to bereasonable
Based on the following points, the Business Combination (including theTender Offer) will contribute to enhancing corporate value and its goals canbe found to be reasonable, given that it can be found that (i) the anticipatedsynergies from the Business Combination are reasonable, there is noconflict or inconsistency between Crosby’s and KKR’s expectations andthe Company’s expectations, and implementation of the Business
Combination will contribute to resolving the management challenges
recognized by the Company, (ii) the details explained as the reasons forusing the Business Combination and not another method such as a business43

News Release (6409 TSE)
alliance are reasonable, and it is suitable to use the Business Combination,and (iii) there are no apparent circumstances due to the Business
Combination that would be a material impediment to enhancing theCompany’s corporate value.
 According to the Company, not having been able to realize the targeted
expansion of the scale of profits set forth in the medium-term
management plan, the Company (i) going forward, in addition tosteadily capturing the increase in demand resulting from a return toeconomic activity as the Coronavirus pandemic subsides, is aware of
the urgent task of securing profitability growth exceeding the cost
increases resulting from personnel expenses and raw materials prices
affected by inflation pressures and soaring transportation expenses andthe like, and of achieving profit growth through expansion of its Europe
business, and (ii) in the medium term, believes that in order to achieve
further growth globally in the hoist and crane industry, it is essential for
it to win more business in the material handling field in which theCompany has a strong position, and maximize added value forcustomers by expanding the product line up and fields of services.
According to the Company, to do so requires agile and rapid expansionof its business domain through decisive management actions and boldinvestments in resources. In general terms, it can be concluded that, asa part of the strategy towards resolving such management challenges
and the realization thereof, the adoption of a scheme that contributes tomeasures with respect to a business alliance or a business combination,
including an M&A transaction with a partner who will promote
globalization of the business and organization and who will supplement
expansion of the product lineup, as has been repeatedly considered by
the Company, will contribute to enhancement of the Company’s
corporate value.
 According to Crosby and KKR, the synergies of the Transactions
envisaged by Crosby and KKR include: (i) acceleration of growth inboth new and existing markets by making the most of geographic
complementariness and product complementariness, (ii) the creation of
product innovation through expanded investment in productdevelopment, market research, and expert knowledge and technology incore areas such as metallurgy and additive manufacturing, (iii) the
creation of a single set of best practices and enhancement of worker
safety by continuous promotion of the safety culture shared by theParties, (iv) attraction and retention of the best available talent throughexpanded and diverse career and development paths for all employees
resulting from an increase in new opportunities in all regions following
expansion of the size and scope of international rotational assignments
and business activities, (v) contributions to local communities in a
broader array of areas by expanding investments and policies based on
ESG (Environment, Social, and Governance) metrics, (vi) expansion of44

News Release (6409 TSE)high quality products and solutions to efficiently allow end-users andchannel partners to procure from a trusted provider, and (vii) an increasein commitment to the local communities in which the Company Groupand Crosby Group operate by expanding opportunities for community
service, hiring, and support of causes important to local populations.
Furthermore, according to the Company, it can be expected that throughthe Business Combination, the aforementioned synergies also will becreated for the Company as well. No points that are mutuallycontradictory or points that clearly are objectively false can be found in
the details of the aforementioned anticipated synergies, and those details
are thought to be reasonable.
Crosby and KKR have stated that they believe that unrestricted sharingof business information and support of investment in product innovationand intellectual property development would be exceedingly difficult ina minority investment or a subsidiary premised on its shares remaining
listed. The determination that the best method of realizing a quick
response to the changes in the business environment facing theCompany and contributing to the enhancement of the Company’s
corporate value is to implement the Business Combination by making
the Offeror the sole shareholder of the Company and de-listing theCompany Shares, and to aim for resolution of management challenges
through the Business Combination and not by other methods, is thought
to be reasonable.
According to Crosby and KKR, given that in the Business Combination
they do not plan a workforce reduction or acts that risk adversely
impacting relationships with the Company’s customers, suppliers andother trading partners or otherwise diminishing the Company’s
corporate value after the Transactions, and that although Holdco’s debts(including borrowing from financial institutions related to theTransactions) will be indirectly shared by the Company after theBusiness Combination, Holdco’s debts are not excessively large, nocircumstance can be found that would present a material impediment toenhancing the Company’s corporate value through the Business
Combination.

ii. Whether the appropriateness of the terms and conditions of theTransactions (including the Tender Offer) is ensured (including theTender Offer Price)
Based on the following points, premised on the appropriateness of thenegotiating circumstances and scheme of the Transactions, etc., it can befound that the Tender Offer Price and the Stock Acquisition Rights Tender
Offer Price are appropriate, and that the appropriateness of the terms andconditions of the Transactions (including the Tender Offer) is ensured.
 Looking at the negotiating circumstances for the Tender Offer Price, a
final agreement was reached on the Tender Offer Price (JPY 2,725 per
45

