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

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

Announcement Regarding Planned Commencement of the Tender Offer for the Share
Certificates, Etc. of KITO CORPORATION (Securities Code: 6409)
by Lifting Holdings BidCo, Inc.
This is to announce that Lifting Holdings BidCo, Inc. released the "Announcement Regarding Planned
Commencement of the Tender Offer for the Share Certificates, Etc. of KITO CORPORATION (Securities Code:6409)" attached hereto today.

End
The purpose of this document is to, in accordance with Article 30, Paragraph 1, Item 4 of the Order for
Enforcement of the Financial Instruments and Exchange Act, make an announcement based on a requestthat Lifting Holdings BidCo, Inc. (the tender offeror) made to KITO CORPORATION (the target
company of the tender offer).

(Attachment)“Announcement Regarding Planned Commencement of the Tender Offer for the Share Certificates, Etc. of
KITO CORPORATION (Securities Code: 6409)” as of May 16, 2022.

[Translation]
May 16, 2022
Company Name:
Representative:

Lifting Holdings BidCo, Inc.
Robert Desel, Representative Director

Announcement Regarding Planned Commencement of the Tender Offer for the Share
Certificates, Etc. of KITO CORPORATION (Securities Code: 6409)
Lifting Holdings BidCo, Inc. (“Offeror”) hereby announces that, on May 16, 2022, it
decided to acquire the share certificates, etc. of KITO CORPORATION (Securities Code: 6409,
Prime Market of the Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”); the “Target
Company”) through a tender offer (the “Tender Offer”) under the Financial Instruments andExchange Act (Act No. 25 of 1948, as amended) (the “Act”).
Because the procedures and steps required under competition laws in Japan, the U.S.,
China, Austria, Cyprus and Serbia are expected to take time to complete, the Offeror plans topromptly commence the Tender Offer on the date that is (i) within 10 business days after theTender Offer Conditions Precedent (Note 1), including the completion of such procedures andsteps, are satisfied (or waived by the agreement of Lifting Holdings Limited, which is the parent
company holding all of the issued and outstanding shares of the Offeror (“HoldCo”), Crosby
US Acquisition Corp., which is a wholly owned subsidiary of HoldCo (“Crosby US”), Crosby
UK Acquisition Limited, which is a wholly owned subsidiary of HoldCo (“Crosby UK”, and
HoldCo and its subsidiaries, including Crosby US, Crosby UK and The Crosby Group LLC(“Crosby”), established under the laws of Delaware whose shares are indirectly wholly owned
by HoldCo through Crosby US’s wholly-owned subsidiaries (collectively, “Crosby US Other
Wholly-owned Sub”), collectively “Crosby Group”) and the Target Company) and (ii)separately agreed among HoldCo, Crosby US, Crosby UK and the Target Company (the“Tender Offer Commencement Date”). As of today, the Offeror aims to complete procedureswith domestic and foreign regulatory authorities on or around mid October 2022 and commence
the Tender Offer on or around late October 2022, but it is difficult to accurately estimate theamount of time required for those procedures, etc. as they involve domestic and foreign
regulatory authorities. Given that fact, the detailed schedule for the Tender Offer will bepromptly announced once we have obtained all regulatory clearances. Any changes to the
expected timing of the obtainments of such regulatory clearances and the commencement of
the Tender Offer as stated above will be also announced promptly.
Note 1: The Business Combination Agreement (as defined in the “(1) Summary of
the Tender Offer” of “1. Purpose of the Tender Offer”, hereinafter thesame) provides that the commencement of the Tender Offer is subject tothe following conditions precedent: (i) the required clearances (Note 3)
shall have been obtained; (ii) the board of directors of the Target Company
has adopted a resolution to express an opinion in support of the Tender
Offer and a recommendation that its shareholders and holders of Stock
Acquisition Rights (“Stock Acquisition Right Holders”) tender their sharesand share options, respectively, in response to the Tender Offer(collectively, the “Opinion to Support and Recommend to Tender in theTender Offer”), and the Opinion to Support and Recommend to Tender in
the Tender Offer shall remain in effect at the time the Tender Offer is1commenced without amendment, supplement, or modification; (iii) the
special committee of the Target Company reviewing the Business
Combination shall have submitted to the board of directors of the Target
Company an opinion that it is appropriate for the board of directors of theTarget Company to issue the Opinion to Support and Recommend to
Tender in the Tender Offer, and such opinion shall remain in effect at thetime the Tender Offer is commenced without amendment, supplement, or
modification; (iv) the Target Company performed and complied with, inall material respects, all obligations under the Business Combination
Agreement (Note 4) that are required to be performed and complied withby it on or before the Tender Offer Commencement Date, and therepresentations and warranties of the Target Company set forth in theBusiness Combination Agreement (Note 5) shall be true and correct in allmaterial respects as of the date of the Agreement and the Tender Offer
Commencement Date; (v) HoldCo Crosby US and Crosby UK performed
and complied with, in all material respects, all obligations under theBusiness Combination Agreement (Note 6) that are required to be
performed and complied with by it on or before the Tender Offer
Commencement Date, and the representations and warranties 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 ofthe date of the Agreement and the Tender Offer Commencement Date; (vi)no governmental authority of any competent jurisdiction shall haveenacted, 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 the consummation of the Business Combination;(vii) there shall be no “material fact pertaining to the business” (Article
166, Paragraph 2 of the Act) of the Target Company that has not been
“publicized” (Article 166, Paragraph 4 of the Act) by the Target Company;(viii) no event or circumstance shall have occurred since the date of theBusiness Combination Agreement that 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 and remains in full force and effect;(collectively, “Tender Offer Conditions Precedent”).
Note 2: Under the Business Combination Agreement, among the Tender Offer
Conditions Precedent, (i) to (iii), (vi), (vii) and (ix) may be waived, if
permitted by applicable laws, by the agreement of HoldCo, Crosby US,
Crosby UK and the Target Company, (v) may be waived by sole discretionof the Target Company, and (iv) and (viii) may be waived by sole discretionof HoldCo, Crosby US and Crosby UK. As for (i), the Offeror may, wherepermitted by applicable law, commence the Tender Offer earlier thancurrently contemplated by waiving the condition when the Offeror
reasonably expects to obtain the required clearances during the Tender
Offer Period to offer the shareholders of the Target Company anopportunity to tender their shares earlier and quickly proceed with theBusiness Combination.
Note 3: Notifications in relation to competition laws of Japan, the U.S., China,
Austria, Cyprus and Serbia.
2Note 4: Please refer to “(6) Matters relating to material agreements regarding theTender Offer” of “1. Purpose of the Tender Offer” for the obligation of theTarget Company provided in the Business Combination Agreement.
Note 5: Please refer to “(6) Matters relating to material agreements regarding theTender Offer” of “1. Purpose of the Tender Offer” for the representations
and warranties of the Target Company provided in the Business
Combination Agreement.
Note 6: Please refer to “(6) Matters relating to material agreements regarding theTender Offer” of “1. Purpose of the Tender Offer” for the obligations of
HoldCo, Crosby US and Crosby UK provided in the Business
Combination Agreement.
Note 7: Please refer to “(6) Matters relating to material agreements regarding theTender Offer” of “1. Purpose of the Tender Offer” for the representations
and warranties of HoldCo, Crosby US and Crosby UK provided in theBusiness Combination Agreement.
1.

Purpose of the Tender Offer(1)

Summary of the Tender Offer
The Offeror was established on April 28, 2022 for the primary purpose ofcontrolling and managing the business activities of the Target Company through theacquisition of and holding of the Target Company Shares after the completion 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 business purposes ofholding shares of and managing its subsidiaries. Ascend Overseas Limited(“Ascend”), established under the laws of England and Wales, with its businesspurpose of holding shares of HoldCo, holds approximately 96.7% of the shares of
HoldCo (and its management holds the remainder). Funds, investment vehicles
and/or separately managed accounts (Note 8) advised by Kohlberg Kravis Roberts& Co. L.P., an investment advisory company established under the laws ofDelaware, the United States (together with its and their affiliates and other related
funds, “KKR” and those funds, etc., collectively, “KKR Advisory Funds, etc.”)
directly or indirectly holds a 100% stake in Ascend. HoldCo directly holds a 100%
stake in Crosby US, established under the laws of Delaware, and Crosby UK,
established under the laws of England and Wales and indirectly holds a 100% stakein Crosby (Crosby, Crosby US, Crosby UK, HoldCo and the Offeror collectively
the “Offerors.”). The Offerors and KKR do not hold any Target Company Shares asof today.
Note 8: “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/parties to that account.
KKR Advisory Funds, etc. acquired Crosby US’s subsidiaries and Crosby
UK’s subsidiaries through Ascend from Melrose Industries Plc in 2013. Crosby US
and Crosby UK were used as acquisition vehicles for such acquisition and theacquisition resulted in the current form of Crosby Group. With roots dating back to1836 and having a headquarter function in the United States, Crosby Group has
been engaged in the lifting and securement hardware (Note 9) industry for nearly3

