[Translation]
September 29, 2014
To whom it may concern,
Company name:Name of representative:(TSE Code:Contact person:

Taiyo Nippon Sanso Corporation
Yujiro Ichihara, President and CEO
4091, First Section of the TSE)
Masayuki Kuniya, General Manager,
Corporate Communications
TEL. 03-5788-8015

Notice of Expression of Opinion regarding Tender Offer for the Company Shares by Mitsubishi
Chemical Holdings Corporation
As announced in the press release dated May 13, 2014 titled “Notice Regarding Execution of an
Agreement in connection with Tender Offer by Mitsubishi Chemical Holdings Corporation for Sharesof Taiyo Nippon Sanso Corporation,” Taiyo Nippon Sanso Corporation (the “Company”) and
Mitsubishi Chemical Holdings Corporation (the “Tender Offeror”) determined to conduct a tender
offer (the “Tender Offer”) for common shares of the Company after certain conditions, such as thecompletion of procedures and responses required under domestic and foreign competition laws, weresatisfied.
The Tender Offeror has advised that since it has confirmed that the procedures and responses required
under domestic and foreign competition laws have been completed, and that it has become possible toconduct the Tender Offer, it has determined to commence the Tender Offer on September 30, 2014, as
follows.
Regarding the Tender Offer, the Company’s board of directors, at its meeting held on September 29,
2014, passed resolutions to issue an opinion in support of the Tender Offer, based on the grounds andreasons stated in “(2) Grounds and Reasons for the Opinion” of “3. Details of, and Grounds andReasons for, the Opinion Concerning the Tender Offer” below, to take a neutral position on whether torecommend that the shareholders of the Company accept the Tender Offer, and to defer to eachshareholder the decision as to whether to accept the Tender Offer, as follows.
Both companies have the common understanding to have a policy to maintain the listing of theCompany shares after the consummation of the Tender Offer.
1.

Outline of the Tender Offeror(1) Corporate Name
(2) Location(3) Title and Name of theRepresentative(4) Details of Business(5) Stated Capital(6) Date of Incorporation(7) Major Shareholders andShareholding Percentages(As of March 31, 2014)
Mitsubishi Chemical Holdings Corporation
1-1-1, Marunouchi, Chiyoda-ku, Tokyo
Yoshimitsu Kobayashi
President & Chief Executive Officer
Management and control of group companies (establishingstrategies, distributing resources, and other matters for or in relation
to the entire group)
50,000 million yen
October 3, 2005
The Master Trust Bank of Japan, Ltd.
4.73%
(Trust Account)1

Meiji Yasuda Life Insurance Company (Standing
Proxy), Trust & Custody Services Bank, Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account)(8) Relationship between
Listed Company andTender Offeror

2.

4.27%
4.18%

Nippon Life Insurance Company

3.05%

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2.72%

Takeda Pharmaceutical Company Limited

2.54%

Tokio Marine & Nichido Fire Insurance Co., Ltd.

1.98%

TAIYO LIFE INSURANCE COMPANY
1.64%
Japan Trustee Services Bank, Ltd. (Trust Account
1.54%
4)Mizuho Bank, Ltd. (Standing Proxy), Trust &1.17%
Custody Services Bank, Ltd.
The Tender Offeror holds 116,797,870 shares(including those held indirectly) of the stock of
Capitalthe Company.
Relationship
The Company holds 10,118,148 shares(including those held indirectly) of the stock of
the Tender Offeror.
Personnel
Not applicable.
Relationship
There are no material transactional relationships
to be specifically noted, between people orcompanies affiliated with the Company, andBusiness
those affiliated with the Tender Offeror. There
Relationshipare no material transactional relationships
between the Company and the Tender Offeror to
be noted.
Status of
The Company is an equity method affiliate ofApplicability of
the Tender Offeror, and falls under the category
the Relatedof a related party.
Parties

Tender Offer Price
1,030 yen per common share.

3.

Details of, and Grounds and Reasons for, the Opinion Concerning the Tender Offer(1)

Details of the Opinion
Regarding the Tender Offer, the Company’s board of directors, at its meeting held on
September 29, 2014, passed resolutions to issue an opinion in support of the Tender Offer,based on the grounds and reasons stated in “(2) Grounds and Reasons for the Opinion” below,
to take a neutral position on whether to recommend that the shareholders of the Company
accept the Tender Offer, and to defer to each shareholder the decision as to whether to accept
the Tender Offer.