News Release (6409 TSE)share) by the Company having obtained from Crosby proposals to raise
the offer price 3 times as a result of negotiations with Crosby based also
on the committee’s request to raise the offer price pursuant to thecommittee’s discussions and examinations and while receiving advice
from Nomura Securities, and the Company and Nomura Securities
shared with and explained to the committee in a timely manner by email
the series of developments in the negotiations. As a result, the final
Tender Offer Price was suitably increased from the price originallyoffered by the Offeror, and it can be found that developments show that
the Company negotiated with the aim of conducting the Transactions on
terms and conditions that are as advantageous as possible for generalshareholders. With respect to this point, the same is true also for the
Stock Acquisition Rights Tender Offer Price. Following from the above,it is presumed that the agreement on the Tender Offer Price and theStock Acquisition Rights Tender Offer Price in the Transactions is theresult of negotiations between the Company and Crosby that were basedon objective and coherent discussions equivalent to those between
parties that are independent also in substance, and no circumstances arefound that would call into question the transparency or fairness of theagreement process.
Preparation of the Business Plan was underway from prior to thepossibility of the Transactions’ implementation being concretely
confirmed, no fact can be found of there having been interveningpressure from the Offerors and KKR in that formulation process, andno aspect of its details can be found to be an unreasonable forecast.
With respect to Nomura Securities’ Share Valuation Report, based oninterviews, etc. with Nomura Securities, no unreasonable points were
found regarding the choice of the average market price analysis method,
the comparable company analysis method and the DCF Analysis, aswell as the respective calculation method and the basis for calculation,
and when studying the share value of the Company Shares, thecommittee assessed the Share Valuation Report prepared by Nomura
Securities as being reliable. Furthermore, the Tender Offer Price of JPY
2,725 per share (i) exceeds the maximum of the range of values per
share of the Company Shares calculated by the average market priceanalysis method, (ii) exceeds the median (JPY 2,624) of the range ofvalues per share of the Company Shares calculated by the comparable
company analysis method, and (iii) well exceeds the lower limit and iswithin the range of values per share of the Company Shares calculatedby the DCF Analysis. Moreover, whereas the Tender Offer Price of JPY
2,725 per share adds a premium of 54.65 to 64.26 percent to the closing
price of the Company Shares on the TSE up to May 13, 2022 (theclosing price as of that day and the average closing prices over theimmediately preceding one-, three-, and six-month periods), it can befound that the premium secured in the Tender Offer is not inferior to46

News Release (6409 TSE)that of other deals of the same kind. Taking the above into consideration,
it cannot be said that the level of the Tender Offer Price is unreasonable.
It is planned that the Stock Acquisition Rights Tender Offer Price willbe the product of the difference between the Tender Offer Price and theexercise price per Company Share for each Stock Acquisition Right
multiplied by the number of Company Shares that underlie each such
Stock Acquisition Right (200 per stock acquisition right). As set forth
above, whereas it can be concluded that it is possible to assess theTender Offer Price as not being a level that denies the appropriatenessof that price, since the Stock Acquisition Rights Tender Offer Price iscalculated using the difference between the Tender Offer Price and theexercise price per each Stock Acquisition Right, it can be concluded that
it is possible to assess the Stock Acquisition Rights Tender Offer Pricealso as not being a level that denies the appropriateness of that price.
The method of the Transactions may be concluded to be more desirable
than, in particular, a corporate reorganization such as a share exchangewith shares or the like as consideration, as there are desirable points
such as the consideration being easy to understand and having a stableand objective value because the consideration to be received by theshareholders and Stock Acquisition Right Holders is cash, and also the
aspect that it is possible to both call for quickly making the Company awholly owned subsidiary and also to secure the opportunity and time
for an appropriate decision based on sufficient information by generalshareholders, etc. Furthermore, if money is delivered to shareholders
and the Stock Acquisition Right Holders who do not tender in theTender Offer, it is planned that it will be calculated so as to be the sameas the price they would receive if they had tendered in the Tender Offer.

iii. Whether the fairness of procedures for the Business Combination(including the Business Combination) is ensured
Based on the following points, in the Transactions, (i) a situation
substantially equivalent to a transaction between independent parties has
been ensured in the process of formulating the transaction terms, (ii)fairness ensuring measures have been adopted and operated effectively
from the perspective of ensuring that general shareholders have an
opportunity to make an appropriate decision based on sufficient
information, so in conclusion, the fairness of procedures for the Business
Combination (including the Tender Offer) has been ensured.
 A special committee has been established comprised of independent
outside directors of the Company who are independent from theOfferors, and KKR and from the success or failure of the Transactions,and the special committee is recognized to be functioning effectively as
fairness ensuring measures based on its time of establishment, authority,etc.
47