two centuries with a focus on safety, quality, training and engineering leadership.
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. With an international network ofapproximately 3,000 authorized distributors, Crosby Group provides a broad rangeof products used in a wide variety of industries and applications. Given its focus on
being highly responsive to customer needs, Crosby Group has prioritizedinvestment in innovation and new product development in lifting securement
hardware and related technology. This focus has been further supported bysignificant investments into the operations of the business, including an investment
in a manufacturing facility in Longview, Texas, that improved employee safety,
increased output, and bolstered efficiency. Additionally, Crosby Group has also
made acquisitions of companies that are complementary with Crosby Group’sbusiness to support its continued growth and customer value proposition.
Note 9: Lifting and securement hardware are hardware and accessories used,
usually in conjunction with lifting equipment, to secure, lift or moveequipment, construction components or other assets.
KKR is a leading global investment firm that offers alternative asset
management for its investors as well as capital markets and insurance solutions.
KKR sponsors investment funds that invest in private equity, credit and real assets
and has strategic partners that manage hedge funds in which KKR owns a minority
stake.
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. Since 2010,
KKR Advisory Funds, etc. have completed investments into 10 companies
headquartered in Japan, including 3 take private transactions of Japanese publiclylisted companies.
Most recently, KKR’s transaction experience in Japan includes investments
in Hitachi Koki (2017), Hitachi Kokusai Electric (2017), Seiyu Co (2021), andYayoi Co (2022). Through these transactions, KKR has worked and is working tosupport investment into and acceleration of growth for Japanese companies invarious industry sectors, which are expected to achieve high growth in the future
through KKR’s capital resources, and network with such companies. 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, KKR has a 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). In total, KKR had $471 billion in assets undermanagement as of December 31, 2021.
Today, HoldCo, Crosby US, Crosby UK and the Target Company entered intoa business combination agreement (the “Business Combination Agreement”; for thedetails of the Business Combination Agreement, please refer to the section below
4

titled “(6) Matters relating to material agreements regarding the Tender Offer)
regarding a business combination (the “Business Combination”) between the Target
Company Group (27 companies in total, composed of the Target 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,and decided to conduct the Tender Offer for the purpose of acquiring all of thecommon stocks of the Target Company (the “Target Company Shares”) listed on
the Prime Market of TSE as of today and the Stock Acquisition Rights (the “Stock
Acquisition Rights” and the name of each of Stock Acquisition Rights are definedin “(ii) Stock acquisition rights” under “(3) Price of tender offer”; hereinafter thesame) (excluding treasury shares owned by the Target Company; hereinafter thesame), on the condition that the Tender Offer Conditions Precedent are satisfied or
waived as part of the series of transactions (the “Transactions”) to realize theBusiness Combination. Crosby decided that the tender offeror of the Tender Offer
should be the Offeror instead of Crosby US or its subsidiaries, including Crosby, sothat Crosby US and Crosby UK and the Target Company will become sistercompanies after the Merger (defined in the section below “(iv) Management policy
after the Tender Offer”, hereinafter the same) and each group can operate under the
spirit of a “merger of equals” for a smooth integration and maximization of thecorporate value of the Combined Group (as defined in the “(ii) Background,purpose, and decision-making process leading the Offeror to conduct the Tender
Offer” under “(2) Background, purpose, and decision-making process leading to thedecision to conduct the Tender Offer, and management policy following the Tender
Offer”).
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 10): 66.67%) (Note 11), then the Offeror will not purchase any of theTendered Share Certificates, Etc. However, because the purpose is to acquire all of
the Target Company Shares and the Stock Acquisition Rights, the Offeror has not
set a limit on the maximum number of share certificates, etc. to be purchased, andif the total number of Tendered Share Certificates, Etc. is equal to or greater thanthe minimum number of the share certificates, etc. (13,817,400 shares), then theOfferor will purchase all of the Tendered Share Certificates, Etc. The minimum
number of share certificates, etc. to be purchased (13,817,400 shares) is to be theproduct of two thirds of the number of voting rights relating to the Total Number of
Shares After Considering Potential Shares (as defined below) (207,260 voting
rights) (this amounts to 138,174 voting rights; rounded up to the nearest whole
number), multiplied by 100, which is the share unit number of the Target Company.
Because the purpose is to acquire all of the Target Company Shares and the Stock
Acquisition Rights as part of the Transactions, the minimum 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 theCompanies Act is required for carrying out the procedures for the Share
Consolidation as described in the section below titled “(4) Policy for organizational
restructuring after the Tender Offer (matters relating to the “Two-Step
Acquisition”)”.
Note 10: “Ownership percentage” means the percentage (rounded to the two
5

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 Target
Company as of March 31, 2022 (21,048,200 shares) as stated in the“Business Results for the Fiscal Year Ended March 31, 2022 [Japanese
GAAP] (Consolidated)” submitted by the Target Company on May 16,
2022 (the “Target Company’s Business Results”) and (i) the Target
Company Shares (20,000 shares) underlying the Tenth Series Stock
Acquisition Rights (100 stock acquisition rights), (ii) the Target Company
Shares (17,000 shares) underlying the Eleventh Series Stock Acquisition
Rights (85 stock acquisition rights), (iii) the Target Company Shares(20,000 shares) underlying the Thirteenth Series Stock Acquisition Rights
remaining (100 stock acquisition rights), (iv) the Target Company Shares(51,000 shares) underlying the Fourteenth Series Stock Acquisition Rights(255 stock acquisition rights), and (v) the Target Company Shares (40,000
shares) underlying the Fifteenth Series Stock Acquisition Rights (200stock acquisition rights), in each case remaining as of today and as reportedby the Target Company, less the treasury shares (470,181 shares) ownedby the Target Company as of March 31, 2022. This applies hereinafter inthe calculation of the ownership percentage.
Note 11: The minimum number of share certificates, etc. to be purchased is
temporary and depends on the information as of today, and the actual
number of share certificates, etc. to be purchased in the Tender Offer may
differ from the number above due to a change of situation occurring
hereafter. The final minimum number of share certificates, etc. to bepurchased is to be determined before the commencement of the Tender
Offer, based on the latest number of treasury shares owned by the Target
Company available as of the commencement of the Tender Offer.
If the Tender Offer has been successfully completed, but the Offeror is unable
to acquire all of the Target 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“(4) Policy for organizational restructuring after the Tender Offer (matters relating
to the “Two-Step Acquisition”)”, hereinafter the “Squeeze-Out Procedures”) inorder for the Offeror to make the Target Company a wholly-owned subsidiary of
the Offeror after the successful Tender Offer.
The Offeror intends to cover the funds required for the settlement of theTender Offer by equity contributions by HoldCo (the “Contribution”) and by anintercompany loan from Crosby US, a wholly-owned subsidiary of HoldCo. Crosby
US will borrow the funds necessary to permit such loan through incremental
borrowings from financial institutions under its existing credit facilities (the “Debt
Financing”), which will allow Crosby US to source funds at more favorable termswith light covenants regarding the operation of the Target Company Group
compared to financing by the Offeror while maximizing operational flexibility of
the Target Company Group and limiting transaction costs. With respect to the Debt
Financing, it is possible, that a security will be established over part of the sharesor assets of the Target Company Group or that the Target Company Group will6

provide a joint guarantee. HoldCo also intends to cover a part of the Contribution
through an equity financing by KKR North America Fund XI L.P., a limited
partnership affiliated with KKR established under the laws of the U.S.
According to “Announcement of Position Statement on the Planned
Commencement of the Tender Offer for Shares, etc. of KITO CORPORATION by
Lifting Holdings BidCo, Inc. in Connection With the Business Combination of
KITO CORPORATION and Crosby Group” released by the Target Company on
May 16, 2022 (the “Target Company’s Press Release”), at the board of directors
meeting of the Target Company held today, a resolution was made stating that basedon the grounds and reasons set out in the section below titled “(2) Background,purpose, and decision-making process leading to the decision to conduct the Tender
Offer, and management policy following the Tender Offer”, if the Tender Offer
commences, the position of the Target Company as of May 16, 2022 is that it will
declare a position in support of the Tender Offer and that it will recommend that theTarget Company’s shareholders and Stock Acquisition Right Holders accept theTender Offer.
As stated above, since the Offeror plans to promptly commence the Tender
Offer on the date that is (i) within 10 business days after the Tender Offer
Conditions Precedent are satisfied or waived and (ii) agreed among HoldCo, Crosby
US, Crosby UK and the Target Company and the Offeror aims to commence theTender Offer on or around late October 2022 as of today, but it is difficult toaccurately estimate the amount of time required for those procedures, etc. as they
involve domestic and foreign regulatory authorities. Given that fact, the detailed
schedule for the Tender Offer will be promptly announced once we have obtained
all regulatory clearances.
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 Target
Company. As set out in the section below titled “(i) Establishment of an independent
special committee at the Target Company” under “(3) Measures to ensure thefairness of the Tender Offer Price and avoid conflicts of interest, and other measures
to ensure the fairness of the Tender Offer,” the Target Company’s board of directors
additionally resolved that when the Tender Offer commences, the special committee
established by the Target Company will be asked to review whether or not there isany change to the contents of the Report (as defined in the section below titled “(b)Background of examination and negotiations” under “(iii) Decision-making process
and reasons of the Target Company to issue the opinion to support the Tender Offer”
of “(2) Background, purpose, and decision-making process leading to the decision
to conduct the Tender Offer, and management policy following the Tender Offer”),
and if there is no change, to state this fact to the Target Company’s board of directors,
and if there is a change, to state a position after the change, and based on such
position, the Target Company will again publish its position on the Tender Offer
when the Tender Offer commences.
For the details of the resolution of the Target Company’s board of directors
meeting, please refer to the section below titled “(v) Approval of all the directors in
the Target Company and opinions that there has been no objection from any of theTarget Company’s independent statutory auditors” under “(3) Measures to ensure
the fairness of the Tender Offer Price and avoid conflicts of interest, and othermeasures to ensure the fairness of the Tender Offer”.
7The Transaction is substantially as shown in the following diagrams.
<Structure Chart for the Transaction (Note)>
I. Prior to the Tender Offer (current state)
KKR
Advisory
Funds, etc.
100%

AscendHoldCo’s
Management

Approx. 96.7%

Approx. 3.3%

HoldCo100%

100%

Crosby US

Crosby UK

100%

Offeror100%

Shareholdersof Target
Company
100%

Crosby US
Other Whollyowned Sub

TargetCompany

100%

CrosbyII. After the completion of the Tender Offer and the Squeeze-Out Procedures