2

(2)

Grounds and Reasons for the Opinion(i)

Overview of the Tender Offer
As of today, the Tender Offeror holds 116,797,870 shares of the Company (26.97% (whichpercentage is rounded to the nearest hundredth; hereinafter the same applies) of the total
number of issued shares of the Company, 433,092,837 shares, as of June 30, 2014, as set forthin the 11th Business Period First Quarterly Report filed by the Company as of July 31, 2014),
including those held by Mitsubishi Chemical Corporation (“Mitsubishi Chemical”), which is awholly-owned subsidiary of the Tender Offeror. The Company is an equity method affiliateof the Tender Offeror.
The Tender Offeror and the Company executed a master agreement as of May 13, 2014 (the“Agreement”) in order to further enhance the capital and business alliance relationshipbetween both companies and improve the corporate value of both companies. The Tender
Offeror and the Company have confirmed in the Agreement that the ultimate objective is for
the Tender Offeror to acquire the majority of voting rights of the Company. The details of
the Agreement are outlined in “(iv) Outline of the Agreement” below.
Under the Agreement, the Tender Offeror intended to commence a tender offer for thecommon shares of the Company in order to acquire the majority of voting rights of theCompany, after the conditions, such as the completion of procedures and responses required
under domestic and foreign competition laws, are satisfied. The Tender Offeror has advisedthat since it has confirmed that the procedures and responses required under domestic andforeign competition laws have been completed, and that the conditions under the Agreement tocommence the Tender Offer have been satisfied, it has passed a resolution to commence theTender Offer on September 30, 2014, by a written resolution dated September 29, 2014, in
place of a resolution of the board of directors, under Article 370 of the Companies Act andArticle 26 of the Articles of Incorporation of the Tender Offeror.
As of today, the Company shares are listed on the First Section of Tokyo Stock Exchange, Inc.
(the “Tokyo Stock Exchange”). The Tender Offeror intends to enhance the capital alliancerelationship between both companies while maintaining the listing of the Company shares andthe autonomy of the management of the Company after the consummation of the Tender Offer.
Therefore, the Tender Offeror has set 104,079,476 shares as the maximum number of shares tobe purchased in the Tender Offer (together with the Company shares that the Tender Offeror
and Mitsubishi Chemical hold as of today, the shareholding ratio will be 51.00%). The
Tender Offeror has advised that if the total number of tendered share certificates, etc. exceeds
the maximum number of shares to be purchased, it will not purchase all or part of suchexcessive portions, and will conduct delivery and other settlements of the purchased sharecertificates, etc. on a pro rata basis as set forth in Article 27-13, paragraph (5) of the Financial
Instruments and Exchange Act (the “Act”) and Article 32 of the Cabinet OrdinanceConcerning the Disclosure of Tender Offers for Shares, Etc., by Persons Other Than Issuers.
On the other hand, the Tender Offeror has set 99,748,549 shares as the minimum number ofshares to be purchased in the Tender Offer so that the total shareholding ratio of the Tender
Offeror and Mitsubishi Chemical will reach the majority of the Company shares, together with
the Company shares held as of today. The Tender Offeror has advised that if the total numberof tendered shares is less than such minimum number, it will not purchase any of the tenderedshares in the Tender Offer.

3

(ii)

Background and Reason for the Tender Offer, and Management Policy after the Tender Offer(i)