News Release (6409 TSE)








The Company does not have any directors who have a special
relationship with the Offerors and KKR, and the Company’s board of
directors determined that there are no directors who have a special
interest in the Transactions. It is expected that a unanimous resolution
by all seven directors declaring a position in support of the Tender Offer
and that it will be recommend that the Company’s shareholders and theStock Acquisition Right Holders participate in the Tender Offer will be
made, and all auditors will state their opinion that they have no
objection to making the above resolution. The Company’s board of
directors also resolved to make a decision on the Transactions that
respects, to the maximum extent possible, the decision of the committee
and to not agree to the Transactions if the committee decides that thetransaction terms are not appropriate. Based on these and other facts, it
can be said that in the Company’s decision-making process for theTransactions, arbitrariness has been eliminated and fairness, objectivity,
and transparency have been ensured.
The Company is receiving legal advice from the independent legal
advisor Nishimura & Asahi, which is independent from the Company,
the Offerors, and KKR and from the success or failure of theTransactions. The committee is receiving legal advice from theindependent legal advisor Anderson Mori & Tomotsune, which is
independent from the Company, the Offerors, and KKR and from thesuccess or failure of the Transactions.
The Company and the committee have obtained as materials concerning
the value of the Company’s shares the Share Valuation Report from thethird-party appraiser Nomura Securities, which is independent from theCompany, the Offerors, and KKR and from the success or failure of theTransactions.
Since the tender offer period for the Tender Offer is expected to be set
for 21 business days, the Tender Offer is a so-called tender offer withprior announcement, and ensuring a certain period until thecommencement of the Tender Offer after announcing a series oftransaction terms and conditions, including the Tender Offer Price,
ensures that all of the Company’s shareholders and Stock Acquisition
Right Holders have an appropriate opportunity to determine whether totender in response to the Tender Offer, ensures the opportunity forpurchase proposals from Competing Purchase Proposers, and there isno agreement between the Company, the Offerors, and KKR
excessively restricting the Company from contacting Competing
Purchase Proposers, so a so-called “indirect market check,” isrecognized where the M&A transaction is executed by creating anenvironment that allows other potential acquiring parties to makecompeting proposals after the proposed M&A transaction is announced(note that it is stipulated in the Business Combination Agreement that
if the Company withdraws or modifies the Opinion to Support and48

News Release (6409 TSE)







Recommend to Tender and the Business Combination Agreement iscancelled, HoldCo, etc. can receive JPY 1,000,000,000, but due toreasons such as the amount being 1.8% of the purchase price (theamount obtained by multiplying the number of share certificates, etc. tobe purchased with the Tender Offer Price (JPY 2,725 per share), thiscannot be described as an excessive amount, and it does not by its nature
substantially have the effect of compelling the Company’s shareholders
to approve the Transactions, so it can be said to be within a reasonable
scope in practice).
The minimum number of shares to be purchased in the Tender Offer is
expected to be set so as to exceed the number corresponding to a socalled “majority of minority,” and in order to conclude the Tender Offer,
the approval (tendering) of a majority of the number of shareholders
who do not have an interest in the Offeror is required, which isrecognized to lead to further emphasis on ensuring an opportunity fordecisions by general shareholders and contribute to the execution of the
M&A transaction on transaction terms favorable to generalshareholders to the extent possible.
In the Transactions, it is expected that there will be full disclosure ineach press release of information regarding the details of authority
granted to the committee, the background of the review by thecommittee, the status of the committee’s involvement in negotiatingtransaction terms with Crosby, the details of the Report, and thestructure of remuneration for members of the Committee, etc., an
overview of the Share Valuation Report, the process leading up to theimplementation of the Transactions, the course of negotiations, and thedetails of the Business Combination Agreement, and it is recognizedthat the material information is being provided for general shareholders
to decide the reasonableness of transaction terms, etc.
If the Offeror is unable to acquire all of the Company Shares and all of
the Stock Acquisition Rights through the Tender Offer, it will make a
Demand for the Sale of Shares, Etc. or request the Company to hold anextraordinary shareholders’ meeting including submission of a proposal
for a share consolidation, and it is clearly expected that if cash is paid
to the holders of Stock Acquisition Rights of the Company who did nottender in the Tender Offer, it will be calculated so that they will receive
the same price that they would have received if they had tendered in theTender Offer, that in the case of a Demand for the Sale of Shares, Etc.,
the right of the shareholders and holders of Stock Acquisition Rights of
the Company to file a petition to the courts for price determination is
ensured, and that in the case of a share consolidation, the right of theshareholders to request purchase of shares and the accompanying rightto file a petition to the courts for price is ensured, and based on this, it
is recognized that care is being taken to avoid coercion.
49