8

KKR
Advisory
Funds, etc.
100%

AscendHoldCo’s
Management

Approx. 96.7%

Approx. 3.3%

HoldCo100%

100%

Crosby US

Crosby UK

100%

Offeror100%

Crosby US
Other Whollyowned Sub

100%

TargetCompany

100%

CrosbyNote: Figures in the charts are direct or indirect ownership percentages.
(2)

Background, purpose, and decision-making process leading to the decision to
conduct the Tender Offer, and management policy following the Tender Offer
The background, purpose, and decision-making process leading to thedecision to conduct the Tender Offer as well as the management policy following
the Tender Offer are described below. The description of the Target Company Group
included below is based on information released by the Target Company, the Target
Company’s Press Release, and explanations received from the Target Company.
(i)

The Target Company’s operational environment and the Target Company’s
management challenges
Since the Target 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 sellingmaterial handling devices (Note 12) that are vital for lifting, carrying andimmobilizing items. The Target Company began overseas expansion in earnest withthe creation of a US subsidiary in January 1990, and today has 17 businesssubsidiaries operating in 15 countries, including in North America, Asia, andEuropean countries, with revenue outside Japan responsible for around 75% of thetotal revenue of the Target Company Group. The Target Company’s products and9services demonstrate high levels of safety and durability to meet sustained demandat all levels of economic development, and moreover have evolved to meet theneeds of the wide range of industries that need a high level of safety and efficiency
in handling heavy items. The Target 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 thetrust of the market by providing products and services that achieve those proposals,
and becoming “the world’s best hoist manufacturer” by supporting the conduct ofsafe and productive activities in society by customers and adding value to society.
The Target 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.” Based on this, the Target
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 of society while building relationships
with shareholders, investors and all stakeholders in the Target Company Group.
Note 12: “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 Target Company carried out an entity conversion to alimited partnership company in June 1937, and then in July 1944, it both carriedout an entity conversion to a joint stock company and changed its trade name 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 tothe current KITO CORPORATION in November 1970. Thereafter, it listed its
shares as over-the-counter registered stock with the Japan Securities Dealers
Association in October 1980. Since then, the Target Company’s earnings and profits
continued to trend upwards and it expanded the size of its business, but with aprolonged domestic economic slowdown in Japan after the collapse of the 1990’s
bubble economy and difficult financial circumstances, the Target 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 fund headquartered in the U.S., the company announced a managementbuyout, which involved execution of a tender offer for the Target Company Sharesby Carlyle Japan Holdings 3 Co., Ltd. (“CJP3”), wholly owned by Carlyle Group,a share exchange for cash consideration, and an absorption-type merger that madethe Target Company the surviving company and CJP3 the disappearing company,
and which led to the delisting its shares as over-the-counter registered stock in
October 2003. After de-listing, in collaboration with Carlyle Group, the Target
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 aresult, it built a strong base for business growth, as compared to the Target
Company’s sales of JPY 20,759 million and operating profit of JPY 1,002 million
10

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-listing of the Target Company Shares but before
their re-listing on a financial instrument exchange market. Thereafter, in order toachieve the Target Company’s own target of becoming “the world’s best hoist
manufacturer”, and given the equity funding needs to invest in growth and the factthat the Target Company had built a framework to seek to stabilize its business andfinances and make possible realization of sustainable income and expenditures as aresult of a series of structural reforms, to secure access to the stock market, gainsocietal trust and further raise brand awareness, the Target Company listed on thefirst section of the market established by TSE in August 2007. As of today, basedon restructuring of the market divisions of the TSE, the Target Company is listedon the Prime Market, a new market segment of the TSE.
As of today, the Target Company Group’s primary business is thedevelopment, manufacture and sales of material handling equipment such as hoists,
cranes and peripheral devices.
Based on the aforementioned management policy, in its five-year mediumterm management plan from the fiscal year to March 2017 until the fiscal year to
March 2021, the Targett Company aimed for further expansion of the scale ofprofits, listing a return to high profitability, an expanded product portfolio, andconversion to a global organization. Some success was achieved towards thesegoals, and the Target 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 theslowdown in capital expenditure in automobile-related industries, etc. due to theextended COVID-19 pandemic, with the actual value of EBITDA for the fiscal year
to March 2021, which had been targeted to double to JPY 13 billion in five years,
being JPY 7.5 billion, and as a result the Target Company was not able to achieve
the targeted expansion of the scale of profits. Going forward, in addition to steadily
capturing the increase in demand resulting from a return to economic activity as the
COVID-19 pandemic subsides, the Target Company 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 and the like, and of achieving profit growth throughexpansion of its Europe business.
In the medium term, the Target Company believes that in order to achieve
further growth globally in hoist and crane industry in which the Target Company
operates, it is essential for it to win more business in the material handling field inwhich the Target Company is well positioned, and maximize added value forcustomers by expanding the product line up and fields of services. Based on theongoing changes in the hoist and crane industry and accelerating moves by theTarget Company’s competitors to peripheral businesses, in order for the Target
Company Group to raise its overall business to the next stage without being buffeted
by the business environment or social circumstances and to ensure medium andlong-term growth, the Target Company understands the current circumstances torequire agile and rapid expansion of its business domain through decisive
management actions and bold investments in resources.
Given these management challenges and business environment, the Target
Company has considered various management strategies the Target Company could
11take to enhance corporate value, and among those, has heretofore repeatedly
considered measures with respect to a business alliance or a business integration,
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 expansionof the product lineup.
(ii)

Background, purpose, and decision-making process leading the Offeror to
conduct the Tender Offer

Crosby has a highly informed admiration for the Target Company’s brands,
product innovation, product quality, company leadership, and market reputation.
Crosby developed this view since 2014 when KITO Americas, Inc., the Target
Company’s US subsidiary, acquired Peerless Industrial Group, Inc. (“Peerless”), a
company that supplied products to Crosby, thus helping Peerless to introduce
Crosby to the Target Company. Beyond information gathered through these former
supply relationships, Crosby has learned about the business of the Target Company
since November 2016 through publicly available industry information and insights
gathered from trade shows, industry conferences, and has periodically engaged with
the Target Company’s management team, as part of its efforts to identify potential
partners for M&A transactions or other strategic alliances. Through evaluation fromchannel participants such as distributors, end users, and suppliers, Crosby is also
aware of the Target Company’s positive reputation in the industry.
With these positive recognition on the Target Company, Crosby understands
that the Target Company’s Group is experiencing a favorable demand backdrop forits products globally as manufacturing and other industries continue to recover fromthe impacts of the pandemic of COVID-19 in 2020 and 2021. Crosby understands
that the Target Company and Crosby face similar challenges, including material
shortages such as steel, inflationary challenges leading to increased raw material
costs, repair componentry costs, and freight and packaging costs, in the current
supply chain environment such as slowdown in capital expenditure in infrastructure
and industrial-related industries, etc. due to the extended COVID-19 pandemic andthe cost increases resulting from personnel expenses and raw materials prices
affected by inflation pressures and rising transportation expenses, giving it anappreciation for the importance of navigating these challenges.
Crosby believes the combination of the Target Company’s Group and Crosby
Group would provide greater operational resources in the form of capital to invest
in the combined business, sharing practices from each company within each of theTarget Company Group and Crosby Group to enact better safety practices,
employees to engage in product innovation and sharing of ideas, and flexibility tohelp manage these dynamic headwinds, positioning the Combined Group to bebetter equipped to serve customers, employees, and communities in the face of
supply chain challenges and inflationary pressures (HoldCo plans to change its
trade name to Kito | Crosby after the completion of the Business Combination, and
HoldCo after the completion of the Business Combination hereinafter referred to as
the “Combined Company” and the Combined Company and its subsidiaries (i.e. theTarget Company Group and Crosby Group) collectively referred to as the“Combined Group”). As a result, Crosby believes the Combined Group would be
able to maintain better quality from sharing manufacturing practices, and achieve
12better customer service from sharing talent and greater combined experience withservicing customers than either Crosby Group or the Target Company’s Group
could achieve standalone. Additionally, the Combined Group would likely be able
to utilize their complementary capabilities in new product development to create
innovations for new and existing customers of each of Crosby Group and the Target
Company’s Group. Specifically, the Target Company Group has expertise in craneapplications and Crosby Group has expertise in rigging hardware applications(hardware products attached to objects to secure, lift, and suspend), which arecomplementary product areas within the lifting and securement hardware industry.
The Combined Group can also use their complementary geographic presences as
Crosby Group is headquartered in the U.S. while the Target Company Group is
headquartered in Japan, giving the Combined Group better presence globally toservice customers across the globe to add further value to employees, customers,
suppliers and communities, and to promote sales of the products across a broader
global landscape to better serve customers.
Since the acquisition of Crosby in 2013, KKR has closely assisted Crosby inits strategic decision-making processes, including providing advice on Crosby’s
acquisition strategy. Three senior KKR investment professionals and two KKR
Senior Advisors are members of Crosby’s board of directors. In addition, KKR and
Crosby US have entered into a Monitoring Agreement, pursuant to which, among
other services, KKR provides strategic assistance to Crosby with respect to (i)identification, support, negotiation and analysis of acquisitions and dispositions and(ii) support, negotiation and analysis of financing alternatives, including, without
limitation, in connection with acquisitions. As is typical for its investments, KKR
has regular discussions 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. Through such discussions, KKR and
Crosby have identified several potential strategic partners including the Target
Company. Further, throughout the process of due diligence on the Target Company,
KKR assisted Crosby in its evaluation of the Target Company and ultimately
provided support for the transaction given the strategic merits of the CombinedGroup.
Informed by the information gathered through the above research of publicly
available information and insights gathered from trade shows and industry
conferences as part of its efforts to identify potential partners for M&A transactions
including business integration or other strategic alliances and impressed by theTarget Company’s strong franchise and operating performance, for purposes ofseeking possibilities of M&A or other strategic alliances, Crosby initiated highlevel introductions with the Target Company senior management team starting inearly June 2021. Crosby made KKR aware of its high-level introductions with theTarget Company, to which KKR agreed with Crosby’s desire to move forward withthese discussions. These conversations involved preliminary strategic discussion on
the respective businesses and on the structure of the alliance, including strategic
alliance, minority investments, joint venture and business combination, whichallowed Crosby to further hone its appreciation for the Target Company’s businessand to realize how a combination with the Target Company would maximize
corporate value and benefit customers and suppliers by expanding high quality
product offerings, increasing service levels for distributors, and realizing
procurement and manufacturing efficiencies. Based on these preliminary strategic
13