Background and Reason for the Tender Offer
The Tender Offeror has developed its business in a broad range of areas, such as performance
products, health care, and industrial materials, through Mitsubishi Chemical, Mitsubishi
Tanabe Pharma Corporation, Mitsubishi Plastics, Inc., and Mitsubishi Rayon Co., Ltd. as thecore operating companies.
The Company has been focusing primarily on air separation plants that produce industrial
gases (oxygen, nitrogen, and argon), while working to advance a variety of technologies, andhas developed its business as an industrial gas manufacturer, since it developed Japan’s firstoxygen generator in 1934. The Company was formed in 2004 through the merger of Nippon
Sanso Corporation and Taiyo Toyo Sanso Co., Ltd. (“Taiyo Toyo Sanso”). At that time,
Taiyo Toyo Sanso was in an alliance relationship with Mitsubishi Chemical and engaged in theindustrial gas manufacturing business through a joint venture of Taiyo Toyo Sanso and
Mitsubishi Chemical, and Mitsubishi Chemical possessed 50,552,926 shares of the Taiyo Toyo
Sanso (34.85% of the total number of the then issued shares of the Taiyo Toyo Sanso). As aresult of the formation of the Company, Mitsubishi Chemical became the largest shareholderof the Company, holding 40,947,870 shares of the Company (10.09% of the total number of
the then issued shares of the Company). Mitsubishi Chemical continued to acquire theCompany shares thereafter through the market, and as a result, by the end of March 2010, thenumber of the Company shares owned by Mitsubishi Chemical reached 60,947,870 shares(15.12% of the then issued shares of the Company). Although the number of the Company
shares owned by Mitsubishi Chemical has not been changed since then, as stated below,
Mitsubishi Chemical’s current shareholding ratio has become 14.07% due to the issuance of
new shares by the Company by way of third-party allotment to the Tender Offeror.
The Tender Offeror, Mitsubishi Chemical’s parent company, deeply understands theeffectiveness of the Company’s business strategies, and the potential for improvement in the
Company. The Tender Offeror and the Company therefore believed that they would be able
to further expand their business opportunities by causing the Company to establish a broad
alliance relationship with the Tender Offeror and its respective subsidiaries, including
Mitsubishi Chemical (collectively, the “Tender Offeror Group”). As announced in the press
release, “Notice Regarding the Capital and Business Alliance between Taiyo Nippon Sanso
Corporation and Mitsubishi Chemical Holdings Corporation” dated September 26, 2013, bothcompanies thus agreed to create a business alliance relationship, and executed a capital andbusiness alliance agreement. As announced in the Company’s press release, “NoticeRegarding Issuance of New Shares and Disposition of Treasury Shares by Way of Third-Party
Allotment, and Change of the Principal Shareholder” dated September 26, 2013, for the
purpose of making the business alliance between both companies even stronger to generate asynergistic effect, and also meeting the Company’s financial needs concerning future businessdevelopment, including capital investment, the Company issued 30,000,000 new shares anddisposed of 15,096,000 treasury shares by way of third-party allotment to the Tender Offeror(payment date: October 15, 2013; and issue price per share: 687 yen). Furthermore, theTender Offeror has acquired certain number of the Company shares through market
transactions before and after such third-party allotment. As a result, as of today, the Tender
Offeror holds 55,850,000 Company shares (shareholding ratio: 12.90%), Mitsubishi Chemicalholds 60,947,870 Company shares (shareholding ratio: 14.07%) and together they hold116,797,870 Company shares in total (shareholding ratio: 26.97%).
Afterward, based on the execution of the capital and business alliance agreement by bothcompanies and the implementation of the third-party allotment by the Company, bothcompanies discussed and evaluated, among other things, as to the agreed-upon businessalliance areas, the terms and conditions as well as the timing of implementation, and as to4other areas, potential business alliances or business development. These discussions andevaluations were for the purpose of maximizing synergies between both corporate groups. In
this process, both companies shared a common understanding that it is essential to further
strengthen the foundation of their businesses in order to respond to changes in the global
competitive environment, and for that purpose, it is necessary to create further businesssynergies through cooperation by both companies as members of the same corporate groupbased on an enhanced capital relationship and through effective use of management resourcesof both companies. In order to achieve this goal, both companies agreed to strengthen thecapital relationship and business alliance between both companies through the Tender Offer.
Both companies expect that the Company’s changing from an equity method affiliate of theTender Offeror to a consolidated subsidiary of the Tender Offeror will create an even firmer
alliance and a broad range of synergies through, inter alia, disclosure and supply of
management resources that will serve as the foundation of their businesses. Both companies
believe that it will become possible for both companies to cooperate more closely with eachother than previously contemplated. Such cooperation will include, for instance, on-sitecooperative business such as mutual utilization of both companies’ supply chains in andoutside of Japan and the Company’s gas supply to the overseas manufacturing bases
developed by the Tender Offeror, and joint research and development in certain advanced
fields.
The Tender Offer is aimed at enhancing the capital and business alliance relationship between
both companies and improving the corporate value of them, through the Tender Offeror’sacquisition of the majority of voting rights of the Company, and the reorganization of theCompany as a consolidated subsidiary, through the Tender Offer.
Both companies will work on a detailed examination of promoting the mutual use of theirrespective distribution channels. To be more specific, both companies will consider the
possibilities of cooperative business and transactions in every business segment, including the
expansion of sales in the Company’s medical care business (medical gases and related
equipment) through the Tender Offeror’s distribution channels, and the utilization of theCompany’s distribution channels for the Tender Offeror’s artificial spa generators and CFRP
pressure vessels.
The Company has thus far supplied gases through the piping (on-site plant method), mainly tolarge customers in Japan. From now on, the Company intends to utilize its know-how forstably supplying gases, which it has fostered over years for major domestic customers, for new
overseas manufacturing bases that will be planned by the Tender Offeror. By doing so, theCompany aims to further expand overseas business. The Company will also procure the baseload that is stable in the long term, by supplying gases through the piping method, and absorb
demands for liquefied gases, cylinder gases, and gas-related equipment in neighboringmarkets, thereby aiming to expand its sales through the synergetic effect generated withexisting products/business.
(ii)