News Release (6409 TSE)
iv. Whether, based on i. through iii. above, it can be concluded that theBusiness Combination is not disadvantageous for the Company’s
general shareholders
Based on the fact that no problems are recognized concerning any of i.
through iii. above, the Business Combination is believed not to bedisadvantageous for the Company’s general shareholders.
v. Whether it can be concluded that it is reasonable for the Company’sboard of directors to announce a position in support of the Tender Offerand recommend that the Company’s shareholders and Stock Acquisition
Right Holders tender their shares and acquisition rights in the Tender
Offer
Based on the fact that no problems are recognized concerning any of i.
through iv. above, it is believed to be suitable for the Company’s board of
directors to express an opinion in support of the Tender Offer andrecommend that the Company’s shareholders and Stock Acquisition Right
Holders tender in response to the Tender Offer.
(ii)

(iii)

The Company’s acquisition of advice from an independent legal advisor
As stated above in “(b) Background to formulation of examination
framework” under “(iv) Decision-making process and reasons leading to theCompany supporting the Tender Offer” under “(2) Grounds and reasons forthe position regarding the Tender Offer,” the Company appointed the outside
legal advisor Nishimura & Asahi and the Company has been receiving
necessary legal advice from that law firm regarding the decision-making
process and the decision-making method concerning the Business
Combination (including the Tender Offer) and other points to note uponmaking decisions concerning the Tender Offer in order to ensure transparency
and reasonableness in the decision-making process concerning the Business
Combination (including the Tender Offer).
Nishimura & Asahi does not constitute an affiliated party of theOfferors, KKR, or the Company and does not have a material interest in theBusiness Combination (including the Tender Offer). Additionally, at the firstmeeting of the special committee, the special committee confirmed that there
is no issue with the independence of Nishimura & Asahi and approved
Nishimura & Asahi as the Company’s legal advisor.

The Company’s acquisition of a share valuation report from an independent
financial advisor and third-party appraiser
As stated above in “(b) Background to formulation of examination
framework” under “(iv) Decision-making process and reasons leading to theCompany supporting the Tender Offer” under “(2) Grounds and reasons forthe position regarding the Tender Offer,” in order to ensure the fairness of thedecision-making process regarding the Tender Offer Price offered by the50

News Release (6409 TSE)
Offerors, the Company appointed Nomura Securities as a financial advisor
and third-party appraiser independent from the Offerors, KKR, the Company,
and the Business Combination (including the Transactions), and along withreceiving advice and assistance from a financial perspective including advice
on valuation of the Company Shares and the policy for negotiations with theOfferors, the Company obtained the Share Valuation Report dated May 16,
2022. Please see “(i) Name of appraiser and relationship to the Company andthe Offerors” under “(3) Matters regarding valuation” above for a summaryof the Share Valuation Report.
Nomura Securities does not constitute an affiliated party of the Offerors,
KKR, or the Company, and has no material interest in the Business
Combination (including the Tender Offer). Additionally, at the first meetingof the special committee, the special committee confirmed that there is no
issue with the independence of Nomura Securities and approved Nomura
Securities as the Company’s financial advisor and third-party appraiser.
(iv)

The special committee’s acquisition of advice from an independent legal advisor
As stated above in “(b) Background to examination” under “(i)Establishment of an independent special committee at the Company,” thespecial committee appointed the outside legal advisor Anderson Mori &Tomotsune and is receiving necessary legal advice regarding various
procedures for the Transactions, the method and process of deliberations by
the special committee pertaining to the Transactions, and other points to noteupon making decisions concerning the Tender Offer from that law firm.
Anderson Mori & Tomotsune does not constitute an affiliated party of
the Offerors, KKR, or the Company and has no material interest in theBusiness Combination (including the Tender Offer).