discussions, Crosby decided to commence discussions with the Target Company ona potential combination. A series of touchpoints and check-ins with the Target
Company’s senior team ensued over the subsequent months (early June 2021 to mid
February 2022) allowed Crosby to continue to gain conviction on the strategic
merits of a business combination between the Target Company and Crosby as
Crosby was able to understand and appreciate the Target Company’s management
philosophy, corporate culture, business operation focusing on the quality and safetyof its products and deepening discussions regarding the viability of synergy creation
opportunities and Crosby came to believe that the business combination between
Crosby and the Target Company will enable to 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 byexpanding high quality product offerings, increasing service levels for distributors,
and realizing procurement and manufacturing efficiencies. Crosby conducted an
examination on transaction schemes to achieve the Business Combination with
input from advisors. Given KKR’s experience with many types of transactions, thestrategic assistance provided by KKR to Crosby and the fact that senior KKR
investment professionals and KKR Senior Advisors are members of Crosby’s boardof directors, Crosby sought advice of KKR. During the examination, and based on
advice from advisors and KKR, Crosby reached a conclusion that a tender offer
followed by the squeeze-out would be the most appropriate measure for theTransactions, considering that (i) HoldCo can make the Target Company its whollyowned company and conduct the Business Combination between each of the Target
Company Group and Crosby Group, (ii) the structure and procedure of thetransaction are simple compared to conducting a corporate reorganization under theCompanies Act of Japan or other transactions, given that the Offerors are foreign
entities and have no existing capital relationship with the Target Company, (iii) thetransaction could offer the shareholders of the Target Company an opportunity tosell their shares with premiums if the transaction terms are appropriate, and (iv) it
is a common method of taking a Japanese listed company private. KKR was
supportive of this transaction scheme for the aforementioned reasons. Crosby alsoreached a conclusion that the tender offeror of the Transaction should be the Offeror
instead of Crosby US or its subsidiaries, including Crosby, so that Crosby US and
Crosby UK and the Target Company will become sister companies after the Merger
as stated in the section above “(1) Summary of the Tender Offer”, and each group
can operate under the spirit of a “merger of equals” for a smooth integration andmaximization of the corporate value of the Combined Group.
Ultimately, Crosby submitted a non-binding letter of intent on February 14,2022 proposing a business combination of the Target Company Group and Crosby
Group through a Tender Offer for Target Shares followed by a squeeze out (the“Letter of Intent”). This submission was motivated by the current macroeconomic
environment such as material shortages and inflationary pressures described above,
which Crosby believes is well-suited to bring together the Target Company Groupand Crosby Group because the Combined Group will have access to more resources
to solve these challenges. Specifically, Crosby believes the increased focus on
infrastructure spending and safety – as demonstrated 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 coordinated investment by the Combined Group in
innovation, quality, and customer service for the Target Company Group and
Crosby Group product categories. As described previously, Crosby believes the14combined businesses will be better able to support customers in many industries
including the global infrastructure, wind energy, and entertainment segments
through enhanced investment by the combined businesses in new products, a more
responsive supply chain and product delivery mechanism, and broader access to
end-user training These initiatives would be lesser served by Crosby Group and theTarget Company Group separately because the individual entities would have fewer
resources, in the form of capital for investment, people for developing innovation,and ideas for improving safety, individually and thus would not be able to expand
the product portfolio and develop a stronger supply chain. This is particularly
important given the difficult supply chain environment businesses are currently
facing, making the benefits of a combination compelling at this time.
The Target Company responded to the Letter of Intent on February 25, 2022,
allowing Crosby to initiate due diligence. Also, in the Target Company’s response,
it was stated that the board of directors of the Target Company discussed the Letterof Intent, the strategic merit presented by Crosby, and approved assigning thespecial committee to evaluate the proposal.
Crosby and the Target Company commenced due diligence mutually fromearly March, 2022 where Crosby focused on developing a deeper understanding of
the Target Company’s mid-term financial plan as well as confirmatory due diligenceon accounting, tax, legal, information technology, benefits, insurance, andenvironmental topics. Through discussion with the Target Company related to thecompany’s mid-term financial plan, Crosby developed a deeper understanding of
the standalone objectives of the Target Company, which further affirmed thepotential for value creation of the combined entity.
Through such due diligence and further analysis and discussions, 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 product offerings, increasing service levels for
distributors, and realizing procurement and manufacturing efficiencies. Crosby
believes that the Business Combination would result in strong value delivered toboth companies’ end-users, employees, channel partners, suppliers, andshareholders. Following the completion of the majority of due diligence in midApril, 2022, Crosby are convinced that the Target Company Group and Crosby
Group, through the Business Combination, will be best positioned to deliver
increased value across a wide range of areas and generate synergies including, but
not limited to:• 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 be driven by the ability to enhance investment inengineering and product design, yielding benefits across a larger portfolio of
products to best serve the joint end-user base. The Target Company Group and
Crosby Group bring complementary engineering and product capabilities tothis combination; the Target Company Group’s core capability being inmechanical and electro-mechanical disciplines while Crosby Group brings its
capabilities in metallurgy and metal forming, together these areas ofcompetencies will enable new and innovative products that blend both
15

•

•

•

disciplines. The Target Company Group and Crosby Group each contributeproportionally to the profitability that enables efficient investments in productdevelopment and market research, which can be shared across both teams.
Continued advancements to the shared safety culture by implementation of a
global safety council, leveraging best practices and increased financial
resources for greater investment in safety initiatives. The Target Company
Group and Crosby Group both equally bring a safety mindset to the combined
business, which is evidenced by the fact that both companies received the
Associated Wire Rope Fabricators (AWRF) 2020 Safety Award in North
America and will share such mindset in the combined business. While eachcompany group has some unique core manufacturing processes (e.g. forging
for Crosby Group, machining and robotics for the Target Company Group),
their somewhat different sets of safety practices can be shared across the
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.
Broader and more diversified career paths in the combined business will enableattraction and retention of the best available talent in the market driving
innovation and productivity. The Target Company Group and Crosby Groupboth equally bring a focus on the team members to the Business Combination.
The increased size and scope of combined business allows for team members
from both businesses to have an opportunity for larger roles in the combined
business. The Target Company Group and Crosby Group each contributeproportionally to the profitability that enables efficient investments 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. Examples of Crosby Group’s environmental stewardshipinclude installation of LED lighting at manufacturing facilities, inclusion of
EVs in corporate leasing program, and EV charging stations at select locations.
Crosby is in the process of creating an environmental CAPEX sub-committee
to prioritize further investments in ESG, irrespective of short-term financial
returns. Crosby Group has also focused its M&A strategy on the renewableenergy market, with the acquisition of Airpes Sistemas Integrales deManutencion Y Pesaje S.L., established in Spain and a leader in lifting tools
used during the erection of wind turbines, which was announced in 2021. For
every transaction completed, a comprehensive environmental audit isconducted by third parties. These factors are important to both Crosby Groupand the Target Company Group as further evidenced by Crosby’s UpLift
Women’s network, which is an internal organization to connect the female
officers and employees of Crosby through regular meetings and speaker series
that provide leadership and developmental training; investment in thecommunity through partnerships with Children of Fallen Patriots, a foundationin the United States that provides college scholarships and educationalcounseling to military children who have lost a parent in the line of duty, andBridges to Prosperity, a nonprofit organization in the United States that works
16

•

•

to eliminate rural isolation through the building of bridges; and ongoinginvestments in the workforce, the Target Company’s “A” rating for ESG
Management by Mitsubishi UFJ Research and Consulting, supported by theJapan Credit Agency, the introduction of virtually CO2-free electricity at theheadquarters plant (which was announced on March 31, 2022), the provisionof products compatible with wind power generation, and the employment rateof disabled persons is around 7%, which is significantly higher than thestatutory rate of 2.2%. The Target Company Group and Crosby Group bringcomplementary areas of focus for investing in the communities in which they
operate. The Target Company Group’s higher level of focus and experience inareas such as environmental and employment of disabled persons iscomplementary with Crosby Group’s historical focus on higher education andhands on building and construction for under privileged communities. Taken
together, we have the potential to enhance the communities in which operate abroader 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. End-users will
experience higher levels of efficiency and safety in their organizations throughbetter technical, application, and training support from a combined business,
as well as through increased product innovation.
Increase in commitment to the local communities in which the Target Company
Group and Crosby Group operate by expanding opportunities for community
service, engagement, and support of causes important to local populations.
Both the Target Company Group and Crosby Group independently havevolunteering and community outreach programs that can be expanded throughthe Business Combination due to increased availability of resources. Crosby
Group’s community involvement includes a partnership with Bridges to
Prosperity, an organization that works to eliminate rural isolation through thebuilding of bridges. Crosby Group’s support includes donation of products foruse in bridges throughout Eastern Africa as well as training and expertise, andsending team members to Uganda to assist in the construction of a bridge.