Management Policy after the Tender Offer
With respect to the management structure of the Company after the consummation of theTender Offer, as described in “(iv)v. Operation and Maintenance of the Listing of theCompany after the Consummation of the Tender Offer” below, after the consummation of theTender Offer, the Tender Offeror intends to nominate, in principle, two (2) persons ascandidates for the Company’s directors (as of today, the total number of the Company’s
directors is 17), and to nominate a candidate for the Company’s representative director andchairman out of those two (2) persons. However, a candidate for the Company’s
representative director and president is planned to be nominated by the Company.

5

Although the Company will manage its business pursuant to the Tender Offeror’s “Internal
Rules on the Group Management” after the consummation of the Tender Offer, the Company
will continue to be managed on respect for its autonomy, and the Company’s corporate nameand the location of its head office are intended to be maintained.
As described in “(iv) Outline of the Agreement” below, the Tender Offeror and the Company
agreed that the Tender Offeror would maintain the Tender Offeror Group’s collective
ownership ratio of the Company shares. The Tender Offeror does not have any plan ofacquiring additional Company shares after the consummation of the Tender Offer and intends
to own all of its Company shares including those to be acquired through the Tender Offer(including the Company Shares owned by Mitsubishi Chemical), for a long term.
(iii)

Grounds for the Opinion Concerning the Tender Offer
1,030 yen per share, which is the purchase price in the Tender Offer by the Tender Offeror (the“Tender Offer Price”), includes (a) a premium of 28.43% (fractions are rounded to the nearest
hundredth; hereinafter the same applies to the calculation of premium rates) on 802 yen, whichis the closing price of the Company shares quoted on the Tokyo Stock Exchange on May 12,
2014, which is the business day immediately preceding May 13, 2014 on which the executionof the Agreement by the Tender Offeror and the Company was announced, (b) a premium of
26.38% on 815 yen, which is the simple average closing price of the Company shares quoted
for the past one (1) month period to May 12, 2014, (c) a premium of 31.04% on 786 yen,which is the simple average closing price of the Company shares quoted for the past three (3)month period to May 12, 2014, and (d) a premium of 38.44% on 744 yen, which is the simple
average closing price of the Company shares quoted for the past six (6) month period to May
12, 2014. The Tender Offer Price of 1,030 yen per share includes a premium of 5.97% on
972 yen, which is the closing price of the Company shares quoted on the Tokyo Stock
Exchange on September 26, 2014, which is the business day immediately preceding today.
The Company has appointed Mizuho Securities Co., Ltd. (“Mizuho Securities”) as its financial
advisor and a third-party appraiser, and Nishimura & Asahi as its legal advisor, and has held
multiple consultations and negotiations with the Tender Offeror regarding the significance andpurposes of the Tender Offer, the post-Tender Offer management policies, and the various
conditions of the Tender Offer. Regarding the Tender Offer Price, after receiving a proposal
regarding the Tender Offer Price from the Tender Offeror, the Company obtained a sharevaluation report (the “Share Valuation Report of May 2014”) from Mizuho Securities asreference material on May 13, 2014, for assessing the fairness of the proposed Tender Offer
Price, as stated in “(3) Measures to Ensure the Fairness of the Tender Offer Such as Measures
to Ensure the Fairness of the Tender Offer Price and to Avoid a Conflict of Interest” below.
(The Company did not request that Mizuho Securities issue any opinion stating that the Tender
Offer Price is fair from a financial perspective (fairness opinion).)Based on the contents of the Share Valuation Report of May 2014 obtained from Mizuho
Securities, and on legal advice from Nishimura & Asahi, the Company held a board of
directors’ meeting on May 13, 2014, and seriously considered the various conditions of theTender Offer.
As a result, the board of directors of the Company resolved that if the Tender Offer
commenced, the board would: (i) issue an opinion in support of the Tender Offer, since theCompany reached the conclusion that building an even firmer alliance with the Tender Offeror
based on the stabilized capital relationship, which was subject to the consummation of theTender Offer, would contribute to the enhancement of the Company’s corporate value, andeventually, its shareholder value, and (ii) take a neutral position on whether to recommend thatthe shareholders of the Company accept the Tender Offer and defer to the decision of eachshareholder as to whether to accept the Tender Offer, since the maximum number of shares to6