(v)

Approval of all directors and opinion of all auditors that there is no objection at theCompany
Based on the content of the Share Valuation Report and the legal advice
from Nishimura & Asahi and giving maximum regard to the content of theReport obtained from the special committee, the Company’s board of
directors carefully discussed and examined the various terms and conditions
concerning the Business Combination (including the Transactions) from theperspective of enhancing corporate value.
Consequently, as stated above in “(iv) Decision-making process andreasons leading to the Company supporting the Tender Offer” under “(2)Grounds and reasons for the position regarding the Tender Offer,” because
along with the Business Combination (including the Transactions) being
expected to enhance the Company’s corporate value, the Tender Offer Priceand other terms and conditions of the Tender Offer constitute an appropriate
price that ensures the benefits that should be enjoyed by the Company’s
general shareholders and the Tender Offer provides a reasonable opportunity
for the Company’s general shareholders to sell their shares at a price with an
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News Release (6409 TSE)
appropriate premium, the Company’s board of directors determined that it isappropriate for the Company’s general shareholders and that the Tender Offer
provides a reasonable opportunity for of the Company’s general shareholders
to sell their shares.
At the same time, with respect also to the Stock Acquisition Rights
Tender Offer Price, because it has been calculated based on the amount foundby multiplying the difference between the Tender Offer Price and the exercise
price per Company Share for each Stock Acquisition Right by the number ofCompany Shares that underlie each such Stock Acquisition Right (200 per
stock acquisition right), it was determined that the Tender Offer provides areasonable opportunity for all Stock Acquisition Right Holders to sell their
Stock Acquisition Rights.
Therefore, at the meeting of the Company’s board of directors held on
May 16, 2022, it was resolved that if the Tender Offer is commenced, theposition of the company as of this date is that it will declare a position in
support of the Tender Offer and that it will recommend that the Company’s
shareholders and Stock Acquisition Right Holders accept the Tender Offer.
At that meeting of the board of directors, all seven of the Company’s
directors participated in deliberations and the resolution, and the directors
who participated in the resolution unanimously passed the above resolution.
Additionally, said meeting of the board of directors was attended by thecompany’s three auditors, and all auditors who attended stated their opinion
that they have no objection to making the above resolution.
(vi)

Non-existence of deal protection provisions and other measures to ensure theopportunity for purchase proposals other than the Transactions
The Offerors and the Company have not made any agreement
whatsoever, including agreements pursuant to the Business Combination
Agreement, with content restricting contact, etc. between parties proposing acompeting purchase and the Company, such as agreements including deal
protection provisions prohibiting the Company from contacting parties
proposing a purchase other than the Offerors (“Competing Purchase
Proposer”), they shall not prevent any Competing Purchase Proposer fromhaving the opportunity to make a purchase proposal, and have taken care toensure the fairness of the Tender Offer.
Additionally, although the minimum tender offer period stipulated bylaws and regulations is 20 business days, the Company is informed that theOfferors have made the period 21 business days. The Tender Offer is a socalled tender offer with prior announcement, and ensuring a certain period
until the commencement of the Tender Offer after announcing a series oftransaction terms and conditions, including the Tender Offer Price, ensuresthat all of the Company’s shareholders and Stock Acquisition Right Holders
have an appropriate opportunity to determine whether to tender in responseto the Tender Offer, ensures the opportunity for purchase proposals from
Competing Purchase Proposers, and therefore aims to ensure the52News Release (6409 TSE)
appropriateness of the Tender Offer Price.
(vii)

4.

Creation of minimum to satisfy the majority of minority condition
As set forth in the section above titled “(i) Summary of the Tender Offer”
under “(2) Grounds and reasons for the position regarding the Tender Offer,”
we are informed that the minimum number of share certificates, etc. to bepurchased in the Tender Offer (13,817,400 shares; ownership percentage:
66.67%) will exceed the number equal to the number of shares (10,363,010
shares; ownership percentage: 50.00%) equal to a majority of the Total
Number of Shares After Considering Potential Shares (20,726,019 shares),i.e., a majority of the number of Company Shares owned by shareholders of
the Company who do not have an interest in the Offerors or a so-called“majority of minority.” We are informed that the Offeror believes that theTender Offer, by not being concluded if it does not obtain the support of amajority of shareholders of the Company who do not have an interest in theOfferors, gives serious consideration to the intention of the minority
shareholders of the Company.

Matters Concerning Tendering in Response to the Tender Offer by the Company’s
Shareholders and Material Agreements Pertaining to the Tender Offer
As stated above in the section titled “(2) Grounds and reasons for the position regarding
the Tender Offer,” under “3. Details of, Grounds, and Reasons for the Position Regarding
the Relevant Tender Offer” as of today, the Company entered into the Business
Combination Agreement with HoldCo, Crosby US, and Crosby UK. Under the Business
Combination Agreement, the Company has agreed that, until the expiration of the tender
offer period, it will maintain the Opinion to Support and Recommend to Tender in theTender Offer and will not adopt any resolution of its board of directors to withdraw or
modify the Opinion to Support and Recommend to Tender in the Tender Offer, on thecondition that the special committee has submitted to the board of directors of theCompany an opinion that it is appropriate for the board of directors to issue the Opinion
to Support and Recommend to Tender in the Tender Offer and that such opinion has notbeen withdrawn or modified.
In addition, under the Business Combination Agreement, the Company and its
subsidiaries shall not, directly or indirectly, proactively solicit a third party, relating toany proposal for the purchase, merger, split, business combination, tender offer or
acquisition by other method of stock, business, or assets of the Company or its
subsidiaries, or any other transaction that could reasonably considered to compete withor otherwise impede or delay the implementation of the Transactions (“Competing
Transaction”). If the Company receives any proposal regarding a Competing Transaction
or any indication thereto, the Company shall immediately notify HoldCo, Crosby US, andCrosby UK of the details of such proposal or indication, provide other material
information regarding such Competing Transaction, and discuss in good faith with
HoldCo, Crosby US, and Crosby UK the response to the Competing Transaction, to theextent it is permitted under applicable laws and regulations.
The Company may withdraw or modify the Opinion to Support and Recommend to53