In order to achieve the above, Crosby believes that it is necessary to privatize
the Target Company through the Business Combination to create an environment inwhich the management will have the flexibility to make decisions and investmentsthat will yield long-term benefits for the business, customers, team members, andcommunities. Crosby also believes that it is necessary to privatize the Target
Company because frictionless exchange of information and ideas would not be
possible in a minority investment or making the Target Company a subsidiary
whose shares remain listed, given the practical and legal limitations on integrationof teams, and strategy deployment for public companies with minority shareholders
and due to confidentiality, potential conflicts of interests with minority shareholders
with respect to optimized decision making as an integrated group, fewer
communication channels and day-to-day cooperation. By making the Target
Company a wholly owned subsidiary of the Tender Offeror and creating an
integrated group, the Combined Group would be able to have management teammembers and the broader employee base move freely between organizations to
openly share best practices, support investment in product innovation andintellectual property development, and invest in growth without practical and legal
hindrance or conflicting priorities. This type of open exchange of information
17

without restriction and support investment in product innovation and intellectual
property development would be very difficult in a minority investment or making
the Target Company a subsidiary whose shares remain listed as it will be easier tocommunicate without conflicts of interest and when interests are aligned by making
the Target Company wholly owned by the Tender Offeror.
For the review process by Crosby and discussions and negotiations with theTarget Company described above, KKR decided to support Crosby in its decision
to pursue the Transactions, resulting in Crosby engaging in discussions andnegotiations with the Target Company and its special committee regarding whether
to implement the Transactions and the terms and conditions including the details of
the structure, as well as the management and operational plans after the Business
Combination and submitting a non-binding proposal on April 27, 2022 regarding
the price of the Tender Offer per share of the Target Company Shares (the “Tender
Offer Price”) (the “First Proposal”). Crosby conducted a comprehensive andmultifaceted analysis of the Target Company’s business, financial status and futureplan, and made the Tender Offer Price in the First Proposal JPY 2,400, consideringthat (i) Crosby believed the price would not cause any disadvantages to theshareholders of the Target Company, given its premiums to market prices of theTarget Company Shares as of April 26, 2022 were (a) 39.70% to the simple averageclosing prices of the Target Company Shares over the preceding one-month periodof JPY 1,718, (b) 41.34% to the simple average closing prices of the Target
Company Shares over the preceding three-month period of JPY 1,698, and (c)36.21% to the simple average closing prices of the Target Company Shares over thepreceding six-month period of JPY 1,762 and (ii) Crosby could provide theshareholders that purchased the Target Company Shares at a higher price than thecurrent price over the past three years with the opportunities to sell the Target
Company Shares at a higher price than the purchase prices for such shareholders,given the highest closing price of the Target Company Shares over the past three
years was JPY 2,055. There was no specific proposal for the tender offer price for
Stock Acquisition Rights (the “Stock Acquisition Rights Tender Offer Price”) in theFirst Proposal because it was made 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 (Note)).
(Note) Based on the information Crosby had as of the submission date of the First
Proposal (April 27, 2022), it was calculated as the sum of the total number
of issued shares of the Target Company as of December 31, 2021
(21,048,200 shares) as stated in the “Business Results for the Third Quarterof the Fiscal Year Ending March 31, 2022 Japanese GAAP (Consolidated)”
submitted by the Target Company on February 8, 2022 (the “Target
Company’s Business Results”) and (i) the Target Company Shares (20,000
shares) underlying the Tenth Series Stock Acquisition Rights (100 stockacquisition rights), (ii) the Target Company Shares (17,000 shares)
underlying the Eleventh Series Stock Acquisition Rights (85 stockacquisition rights), (iii) the Target Company Shares (20,000 shares)
underlying the Thirteenth Series Stock Acquisition Rights (100 stockacquisition rights), (iv) the Target Company Shares (51,000 shares)
underlying the Fourteenth Series Stock Acquisition Rights (255 stockacquisition rights), and (v) the Target Company Shares (40,000 shares)
underlying the Fifteenth Series Stock Acquisition Rights (200 stock18

acquisition rights), in each case remaining as of today and as reported by
the Target Company, less the treasury shares (472,181 shares) owned by
the Target Company as of December 31, 2021.
After the submission of the First Proposal, on May 2, 2022, the Target
Company requested Crosby to increase the Tender Offer Price to JPY 3,000 because
the Target Company did not believe the Tender Offer Price sufficiently reflected thecorporate value of the Target Company, based on discussions with the special
committee. In addition, the Target Company requested to propose the Stock
Acquisition Rights Tender Offer Price.
In response to the request from the Target Company, Crosby sincerely
considered raising the price, and on May 5, 2022, submitted a non-binding proposalthat the Tender Offer Price shall be JPY 2,550 (the premiums on the market pricesof the Target Company Shares as of May 2, 2022 were (a) 50.71% on the simple
average closing prices of the Target Company Shares over the preceding one-month
period of JPY 1,692, (b) 50.18% on the simple average closing prices of the Target
Company Shares over the preceding three-month period of JPY 1,698, and (c)44.39% on the simple average closing prices of the Target Company Shares overthe preceding six-month period of JPY 1,766) and the Stock Acquisition Rights
Tender Offer Price shall be the amount obtained by multiplying 200, which is thenumber of the Target Company Shares represented by each of such stock acquisitionrights, by the difference between the Tender Offer Price and the exercise price ofeach stock acquisition right per the Target Company’s common shares (the “Second
Proposal”).
After the submission of the Second Proposal, on May 10, 2022, the Target
Company requested Crosby to increase the Tender Offer Price to JPY 2,900,
because the Tender Offer Price did not sufficiently reflect the corporate value of theTarget Company, based on discussions with the special committee.
In response to the request from the Target Company, Crosby sincerely
considered raising the price, and on May 10, 2022, submitted a non-binding
proposal that the Tender Offer Price shall be JPY 2,650 (the premiums on the market
prices of the Target Company Shares as of May 9, 2022 were (a) 58.11% on thesimple average closing prices of the Target Company Shares over the preceding
one-month period of JPY 1,676, (b) 56.25% on the simple average closing pricesof the Target Company Shares over the preceding three-month period of JPY 1,696,
and (c) 50.14% on the simple average closing prices of the Target Company Shares
over the preceding six-month period of JPY 1,765) (the “Third Proposal”).
After the submission of the Third Proposal, on May 11, 2022, the Target
Company requested Crosby to increase the Tender Offer Price to JPY 2,900 again
because the Target Company did not believe the Tender Offer Price sufficiently
reflected the corporate value of the Target Company, based on discussions with thespecial committee.
In response to the request from the Target Company, Crosby sincerely
considered raising the price, and on May 13, 2022, submitted a non-binding
proposal that the Tender Offer Price shall be JPY 2,725 (the premiums on the market
prices of the Target Company Shares as of May 12, 2022 were (a) 63.08% on thesimple average closing prices of the Target Company Shares over the preceding
one-month period of JPY 1,671, (b) 60.96% on the simple average closing pricesof the Target Company Shares over the preceding three-month period of JPY 1,693,
and (c) 54.57% on the simple average closing prices of the Target Company Shares
19

over the preceding six-month period of JPY 1,763) (the “Fourth Proposal”). As aresult, Crosby received a response from the Target Company to accept the Tender
Offer Price under the Fourth Proposal on the condition that Crosby submits abinding final offer setting the Tender Offer Price at JPY 2,725. Based on such
response from the Target 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 obtained by multiplying
200, which is the number of the Target Company Shares represented by each ofsuch stock acquisition rights, by the difference between the Tender Offer Price andthe exercise price of each stock acquisition right per the Target Company’s commonshares and, on the same date, the Target Company agreed on such final offer.
Based on the response from the Target Company, on May 16, 2022, Crosby
determined the Tender Offer Price to be JPY 2,725 and the purchase price of theStock Acquisition Rights to be the amount obtained by multiplying 200, which isthe number of the Target Company Shares represented by each of such stockacquisition rights, by the difference between the Tender Offer Price and the exercise
price of each stock acquisition right per the Target Company Shares, considering
all relevant factors including the alternatives to unlock the value, management andoperational plans, the recent performance of the Target Company, key takeaways
from due diligence conducted by Crosby (including growth trends in the U.S. andAsia, future investment plans into the business, and potential for synergy creation
through complementary products), price trend of the Target Company’s shares,
equity market trend, economic sentiment, whether the Target Company’s
management and the special committee could endorse the transaction, and theprospect of the shareholders tendering their shares in the Tender Offer and theOfferor determined today to commence the Tender Offer subject to satisfaction or
waiver of the Tender Offer Conditions Precedent.
(iii) Decision-making process and reasons of the Target Company to issue theopinion to support the Tender Offer(a)