be purchased was to be set in the Tender Offer and accordingly, the listing of the Company
Shares was expected to be maintained continuously after the Tender Offer.
Regarding the resolutions at the meeting of the Company’s board of directors mentioned
above, Mr. Shotaro Yoshimura, who was an external director of the Company at that time, did
not participate in the discussion or resolution at the board of directors’ meeting stated above,in order to enhance the fairness, the transparency and the objectivity in the process ofdecision-making regarding the Tender Offer, and to avoid a conflict of interest, because heconcurrently served as a director of the Tender Offeror. All of the above resolutions at theCompany’s board of directors’ meeting were adopted by a unanimous vote of all directors
present, excluding Mr. Shotaro Yoshimura. Further, all four (4) corporate auditors of theCompany attended the above board of directors’ meeting, and stated that they had noobjections to the resolutions.
Thereafter, in order to commence the Tender Offer, it was necessary to consider changes in themarket environment, because more than four (4) months have passed since the scheduled
Tender Offer was announced in the press release dated May 13, 2014. In order to re-assess
the appropriateness of the Tender Offer Price, the Company again obtained a share valuation
report (the “Share Valuation Report of September 2014”) from Mizuho Securities as referencematerial on September 29, 2014, as stated in “(3) Measures to Ensure the Fairness of theTender Offer Such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid a
Conflict of Interest” below. (The Company has not requested that Mizuho Securities issue
any opinion stating that the Tender Offer Price is fair from a financial perspective (fairness
opinion).)Based on the contents of the Share Valuation Report of September 2014, and on legal advice
from Nishimura & Asahi, the Company held a board of directors’ meeting on September 29,
2014, and seriously considered the various conditions of the Tender Offer. As a result, theboard of directors of the Company has unanimously resolved to (i) issue an opinion in supportof the Tender Offer, since the Company has reached the conclusion that building an evenfirmer alliance with the Tender Offeror based on the stabilized capital relationship, which is
subject to the consummation of the Tender Offer, will contribute to the enhancement of theCompany’s corporate value, and eventually, its shareholder value, and (ii) take a neutral
position on whether to recommend that the shareholders of the Company accept the Tender
Offer and defer to the decision of each shareholder as to whether to accept the Tender Offer,since the maximum number of shares to be purchased has been set in the Tender Offer andaccordingly, the listing of the Company Shares is expected to be maintained continuously after
the Tender Offer.
Further, all four (4) corporate auditors of the Company attended the above board of directors’
meeting, and stated that they had no objections to the resolutions. There are no directors or
corporate auditors who have any special interest in the resolutions at the board of directors’
meeting on September 29, 2014 regarding the above-mentioned Tender Offer.
(iv).

Outline of the Agreement
As described in “(i) Overview of the Tender Offer” above, the Tender Offeror and theCompany concluded the Agreement on May 13, 2014. The outline of the Agreement is as
below.
i.

Purpose and Outline of the Agreement
By aiming to further enhance the capital and business alliance relationship between
both companies, and improve the corporate value of both companies, in order to7

survive the global competition, which is predicted to become fiercer in the future, thecompanies agreed to conduct the Tender Offer, to achieve the said purposes.
ii.

Launch of the Tender Offer by the Tender Offeror
The Tender Offeror will launch the Tender Offer subject to the satisfaction, as of thebusiness day immediately preceding the commencement date of the Tender Offer, ofthe following conditions precedent: (a) the Company’s board of directors has resolved
to express the Supporting Opinion as defined in “iii. Support and Revocation of
Support of the Tender Offer by the Company” below, and has announced theSupporting Opinion; (b) the Company has not violated any of its obligations under the
Agreement to be performed by the time of commencement of the Tender Offer in any
material respect; (c) the Company’s representations and warranties are true and correct
in all material respects; (d) necessary licenses, approvals, and so on have beenobtained, or the relevant waiting period has expired, without any objection being
withheld, in relation to the procedures and responses required under domestic andforeign competition laws; (e) there is no judgment, decision, order, or similar
obligation from a court or administrative agency that prohibits commencement of theTender Offer, or places restrictions on the Tender Offer; (f) no material adverse effecthas occurred with respect to the Company’s business, assets, liabilities, financial
conditions, operating results, cash flow status, or future earnings plan; and (g) there isno material fact or a Fact Concerning Tender Offer, etc. (as defined in Article 167(3)of the Act) that has not yet been announced regarding the Company. If an event
falling under (f) above has occurred by the time of commencement of the Tender
Offer, the companies will faithfully consult with each other regarding the responses tobe taken regarding the Tender Offer, including revision of its conditions.

iii.