News Release (6409 TSE)
Tender in the Tender if a third party other than Offeror publicly announces or commencesa counter tender offer for all shares of the Company or makes any bona fide purchaseproposal pertaining to a Competing Transaction, and in each case the board of directorsof the Company reasonably determines in good faith after taking into account all relevant
factors (including any financing conditions, regulatory approvals, timing, consent or otherconditions, as well as deal certainty, potential synergies, and other elements that may berealized through the Business Combination to enhance the corporate value of theCompany) and based on advice from its outside legal advisor to the effect that the failure
to take such actions would reasonably be expected to constitute a breach of the Company
directors’ duty of care. However, it is conditioned that the Company shall, at least three
Business Days before a withdrawal or modification of the Opinion to Support andRecommend to Tender in the Tender Offer or entering into a definitive agreement
regarding the Competing Transaction, send to HoldCo, Cosby US, and Crosby UK awritten notice of intent to take such action(s) together with an outline of the material terms
and conditions of the Competing Transaction and the counterparties that proposed theCompeting Transaction to provide HoldCo, Crosby US, and Crosby UK with anopportunity to update the Tender Offer, and engage in good faith discussion with HoldCo,
Cosby US, and Crosby UK until the earlier of (i) three Business Days after such notice or(ii) five business days prior to the final date of the tender offer period. It is stated that if
the Company withdraws or modifies the Opinion to Support and Recommend to Tenderin the Tender Offer for the reason that the special committee withdraws or modifies its
opinion to the board of directors of the Company that it is appropriate for the board of
directors to issue the Opinion to Support and Recommend to Tender in the Tender Offer,
or in accordance with an agreement on the withdrawal or modification of said Opinion to
Support and Recommend to Tender in the Tender Offer, and HoldCo, Crosby US or
Crosby UK, or the Company cancelled the Business Combination Agreement, HoldCo
can receive JPY 1,000,000,000 from the Company.
The Business Combination Agreement provides, including among others, (i) the
matters relating to the terms and conditions of the Tender Offer, (ii) the Tender Offer
Conditions Precedent, (iii) HoldCo’s, Crosby US’s, and Crosby UK’s obligation to makeefforts to obtain the necessary approvals and the Company’s obligation to cooperate
therewith, (iv) the matters relating to the implementation of the squeeze out and theMerger, (v) the Company Group’s obligation to operate their business in the ordinary
course of business consistent with past practice until the consummation of the Business
Combination, (vi) the obligation to provide information of Holdco, Crosby US, andCrosby UK, and the Company, (vii) the obligation of the Company to cooperate withfinancing, (viii) the Company's obligation to make efforts to obtain consents from theother party to any material contracts that require such consent, (ix) Holdco’s, Crosby US’s,
Crosby UK’s, and their affiliates’ standstill obligations to the Company Shares, (x) the
obligation relating to the prohibition of dividends other than dividends with a record dateof March 31, 2022 by the Company, (xi) the Company's obligation to make efforts toimplement any required procedures relating to the labor unions of the Company Group,(xii) the Company's obligation to cooperate in urging the Stock Acquisition Rights heldby the Stock Acquisition Rights Holders and shares held by the employee ownershipshareholding association and the business partner shareholding association of the54