Background to formulation of examination framework
Given this situation, as described in the section above titled “(2) Background,purpose, and decision-making process leading to the decision to conduct the Tender
Offer, and management policy following the Tender Offer” since early June 2021,
the Target Company’s senior management team and Crosby held repeateddiscussions aimed at realizing the enhancement of the corporate value of bothcompanies, and then in October 2021, the Target Company appointed the law firm
Nishimura & Asahi as legal counsel independent from the Offerors, KKR, and theTarget Company 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 achieve abusiness combination of the Target Company and Crosby Group, Crosby
communicated to the Target Company the formal Letter of Intent regarding
implementation of the Business Combination, its intention of wishing to commence
substantive examination of the Business Combination, together with thebackground leading to the proposal of the Business Combination and the purpose
and intentions behind the Business Combination. In response to receiving the Letterof Intent, in order to seriously examine the Business Combination, including theTransactions, in mid-February 2022 the Target Company appointed Nomura
20Securities, Co., Ltd. (“Nomura Securities”) as a financial adviser independent fromthe Offerors, KKR, and the Target Company and from the success or failure of theBusiness 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 reorganization, and conducted a careful
examination from the perspective of the interests of stakeholders to various ways
in which the corporate value of the Target Company can be enhanced, including bya business combination by means of privatization or reorganization through a tender
offer.
The Business Combination (including the Transactions) does not constitute atransaction, etc. with a controlling shareholder, but from the perspective of
exercising the utmost care to ensure the fairness of the Transactions, based on theadvice of Nishimura & Asahi, the Target Company immediately formulated aframework for examining and determining whether to proceed with the Business
Combination (including the Transactions) and the appropriateness of its transaction
terms and conditions and the fairness of procedures from the perspective of seeking
enhancement of corporate value and benefiting general shareholders independently
from the Offerors, the Target Company and the success or failure of the Business
Combination (including the Transactions). Specifically, at a board of directors
meeting of the Target Company held on February 21, 2022, along with resolving tocreate a special committee comprised of three of the Target Company’s outside
directors Katsumi Nakamura, Takashi Hirai, and Koji Osawa, the Target Company’sboard 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 the Transactions),
and if the special committee were to determine that the transaction terms andconditions of the Business Combination (including the Tender Offer) are notappropriate, the Target Company’s board of directors resolved not approve theBusiness Combination (including the Tender Offer). As noted in the section below
titled “(i) Establishment of an independent special committee at the Target
Company” under “(3) Measures to ensure the fairness of the Tender Offer Price andavoid conflicts of interest, and other measures to ensure the fairness of the Tender
Offer”, as well as approving the appointment of Nomura Securities as the Target
Company’s financial advisor and third-party appraiser and the appointment ofNishimura & Asahi as the Target Company’s legal advisor upon confirming their
independence, expertise, and track record, etc., the Target Company also appointed
the law firm Anderson Mori & Tomotsune as independent legal advisor to thespecial 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 Target Company” under “(3) Measures to ensure thefairness of the Tender Offer Price and avoid conflicts of interest, and other measures
to ensure the fairness of the Tender Offer” for details regarding the background to
the establishment, etc. of the special committee, its structure, process for
examination, and details of decisions, etc.
(b)

Background of examination and negotiations
Having formulated the examination framework described in (a) above, theTarget Company received a report on results of the valuation of the Target Company
Shares, advice on the negotiation stance with the Offerors, and other advice from a21

financial perspective from Nomura Securities, and received guidance and otherlegal advice from Nishimura Asahi on ensuring the fairness of the procedures for
the Business Combination (including the Transactions), and based on this, thecompany conducted a careful examination of whether to proceed with the Business
Combination (including the Transactions) and the appropriateness of the transaction
terms and conditions.
Since mid-April 2022, the Target Company has held repeated consultations
and negotiations 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 Target Company from midMarch 2022 through the beginning of April 2022, the Target Company received theFirst Proposal from Crosby after it comprehensively considered whether the Target
Company’s board of directors would endorse the Tender 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 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).
On May 2, 2022, after the submission of the First Proposal, Crosby received
a request from the Target Company to raise the Tender Offer Price to JPY 3,000 on
the basis that the Tender Offer Price did not sufficiently reflect the corporate valueof the Target 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 Target 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 Target 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 Target Company in light of consultation with the special committee.
After receiving the request from the Target 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 Target 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 Target Company in light of consultation with the special
committee.
On receiving the request from the Target Company, on May 13, 2022, Crosby
submitted the Fourth Proposal, which is a non-binding proposal, and the Target
Company reached the conclusion that that price was also appropriate from theperspective of the interests of minority shareholders. The Target 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 Target 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 amount found by
multiplying the difference between the Tender Offer Price and the exercise price
per Target Company Share for each Stock Acquisition Right multiplied by the 200
22Target Company Shares that underlie each such Stock Acquisition Right. In
response, after consultation with the special committee, on the same date, because
the Target Company agreed with Crosby on the approach that the best method ofrealizing a quick response to the changes in the business environment facing theTarget Company and contributing to the enhancement of the Target Company’s
corporate value would be to implement the Business Combination by making theOfferor the sole shareholder of the Target Company and de-listing the Target
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 Target Company held today, a resolution was made that if the Tender Offer
commences, the position of the Target Company as of this date is that it will declarea position in support of the Tender Offer and that it will recommend that the Target
Company’s shareholders and Stock Acquisition Right Holders accept the Tender
Offer.
In the process of the aforementioned examinations and negotiations, theTarget Company 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 the Business Plan
(defined below in the section below titled “(iii) Obtainment by the Target Companyof share valuation report from independent third-party appraiser” under “(3)Measures to ensure the fairness of the Tender Offer Price and avoid conflicts ofinterest, and other measures to ensure the fairness of the Tender Offer”; same
hereinafter) that forms the basis of the valuation of the Target Company Shares by
Nomura Securities and that was presented to Crosby. Furthermore, in negotiatingwith Crosby, the Target Company has handled these negotiations based on thenegotiation stance discussed and determined by the special committee in advance,
and when proposals were received from Crosby regarding the Tender Offer Priceand Stock 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 Target Company has today received from the special committee
the report (the “Report”) to the effect that (a) the Business Combination (including
the Tender 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 theTender Offer) can be found to be assured, (d) based on (a) through (c) above, it canbe found that the Business Combination is not disadvantageous to generalshareholders of the Target Company, and (e) it concludes that it is appropriate for
the Target Company’s board of directors to resolve, to declare a position in supportof the Tender Offer and to recommend that the Target Company’s shareholders andStock Acquisition Right Holders accept the Tender Offer, at the time of theannouncement of the Tender Offer. (Please refer to the section below titled “(i)Establishment of an independent special committee at the Target Company” under“(3) Measures to ensure the fairness of the Tender Offer Price and avoid conflictsof interest, and other measures to ensure the fairness of the Tender Offer” for an
outline of the Report.)(c)

Decision details
23Based on the background set forth above, at the meeting of the board of
directors of the Target Company held today, the Target Company carried out acareful discussion and examination of whether the Business Combination(including the Tender Offer) will contribute to enhancement of the corporate valueof the Target Company and whether the terms and conditions (including thoseagreed 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 itprovided on May 16, 2022 concerning the results of the valuation of the Target
Company Shares (the “Share Valuation Report”), paid maximum respect to thefindings of the special committee presented in the Report.
As a result, the Target Company came to understand that (i) the realization of
the synergies set forth in the section above titled “ (2) Background, purpose, anddecision-making process leading to the decision to conduct the Tender Offer, andmanagement policy following the Tender Offer” could be expected from Crosby
Group and the Target Company integrating their respective management resources
and utilizing the business know-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 Target Company and the Offerors after the Tender
Offer should be executed with the intention of the Offerors and the Target Company
coming together as one to conduct business operations and quickly realize synergies
with a sense of speed after the Offeror makes the Target Company its subsidiarythrough the Tender Offer.
By de-listing the Target Company Shares, the Target 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 enhanced social
credibility that comes with being a listed company. However, considering thecurrent financial condition of the Target Company and the recent low interest rateenvironment for indirect financing among other factors, the Target Company
believes that there is a limited need to continue to maintain the listing of the Target
Company Shares in the future since, for the time being, there is not a great need forequity financing, the Target Company’s brand power and social credibility are being
acquired and maintained through business activities in most respects, and, on thehiring side, it is not necessarily the case that being a listed company is a wellspringfor personnel procurement.
Based on the foregoing, the Target Company reached the conclusion that, for
the Target Company as well, executing the Business Combination Agreement,
which sets forth the policy for business operations after the Business Combination,
between the Target Company, Crosby US, Crosby UK, and HoldCo and thenimplementing the Business Combination can be expected to create the synergies set
forth in the section above titled “(2) Background, purpose, and decision-making
process leading to the decision to conduct the Tender Offer, and management policy
following the Tender Offer,” and contribute to the enhancement of the Target
Company’s corporate value.
In addition, in consideration of the circumstances set forth in the following
items, etc., the Target Company decided that the Tender Offer Price of JPY 2,725
per share is an appropriate price that ensures the benefits that should be enjoyed by
the Target Company’s general shareholders and that the Tender Offer provides areasonable opportunity for the Target Company’s general shareholders to sell the24Target 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 Target Company and Crosby
after the Target 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 “(3) Measures to ensure the fairnessof the Tender Offer Price and avoid conflicts of interest, and other measures
to ensure the fairness of the Tender Offer”;b.
The Tender Offer Price was decided to be appropriate in the Report obtained
from the special committee, as set forth in the section below titled “(i)Establishment of an independent special committee at the Target Company”
under “(3) Measures to ensure the fairness of the Tender Offer Price and avoid
conflicts of interest, and other measures to ensure the fairness of the Tender
Offer”;c.
The Tender Offer Price is a price that respectively adds a premium of 64.26%(rounded to two decimal places; the same applies hereinafter for thepercentage values of premiums on share prices) to the closing price of JPY
1,659 of the Target Company Shares on the Prime Market of TSE on May 13,
2022, which is the business day preceding the announcement date of theTransactions, 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 averageclosing prices), 61.06% to the simple average closing price over the preceding
three-month period until May 13, 2022 of JPY 1,692, and 54.67% to thesimple average closing price over the preceding six-month period until May
13, 2022 of JPY 1,762, and when compared to 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 a domestic listed Target Company was made a wholly owned
subsidiary through 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%), themedian and average premium on the simple average closing prices over thepreceding one-month period (41.67%, 49.63%), the median and averagepremium on the simple average closing 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 found that the premium
secured in the Tender Offer is not inferior to that of other deals and the levelof the Tender Offer Price can be said to be reasonable; andd.
Out of the results of the valuation of the Target Company Shares by Nomura
Securities set forth in the section below titled “(iii) Obtainment by the Target
Company of share valuation report from independent third-party appraiser”
under “(3) Measures to ensure the fairness of the Tender Offer Price and avoid
conflicts of interest, and other measures to ensure the fairness of the Tender
Offer,” the Tender Offer Price is a level that is above the upper limit of therange based on the average market price analysis method and falls within therange based on the comparable company analysis method and the discounted
cash flow analysis method (“DCF analysis”).
25Similarly, the Target Company also decided that the Tender Offer provides areasonable opportunity for the Target 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 thedifference between the Tender Offer Price and the exercise price per Target
Company Share for each Stock Acquisition Right by the number of Target Company
Shares that underlie each such Stock Acquisition Right (200 per stock acquisitionright).
Therefore, the Target Company decided that the Business Combination(including the Transactions) would contribute to enhancing the corporate value of
the Target Company and that the terms and conditions for the Transactions(including the Tender Offer Price) are appropriate, and at the meeting of the Target
Company’s board of directors held today, it was resolved both to approve executionof the Business Combination Agreement, and that if the Tender Offer is commenced,
the position of the Target Company as of this date is that it will declare a positionin support of the Tender Offer and that it will recommend that the Target 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 committee
established by the Target Company will be asked to review whether or not there isany change to the contents of the Report, and if there is no change, state this fact to
the Target Company’s board of directors, and if there is a change, to state a position
after the change, and based on such position, the Target Company will again publish
its position on the Tender Offer when the Tender Offer commences. Please see thesection below titled “(v) Approval of all the directors in the Target Company andopinions that there has been no objection from any of the Target Company’s
independent statutory auditors” under “(3) Measures to ensure the fairness of theTender Offer Price and avoid conflicts of interest, and other measures to ensure thefairness of the Tender Offer,” for the details of the process of decision making at
the Target Company’s board of directors.
(iv) Management policy after the Tender Offer
If the Tender Offer has been successfully completed, the Offerors intend to
make the Target Company a wholly-owned subsidiary of the Offeror as stated in thesection above titled “(1) Summary of the Tender Offer”. After the completion of the
Squeeze-Out Procedures, an absorption-type merger (the “Merger”) is scheduled to
be implemented between the Target Company and the Tender Offeror, with theTarget Company as the surviving company. After the Merger takes effect, HoldCo
will directly own all shares of the Target Company. As of today, HoldCo does nothave any specific plan for a transfer of the shares of the Target Company to any
third party or a reinvestment by any third party to the Target Company through
HoldCo.
After the transaction, the Combined Group will operate the business with the
purpose of achieving a smooth integration and maximizing the corporate value of
the Combined Group in a spirit of cooperation, valuing the brands, employees,
customers, suppliers, communities and plant facilities of Crosby Group and theTarget Company’s Group as “One Company, One Team and One Mission” whichbalances a degree of autonomy of the businesses of the Target Company and Crosby
Group with the coordinated and cohesive management of Kito | Crosby as a whole.
26