Support and Revocation of Support of the Tender Offer by the Company
The Company shall express and announce its opinion approving the Tender Offer (the“Supporting Opinion”), and shall maintain the Supporting Opinion until the expirationof the Tender Offer period. However, the Company’s expression of the Supporting
Opinion shall be subject to the satisfaction, as of the business day immediately
preceding the commencement date of the Tender Offer, of the following conditions
precedent: (a) the Tender Offeror has not violated any of its obligations under the
Agreement to be performed by the time of commencement of the Tender Offer in any
material respect; (b) the representations and warranties of the Tender Offeror are trueand correct in all material respects; (c) no event has occurred that will materially affectthe corporate value of the Company, and that will thus cause it to be reasonably
decided to be inappropriate for the Company to support the Tender Offer; and (d)there is no proposal for a tender offer of the Company shares or any other large
purchasing transaction, etc. of the Company’s Shares, etc. by a third party other than
the Tender Offeror, that proposes conditions that are superior to those of the Tender
Offer and that, due to expressing the Supporting Opinion despite the existence of sucha Competing Transaction may, in reasonable judgment, cause the Company’s directors
to be in violation of their duty to exercise the due care of a prudent manager.

iv.

Maintenance of Ownership Ratio After the Consummation of the Tender Offera)

The Tender Offeror shall maintain the Tender Offeror Group’s collective ownership
ratio in the Company after the consummation of the Tender Offer.

b)After the Tender Offer, if the Company intends to conduct any act that will result in
the Tender Offeror Group’s ownership ratio of the Company shares becoming less thanthe majority of the total number of issued Company’s shares, then the Company shall,
8

upon consultation with the Tender Offeror, provide the Tender Offeror with areasonably acceptable opportunity to maintain Tender Offeror Group’s ownership ratioof the Company shares.
v.

Operation and Maintenance of the Listing of the Company after the Consummation of
the Tender Offera)

The Company shall manage its business pursuant to the “Internal Rules on the GroupManagement” of the Tender Offeror. Under the “Internal Rules on the GroupManagement”, Tender Offeror shall respect the autonomy of the Company’s
management, and shall support and cooperate with the Company in full force.

b)

The Tender Offeror shall maintain the listing of the Company shares, and shall not
conduct any act intended to abolish their listing.

c)

The Tender Offeror may nominate, in principle, two persons, as candidates for theCompany’s directors, out of whom the Tender Offeror may nominate a candidate for
the Company’s representative director and chairman. The Company may nominate acandidate for the Company’s representative director and president.

d)

The Company shall, in principle, maintain its corporate name, and the location of its
head office.

(3)

Measures to Ensure the Fairness of the Tender Offer Such as Measures to Ensure the Fairnessof the Tender Offer Price and to Avoid a Conflict of Interest(i)

Obtaining Share Valuation Reports from Independent Third-party Appraiser
As stated in “3.(2)(iii) Grounds for the Opinion Concerning the Tender Offer” above as
measures to ensure the fairness of the Tender Offer, the Company received share valuation
reports as reference materials from Mizuho Securities, an independent third-party appraiser
having no material interest in either company and which is not a related party of either
company, upon determining the appropriateness of the Tender Offer Price. Because theCompany takes a neutral position on whether to recommend that the shareholders of theCompany accept the Tender Offer, and defers to the decision of each shareholder as to whether
to accept the Tender Offer, the Company has not requested that Mizuho Securities issue any
opinion stating that the Tender Offer Price is fair from a financial perspective (fairness
opinion), in light of actual practices in similar cases.
i.

Outline of the Share Valuation Report of May 2014
Mizuho Securities analyzed the value of the Company shares, upon certain conditions,based on the financial information and the financial forecasts, which the Company had
provided. Mizuho Securities calculated the value of the Company shares using (i)the average market price method, since the Company shares are listed on the Tokyo
Stock Exchange and the market price of those shares is available there; (ii) thecomparable company method, since there are multiple listed companies engaged inbusinesses relatively similar to the business of the Company, and accordingly it ispossible to estimate the value of the Company shares by comparing the Company withthose similar companies; and (iii) the DCF method, in order to reflect the performanceof the Company’s future business activities on the valuation.
The valuation ranges per Company share calculated by using the above methods are as
follows, respectively:
9Average Market Price Method:
Comparable Company Method:
DCF Method:

between 744 yen and 815 yen.
between 777 yen and 1,064 yen.
between 779 yen and 1,169 yen.