News Release (6409 TSE)
Company to be tendered in the Tender Offer, (xiii) representations and warranties by
HoldCo, Crosby US, Crosby UK, and the Company (Note), (xiv) confidentiality
obligation, and (xv) the provision pertaining to cancellation by the Holdco, Cosby US,
and Crosby UK or the Company in the event that the Company withdraws or modifies
the Opinion to Support and Recommend to Tender in the Tender Offer, in the event of abreach of representations and warranties or obligations, in the event that a petition forcommencement of insolvency proceedings is filed against the other party, or in the eventthat the Tender Offer is not commenced by March 31, 2023 (“Tender Offer
Commencement Deadline”). The Business Combination Agreement also provides that if
the clearances necessary under competition laws to execute the Business Combination
have not been obtained by the Tender Offer Commencement Deadline, and the Business
Combination Agreement is cancelled despite other Tender Offer Conditions Precedentbeing satisfied or waived, the Company can receive JPY 1,000,000,000 from HoldCo
unless the Company has breached its obligation to cooperate in obtaining necessary
clearances or the cancellation is attributable to the Company.
In addition to the change of the company name of HoldCo into Kito | Crosby after thecompletion of the Squeeze-Out Procedures, in summary the following matters relating to
the governance and operation of the Combined Company have also been agreed.
(i)Management Principles
To ensure a smooth integration and maximize the corporate value of the
Combined Group, the management of the Combined Group shall be carriedout in a spirit of collaboration, with the brands, employees, customers,
suppliers, communities, and facilities of Crosby Group and the Company
Group being valued equally as “One Company, One Team and One Mission”,
and balance a certain level of autonomy of the businesses of the Company
and the Crosby Group with the harmony and consistency of Kito | Crosby asa whole.
In order to ensure a smooth integration and maximize the corporate value of
the Combined Group, the board of directors and ELT (as defined below) of
the Combined Company shall discuss and examine the optimal management
structure within 18 months from the completion of the Business Combination(the “Initial Combination Term”).

(ii)Company Name and Headquarters of the Combined Company
The Combined Company’s trade name shall be Kito | Crosby and its
headquarters shall be co-located in the United States and Japan.

(iii)

Directors
The Combined Company’s board will initially consist of a total of nine
directors, and three directors shall be nominated by the Company, one director
shall be the Group CEO of the Combined Company, and the five others shallbe nominated by the shareholders of the Combined Company. The CEO of
the Combined Company shall be elected by the Combined Company’s boardof directors.
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News Release (6409 TSE)The Chairperson of the board of directors of the Combined Company shall be
appointed from among the directors nominated by the Company. The Chief
Operating Officer shall be appointed from among the directors of the
Combined Company nominated by the Company during the Initial
Combination Term.
(iv)

Executive Leadership TeamThe Combined Group will form an Executive Leadership Team (the “ELT”).
The ELT shall bear primary responsibility regarding matters relating to thebusiness and operation of the Combined Group, and the Combined GroupCEO shall perform his/her duties in accordance with theguidance/instructions of the ELT and the board of directors of the Combined
Company. During the Initial Combination Term, the ELT shall comprise thecurrent CEO and COO of the Company and one person designated by theCompany, and the current CEO and CFO of the Crosby Group and one person
designated by the Crosby Group, and the current CEOs of the Company andthe Crosby Group shall be the co-heads.
The responsibilities of the ELT include the following matters relating to
the business and operation of the Combined Group.
(i) Material changes to organizational design, personnel development,
and compensation(ii) Planning, strategy, and implementation of value creation(iii) Combination, setting of priorities, and distribution of management
resources(iv) Gradual expansion of business and operations(v) Formulation and approval of budget (conditional on the approval of
the board of directors of the Combined Company)(vi) Formulation and achievement of consolidated annual business plan(including plan for related incentive compensation)(vii) Exploration and implementation of additional M&A projects(viii)Other material matters relating to the joint strategy and leadership of
the Combined Group.

(v)

Divisional leadership teamFor no less than the first six months after completion of the Business
Combination and no longer than the earlier of (a) the end of the Initial Periodor (b) the approval of a new organization structure (“DLT Period”), theCombined Group will have divisional leadership teams (“DLT”) for a KITO
divisionand a Crosby Group division . Each DLT shall comprise adivisional president and other management, and the Company shall designate
the divisional president of the KITO division. The divisional president of the
KITO division will be nominated by KITO during the DLT Period.
Each DLT shall be operated based on the annual budget approved by the boardof directors of the Combined Company, conduct business operations inaccordance with the ideas and strategy of the Combined Group CEO, be
56

News Release (6409 TSE)
responsible for the operations and strategy of their respective division, andreport to the Combined Group CEO.
(vi)

Matters Requiring Over 75% Approval of the Board of Directors
The following matters require approval by more than 75% of the directors of
the Combined Company’s board of directors:(i)Discontinuation of a major brand or major product category of Crosby
Group or the Company(ii) Change of the trade name of the Combined Company (Kito | Crosby)(iii) Large-scale reduction of personnel(iv) Large-scale closure of facilities(vii) Business Strategy after the Business Combination
After the Business Combination, the Combined Group envisions
implementing the (a) analysis of product development and production
technology, and consolidation of quality standards, (b) improvement of
production system efficiency, (c) expansion of product portfolios andstrengthening of customer base, (d) consolidation of personnel andorganizational structure to secure new sales opportunities and construction of
new customer interfaces and infrastructure investments, (e) improvement oflogistics efficiency, (f) employee development and exchange of personnel, (g)ensuring the financing necessary for investments, and (h) promotion ofsustainability.
Note:

In the Business Combination Agreement, HoldCo, Crosby US, and Crosby
UK represent and warrant (1) the validity of their incorporation andexistence, (2) the validity and enforceability of the Business Combination
Agreement, (3) the capacity to hold rights necessary for the execution andperformance of the Business Combination Agreement, the performance ofprocedures required by internal rules for the execution and performance of
the Business Combination Agreement, and the absence of any conflict withlaws and regulations, (4) the absence of transactions or involvement with
antisocial forces, and (5) matters relating to financing. In addition, in theBusiness Combination Agreement, the Company represents and warrants(1) the validity of its incorporation and existence, (2) the validity andenforceability of the Business Combination Agreement, (3) the capacity tohold rights necessary for the execution and performance of the Business
Combination Agreement, the performance of procedures required byinternal rules for the execution and performance of the Business
Combination Agreement, and the absence of any conflict with laws andregulations, (4) the absence of any transaction or involvement with
antisocial forces, and (5) the accuracy of the Company's annual securities
reports and quarterly reports for the fiscal year ending March 31, 2021 andthereafter.
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News Release (6409 TSE)

5.

Details of the Provision of Benefits by the Offeror or its Specially Related Party
Not applicable.

6.

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

7.

Questions to the Offeror
Not applicable.

8.

Request to Extend the Tender Offer Period
Not applicable.

9.

Future Prospects
Please see “(ii) Background, purpose, and decision-making process leading to Offerors
deciding to implement the Tender Offer,” “(iii) Management policy after the Tender Offer,”and “(iv) Decision-making process and reasons leading to the Company supporting theTender Offer” under “(2) Grounds and reasons for the position regarding the Tender Offer,”“(4) Expected delisting and reasons therefor,” and “(5) Policy for organizational
restructuring after the Tender Offer (matters relating to the “Two-Step Acquisition”)”
under “3. Details of, Grounds, and Reasons for the Position Regarding the Relevant
Tender Offer” above

10.

Other
(1) Release of “Business Results for the Fiscal Year Ending March 2022 (JapaneseGAAP) (Consolidated)”
The Company released the Company’s Business Results today. For details, please referto the release concerned.
(2) Release of “Notice Regarding Distribution of Dividends from Retained Earnings(No Dividend)”
At the board of directors meeting held today, a resolution was made not to pay
dividends from retained earnings on the record date of September 30, 2022 (the end of
the second quarter) and not to pay dividends from retained earnings on the record date ofMarch 31, 2023 (the end of the financial year). For details, please refer to the “NoticeRegarding Distribution of Dividends from Retained Earnings (No Dividend)” released
separately today.

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News Release (6409 TSE)
(Reference) Outline of the Tender Offer (attached)
Please see the attached materials “Notice Regarding Plan to Commence a Tender Offer for KITOCORPORATION Shares (Securities code: 6409) ” that were published on this day by the Offeror.

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News Release (6409 TSE)
Solicitation Regulations
This document is a press release to announce a position on the Tender Offer to the general public and has not been prepared for the purpose ofsoliciting a sale. If shareholders wish to make an offer to sell, they should be sure to read the tender offer explanatory st atement for the Tender
Offer and make their own independent decision. This press release does not constitute, nor form part of, any offer or solicitation to sell, or any
offer or solicitation to buy, any securities. In addition, neither this press release (nor any part of it) nor the fact of its distribution shall form thebasis of any agreement regarding the Tender Offer, nor shall it be relied on in connection with executing any such agreement.
U.S. Regulations
Although the Tender Offer will be conducted in compliance with procedures and information disclosure standards prescribed by law, theseprocedures and standards are not necessarily the same as the procedures and standards in the United States. In particular, Section 13(e) or
Section 14(d) of the Securities Exchange Act of 1934 (as amended; “ Securities Exchange Act”) and the rules promulgated under such Section
do not apply to the Tender Offer, and the Tender Offer does is not in compliance with such procedures and standards.
Except for where specifically noted, all procedures in connection with the Tender Offer shall be conducted in the Japanese language. While apart or all of the documents in connection with the Tender Offer may be prepared in English, the Japanese documents shall prevail in case ofany discrepancies between Japanese documents and corresponding English documents.
Other Countries
Some countries or regions may impose restrictions on the announcement, issue, or distribution of this press release. In such cases, please takenote 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 fo r informative purposes
only.

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