In addition, the Combined Group will promote measures to enhance the Target
Company’s corporate value with a view to further grow and globalize the Target
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 Target Company has built to date.
Under the Business Combination Agreement, the Target Company, HoldCo,
Crosby US and Crosby UK have also agreed on the governance and operation of
the Combined Group. Please refer to “(6) Matters relating to material agreements
regarding the Tender Offer” for the details of the Business Combination Agreement.
(3)

Measures to ensure the fairness of the Tender Offer Price and avoid conflicts ofinterest, and other measures to ensure the fairness of the Tender Offer
As of today, the Tender Offer is not an MBO (meaning (i) a tender offer where
the Offeror is a director or officer of the Target Company or (ii) a tender offer where
the Offeror conducts the tender offer at the request of the directors or officers of theTarget Company and the Offeror shares its benefits with the directors or officers of
the Target Company) or a tender offer that falls under any of “Significant Transactions,etc. with Controlling Shareholder” set forth in the Code of Corporate Conduct of theTokyo Stock Exchange. However, considering that the Offerors intend to delist theTarget Company through the Transactions including the Tender Offer, the Offerors
and the Target Company have taken the following measures as measures to ensure
the fairness of the Tender Offer Price and to avoid conflicts of interest, taking into
account the impact on the shareholders of the Target Company. The descriptions
below, including the measures taken by the Target Company, are based on the Target
Company’s Press Release and explanations received from the Target Company.
(i)

Establishment of an independent special committee at the Target Company(a)Background to establishment, etc.
As stated above in “(iii) Decision-making process and reasons of the Target
Company to issue the opinion to support the Tender Offer” under “(2) Background,purpose, and decision-making process leading to the decision to conduct the Tender
Offer, and management policy following the Tender Offer,” pursuant to a resolutionof a meeting of the board of directors on February 21, 2022, the Target Company
established a special committee composed of three members without an interest in
the Offerors, KKR, the Target Company, or the outcome of the Business
Combination (including the Transactions): Katsumi Nakamura, Takashi Hirai, andKoji Osawa (the members of the special committee have been those three persons
since it was first established and there has been no change in the members).
Prior to the establishment of that special committee, after receiving the Letterof Intent regarding the Business Combination from Crosby on February 14, 2022,
while receiving advice from Nishimura & Asahi in order to build a framework to
examine, negotiate, and assess the Business Combination (including theTransactions) from the perspective of enhancing the corporate value of the Target
Company and ensuring the interests of general shareholders of the Target Company
independently from the Offerors, KKR, the Target Company, and the outcome of
the Business Combination (including the Transactions), the Target Company
immediately provided explanations to all of the Target Company’s independent
outside directors including the fact that a Letter of Intent had been received from27

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. the Business Combination(including the Transactions), including the establishment of the special committee.
In parallel with this, while obtaining the advice of Nishimura & Asahi, the Target
Company confirmed that the independent outside directors of the Target Company
who comprise the candidates for membership of the special committee wereindependent and eligible, etc. and that they had no special interest regarding theoutcome of the Business Combination (including the Transactions), held
discussions with the Target Company’s independent outside directors, andappointed Katsumi Nakamura, Takashi Hirai, and Koji Osawa as candidate
members for the special committee.
Katsumi Nakamura was appointed as the chair of the special committee basedon factors such as his holding a position where he is directly involved inmanagement decisions as a member of the Target Company’s board of directors, his
having considerable knowledge regarding the Target 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 fixed monthly
officer compensation irrespective of the outcome of the Business Combination(including the Transactions) or the content of the opinion, and the compensation
does not include contingency compensation conditioned on an announcement or
success, etc. of the Business Combination (including the Transactions).
(b)

Background to examination
The Target Company asked the special committee (i) whether the Business
Combination (including the Tender Offer) would serve to enhance corporate value
and whether that goal can be found to be reasonable, (ii) whether theappropriateness of the terms and conditions of the Transactions (including theTender Offer) is ensured (including the Tender Offer Price), (iii) whether thefairness of procedures for the Business Combination (including the Tender Offer)is ensured, (iv) based on (i) through (iii) above, whether it can be concluded thatthe Business Combination is not disadvantageous for the Target Company’s generalshareholders, and (v) whether it can be concluded that it is reasonable for the Target
Company’s board of directors to announce a position in support of the Tender Offerand recommend that the Target Company’s shareholders and Stock Acquisition
Right Holders tender their shares and acquisition rights in the Tender Offer (the“Inquiry Matters”), and commissioned the committee to report on such matters. The
Target Company’s board of directors has resolved to give maximum deference tothe details of the special committee’s judgment when the Target Company’s boardof directors makes a decision 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 conditions of
the Business Combination (including the Tender Offer) are not appropriate. In
addition, pursuant to the board of directors’ resolution regarding the establishmentof the special committee, the Target Company’s board of directors granted thespecial 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-the-fact approval) the Target Company’s Advisors, etc. as the
special committee’s Advisors, etc., (y) authority to require the Target Company’s
directors, employees, or any other parties deemed necessary by the special
28

committee to attend a meeting of the special committee and to demand explanationsof necessary information, and (z) authority to be substantively involved in thenegotiation process for the Transactions’ terms and conditions by means such asconfirming in advance the negotiation policy of the Target Company for thetransaction terms and conditions, etc. for the Business Combination (including theTender 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 totalof 15 meetings and discussed and studied the Inquiry Matters. Specifically, in early
March 2022, the special committee confirmed that as there were no issues with theexpertise and independence of Nomura Securities appointed by the Target Company
as its financial advisor and third-party appraiser and Nishimura & Asahi appointed
as the Target Company’s legal advisor, the special committee had no objection to
the Target 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 Target Company, and the Business Combination (including theTransactions). Additionally, the special committee approved the Target Company’s
directors involved in examining, negotiating, and determining the Business
Combination after confirming that they have no issues in terms of having interestsin the Offerors, KKR, the Target Company, and the outcome of the Business
Combination (including the Transactions). As there were no issues with either theexpertise or independence of Nomura Securities appointed by the Target Company
as its financial advisor and third-party appraiser, it was confirmed that a separate
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 Target Company, thespecial committee received explanations from the Target Company of the content
of Crosby’s proposal, the purpose and reasons for implementing the Business
Combination (including the Transactions), the effect of the Business Combination(including the Transactions) on the Target Company’s corporate value, the mattersthat the Target Company would request of Crosby when implementing the Business
Combination (including the Transactions), the formulation process and plan content
of the Business Plan (including its rationality and preparation background), theterms and conditions 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), and conducted 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, thespecial committee confirmed matters such as the overview of the business of
Crosby and KKR and their awareness of the Target Company’s operational
challenges/market value, the background leading to the proposal regarding theTender Offer and the content of the proposal including the anticipated structure, andthe effect of the Tender Offer on measures to enhance the Target Company’s
corporate value after the Business Combination (including the Transactions).
Based on the advice from a financial perspective received from Nomura
Securities, along with deliberating on and examining a negotiation policy to elicit ahigher price from Crosby, the Target Company received a timely report each timethat a proposal regarding the tender offer price was received from the Offerors, and29

it conducted discussions and negotiations with Crosby regarding the tender offer
price such as by deliberating 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 “(b) Background of examination andnegotiations” under “(iii) Decision-making process and reasons of the Target
Company to issue the opinion to support the Tender Offer” of “(2) Background,purpose, and decision-making process leading to the decision to conduct the Tender
Offer, and management policy following the Tender Offer” for details regarding thebackground 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 a unanimous resolution of
the special committee, the special committee submitted the Report on the Inquiry
Matters with generally the following content to the Target Company’s board of
directors on May 15, 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 Target Company’s generalshareholders
v. It can be found that it is reasonable for the Target Company’s board of
directors to announce a position in support of the Tender Offer andrecommend that the Target 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
can be found to be reasonable, given that it can be found that (i) the
anticipated synergies from the Business Combination are reasonable,
there is no conflict or inconsistency between Crosby’s and KKR’s
expectations and the Target Company’s expectations, andimplementation of the Business Combination will contribute toresolving the management challenges recognized by the Target
Company, (ii) the details explained as the reasons for using the Business
Combination and not another method such as a business alliance arereasonable, and it is suitable to use the Business Combination, and (iii)
there are no apparent circumstances due to the Business Combinationthat would be a material impediment to enhancing the Target
Company’s corporate value.
30