With the average market price method, Mizuho Securities used May 12, 2014 as thebase date, and the valuation was based on 802 yen, which is the closing share price on
the base date; 815 yen, which is the simple average closing price for the past one (1)month; 786 yen, which is the simple average closing price for the last three (3)months; and 744 yen, which is the simple average closing price for the last six (6)months on the First Section of the Tokyo Stock Exchange.
With the comparable company method, Mizuho Securities valued the Company sharesthrough comparison with market share prices and financial metrics (indicating
elements such as profitability) of listed companies engaged in businesses relatively
similar to the business of the Company.
With the DCF method, Mizuho Securities calculated the value of the Company sharesby discounting the free cash flows that the Company is expected to generate in or after
the fiscal year ending March 2015, to present value using certain discount rates. It
was based on assumptions derived from multiple sources, including profit andinvestment projects in the Company’s business plans, and publicly available
information.
In addition, no significant increases or decreases in profit are anticipated in the
Company’s business plans, on which the DCF analysis was based.
ii.

Outline of the Share Valuation Report of September 2014
Mizuho Securities analyzed the value of the Company shares, upon certain conditions,based on the financial information and the financial forecasts, which the Company had
provided. Mizuho Securities calculated the value of the Company shares using (i)the average market price method, since the Company shares are listed on the Tokyo
Stock Exchange and the market price of those shares is available there; (ii) thecomparable company method, since there are multiple listed companies engaged inbusinesses relatively similar to the business of the Company, and accordingly it ispossible to estimate the value of the Company shares by comparing the Company withthose similar companies; and (iii) the DCF method, in order to reflect the performanceof the Company’s future business activities on the valuation.
The valuation ranges per Company share calculated by using the above methods are as
follows, respectively:
Average Market Price Method:
Comparable Company Method:
DCF Method:

between 744 yen and 815 yen.
between 868 yen and 1,126 yen.
between 740 yen and 1,251 yen.

With the average market price method, Mizuho Securities used May 12, 2014 as thebase date, and the valuation was based on 802 yen, which is the closing share price on
the base date; 815 yen, which is the simple average closing price for the past one (1)month; 786 yen, which is the simple average closing price for the last three (3)months; and 744 yen, which is the simple average closing price for the last six (6)months on the First Section of the Tokyo Stock Exchange.

10With the comparable company method, Mizuho Securities valued the Company sharesthrough comparison with market share prices and financial metrics (indicating
elements such as profitability) of listed companies engaged in businesses relatively
similar to the business of the Company.
With the DCF method, Mizuho Securities calculated the value of the Company sharesby discounting the free cash flows that the Company is expected to generate in or after
the fiscal year ending March 2015, to present value using certain discount rates. It
was based on assumptions derived from multiple sources, including profit andinvestment projects in the Company’s business plans, and publicly available
information.
In addition, no significant increases or decreases in profit are anticipated in the
Company’s business plans, on which the DCF analysis was based.
(ii)

Advice from Independent Law Firm
The Company received legal advice regarding the decision-making method and process of theCompany’s board of directors with respect to the Tender Offer from Nishimura & Asahi, alegal advisor independent from both companies, in order to ensure fairness andappropriateness of the decision-making method and process.

(iii)

Unanimous Approval by the Non-Interested Directors and Corporate Auditors of the Company
The Company and the Tender Offeror shared a common understanding that it is essential tofurther strengthen the foundation of their businesses in order to respond to changes in the
global competitive environment, and for that purpose, it is necessary to create further businesssynergies through both companies’ cooperation as members of the same corporate group basedon an enhanced capital relationship and through effective use of the management resources ofboth companies.
Based on the consideration of the enhancement of corporate value and shareholder value as
above, the intention of the Tender Offeror, the contents of the Share Valuation Report of May
2014 prepared by Mizuho Securities, legal advice from Nishimura & Asahi, and other related
documents, the Company held a board of directors’ meeting on May 13, 2014, and seriously
considered the various conditions of the Tender Offer.
As a result, the board of directors of the Company resolved that if the Tender Offer
commenced, the board would: (i) issue an opinion in support of the Tender Offer, since theCompany reached the conclusion that building an even firmer alliance with the Tender Offeror
based on the stabilized capital relationship, which was subject to the consummation of theTender Offer, would contribute to the enhancement of the Company’s corporate value, andeventually, its shareholder value, and (ii) take a neutral position on whether to recommend thatthe shareholders of the Company accept the Tender Offer, and defer to the decision of eachshareholder as to whether to accept the Tender Offer, since the maximum number of shares tobe purchased was to be set in the Tender Offer, and accordingly, the listing of the Company
shares was expected to continue to be maintained after the Tender Offer. Regarding theresolutions at the meeting of the Company’s board of directors mentioned above, Mr. Shotaro
Yoshimura, who was an external director of the Company at that time, did not participate in
the discussion or resolution at the board of directors’ meeting stated above, in order to enhance
the fairness, the transparency and the objectivity in the process of decision-making regarding
the Tender Offer, and to avoid a conflict of interest, because he concurrently served as adirector of the Tender Offeror. All of the above resolutions of the Company’s board of
directors’ meeting were adopted by a unanimous vote of all directors present, excluding Mr.
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Shotaro Yoshimura. Further, all four (4) corporate auditors of the Company attended theabove board of directors’ meeting, and stated that they had no objections to the resolutions.
Thereafter, in order to commence the Tender Offer, it was necessary to consider changes in themarket environment, because more than four (4) months have passed since the scheduled
Tender Offer was announced in the press release dated May 13, 2014. Therefore, based on
the contents of the Share Valuation Report of September 2014 prepared by Mizuho Securities,
and legal advice from Nishimura & Asahi, the Company held a board of directors’ meeting on
September 29, 2014, and seriously considered the various conditions of the Tender Offer. As
a result, the board of directors of the Company has unanimously resolved to (i) issue an
opinion in support of the Tender Offer, since the Company has reached the conclusion thatbuilding an even firmer alliance with the Tender Offeror based on the stabilized capital
relationship, which is subject to the consummation of the Tender Offer, will contribute to theenhancement of the Company’s corporate value, and eventually, its shareholder value, and (ii)take a neutral position on whether to recommend that the shareholders of the Company accept
the Tender Offer and defer to the decision of each shareholder as to whether to accept theTender Offer, since the maximum number of shares to be purchased has been set in the Tender
Offer and accordingly, the listing of the Company Shares is expected to be maintained
continuously after the Tender Offer. Further, all four (4) corporate auditors of the Company
attended the above board of directors’ meeting, and stated that they had no objections to theresolutions. There are no directors or corporate auditors who have any special interest in the
resolutions at the board of directors’ meeting on September 29, 2014, regarding the abovementioned Tender Offer.
(4)

Likelihood of and Reasons for Delisting
As of today, the Company shares are listed on the Tokyo Stock Exchange First Section. The
Tender Offer does not purport to have the Company shares delisted. Because the Tender
Offeror has set a maximum number of shares (104,079,476) to be purchased in the Tender
Offer (together with the Company shares that Tender Offeror and Mitsubishi Chemical hold asof today, the total holding percentage after the Tender Offer will be 51.00%), the ordinary
shares of the Company will continue to be listed on the Tokyo Stock Exchange First Section
after the Tender Offer.

(5)Matters Relating to the Second-Step Takeover
The Tender Offer does not purport a Second-Step Takeover.

4.

Matters Related to Material Agreement between Tender Offeror and Shareholders and/or
Directors of Company Regarding the Offer in the Tender Offer
Not applicable

5.

Details Regarding Provision of Benefits by Tender Offeror or its Specially Interested Persons
Not applicable

6.

Policy for Responses Regarding Basic Policies on the Control of the Company
The Company updated the “Measures against Large Volume Purchases of the Company Stock(Defensive Measures for Mergers)” in the seventh ordinary meeting of shareholders held on
June 29, 2011 and the tenth ordinary meeting of shareholders held on June 27, 2014, which
had been introduced in the fourth ordinary meeting of shareholders held on June 27, 2008.
The Company resolved at its board of directors’ meeting held May 13, 2014 to support theTender Offer, admitting that the acquisition of the Company shares by the Tender Offeror
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under the Tender Offer does not fall within the scope of the large volume purchases prescribedin the Defensive Measures for Mergers.
7.

Inquiries to the Tender Offeror
Not applicable

8.

Request for Extension of the Tender Offer Period
Not applicable

9.

Future Prospects(1)

Policies, etc. After the Tender Offer
Please refer to “3.(2)(ii) Background and Reason for the Tender Offer, and Management
Policy after the Tender Offer” and “3.(4) Likelihood of and Reasons for Delisting” above forpolicies, etc. after the Tender Offer.

(2)

Business Forecasts
The Company will make an announcement in a timely manner, if it becomes evident that theTender Offer has a material impact on the Company’s business results.

(Reference)
Outline of the Tender Offer, etc.
“Mitsubishi Chemical Holdings Corporation Announces Commencement of Tender Offer for Shares ofCommon Stock of Taiyo Nippon Sanso Corporation (TSE Code: 4091)” published by the Tender
Offeror today, and attached to this document
END

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