According to the Target Company, not having been able to realize thetargeted expansion of the scale of profits set forth in the medium-term
management plan, the Target Company (i) going forward, in addition tosteadily capturing the increase in demand resulting from a return toeconomic activity as the COVID-19 pandemic subsides, is aware of theurgent task of securing profitability growth exceeding the cost increases
resulting from personnel expenses and raw materials prices affected byinflation pressures and soaring transportation expenses and the like, andof 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 the Target
Company has a strong position, and maximize added value forcustomers by expanding the product line up and fields of services.
According to the Target Company, to do so requires agile and rapid
expansion of its business domain through decisive management actions
and bold investments in resources. In general terms, it can be concluded
that, as a part of the strategy towards resolving such management
challenges and the realization thereof, the adoption of a scheme that
contributes to measures with respect to a business alliance or a businesscombination, 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 Target Company, will contribute to enhancement of
the Target 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 ofhigh 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 Target Company
Group and Crosby Group operate by expanding opportunities forcommunity service, hiring, and support of causes important to local
populations. Furthermore, according to the Target Company, it can be
expected that through the Business Combination, the aforementioned
synergies also will be created for the Target Company as well. No points
that are mutually contradictory or points that clearly are objectively
31





false can be found in the details of the aforementioned anticipatedsynergies, 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 the Target
Company and contributing to the enhancement of the Target Company’s
corporate value is to implement the Business Combination by making
the Offeror the sole shareholder of the Target Company and de-listing
the Target Company 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 Target Company’s customers, suppliers
and other trading partners or otherwise diminishing the Target
Company’s corporate value after the Transactions, and that although
Holdco’s debts (including borrowing from financial institutions related
to the Transactions) will be indirectly shared by the Target Company
after the Business Combination, Holdco’s debts are not excessively
large, no circumstance can be found that would present a material
impediment to enhancing the Target 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 canbe found that the Tender Offer Price and the Stock Acquisition Rights
Tender Offer Price are appropriate, and that the appropriateness of theterms and conditions 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 pershare) by the Target 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 the committee’s discussions and examinations and while receiving
advice from Nomura Securities, and the Target 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 aresult, the final Tender Offer Price was suitably increased from the priceoriginally offered by the Offeror, and it can be found that developments
show that the Target Company negotiated with the aim of conducting
the Transactions on terms and conditions that are as advantageous as
possible for general shareholders. With respect to this point, the same istrue also for the Stock Acquisition Rights Tender Offer Price. Following
32









from the above, it is presumed that the agreement on the Tender Offer
Price and the Stock Acquisition Rights Tender Offer Price in theTransactions is the result of negotiations between the Target Company
and Crosby that were based on objective and coherent discussions
equivalent to those between parties that are independent also insubstance, and no circumstances are found that would call into question
the transparency or fairness of the agreement 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 Target 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 Target Company Shares calculated by the average market
price analysis method, (ii) exceeds the median (JPY 2,624) of the rangeof values per share of the Target Company Shares calculated by thecomparable company analysis method, and (iii) well exceeds the lower
limit and is within the range of values per share of the Target Company
Shares calculated by 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 Target Company Shares on the TSE
up to May 13, 2022 (the closing price as of that day and the averageclosing prices over the immediately preceding one-, three-, and sixmonth periods), it can be found that the premium secured in the Tender
Offer is not inferior to that of other deals of the same kind. Taking theabove 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 Target Company Share for each Stock Acquisition
Right multiplied by the number of Target 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
the Tender Offer Price as not being a level that denies theappropriateness of that price, since the Stock Acquisition Rights Tender
Offer Price is calculated using the difference between the Tender Offer
Price and the exercise price per each Stock Acquisition Right, it can beconcluded that it is possible to assess the Stock Acquisition Rights
Tender Offer Price also as not being a level that denies theappropriateness 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 exchange
33

with 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 Target
Company a wholly owned subsidiary and also to secure the opportunity
and time for an appropriate decision based on sufficient information by
general shareholders, etc. Furthermore, if money is delivered toshareholders and the Stock Acquisition Right Holders who do not tenderin the Tender Offer, it is planned that it will be calculated so as to be thesame as 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 theBusiness Combination (including the Tender Offer) has been ensured.
 A special committee has been established comprised of independent
outside directors of the Target 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.
 The Target Company does not have any directors who have a special
relationship with the Offerors and KKR, and the Target Company’sboard 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 theTender Offer and that it will be recommend that the Target Company’s
shareholders and the Stock Acquisition Right Holders participate in theTender Offer will be made, and all auditors will state their opinion thatthey have no objection to making the above resolution. The Target
Company’s board of directors also resolved to make a decision on theTransactions that respects, to the maximum extent possible, the decisionof the committee and to not agree to the Transactions if the committee
decides that the transaction terms are not appropriate. Based on theseand other facts, it can be said that in the Target Company’s decisionmaking process for the Transactions, arbitrariness has been eliminatedand fairness, objectivity, and transparency have been ensured.
 The Target Company is receiving legal advice from the independent
legal advisor Nishimura & Asahi, which is independent from the Target
Company, the Offerors, and KKR and from the success or failure of theTransactions. The committee is receiving legal advice from the
34









independent legal advisor Anderson Mori & Tomotsune, which is
independent from the Target Company, the Offerors, and KKR and fromthe success or failure of the Transactions.
The Target Company and the committee have obtained as materials
concerning the value of the Target Company’s shares the Share
Valuation Report from the third-party appraiser Nomura Securities,
which is independent from the Target Company, the Offerors, and KKR
and from the success or failure of the Transactions.
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 Target Company’s shareholders and Stock
Acquisition Right Holders have an appropriate opportunity todetermine whether to tender in response to the Tender Offer, ensures theopportunity for purchase proposals from Competing Purchase
Proposers, and there is no agreement between the Target Company, theOfferors, and KKR excessively restricting the Target Company fromcontacting Competing Purchase Proposers, so a so-called “indirect
market check” is recognized where the M&A transaction is executed bycreating an environment that allows other potential acquiring parties tomake competing proposals after the proposed M&A transaction isannounced (note that it is stipulated in the Business Combination
Agreement that if the Target Company withdraws or modifies theOpinion to Support and Recommend to Tender and the Business
Combination Agreement is cancelled, HoldCo, etc. can receive JPY
1,000,000,000, but due to reasons such as the amount being 1.8% of thepurchase price (the amount obtained by multiplying the number of sharecertificates, etc. to be purchased with the Tender Offer Price (JPY 2,725
per share), this cannot be described as an excessive amount, and it does
not by its nature substantially have the effect of compelling the Target
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 the35

implementation 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 Target Company Shares andall of the Stock Acquisition Rights through the Tender Offer, it will
make a Demand for the Sale of Shares, Etc. or request the Target
Company to hold an extraordinary 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 Rightsof the Target Company who did not tender 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 the Tender Offer, that in the caseof a Demand for the Sale of Shares, Etc., the right of the shareholders
and holders of Stock Acquisition Rights of the Target Company to filea petition to the courts for price determination is ensured, and that in
the case of a share consolidation, the right of the shareholders to request
purchase of shares and the accompanying right to file a petition to thecourts for price is ensured, and based on this, it is recognized that careis being taken to avoid coercion.

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 boardof 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)

Obtainment by the Target Company of advice from independent legal advisor

As stated above in “(a) Background to formulation of examination framework”
under “(iii) Decision-making process and reasons of the Target Company to issue
the opinion to support the Tender Offer” of “(2) Background, purpose, and decisionmaking process leading to the decision to conduct the Tender Offer, andmanagement policy following the Tender Offer.” The Target Company appointed
the outside legal advisor Nishimura & Asahi and the Target 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 upon making decisions
36

concerning the Tender Offer in order to ensure transparency and reasonableness inthe decision-making process concerning the Business Combination (including theTender Offer).
Nishimura & Asahi does not constitute an affiliated party of the Offerors,
KKR, or the Target Company and does not have a material interest in the Business
Combination (including the Tender Offer). Additionally, at the first meeting of thespecial committee, the special committee confirmed that there is no issue with theindependence of Nishimura & Asahi and approved Nishimura & Asahi as the Target
Company’s legal advisor.
(iii) Obtainment by the Target Company of share valuation report fromindependent financial advisor and third-party appraiser
As stated above in “(a) Background to formulation of examination framework”
under “(iii) Decision-making process and reasons of the Target Company to issue
the opinion to support the Tender Offer” under “(2) Background, purpose, anddecision-making process leading to the decision to conduct the Tender Offer, andmanagement policy following the Tender Offer” in order to ensure the fairness ofthe decision-making process regarding the Tender Offer Price offered by theOfferors, the Company appointed Nomura Securities as a financial advisor andthird-party appraiser independent from the Offerors, KKR, the Company, and theBusiness Combination (including the Transactions), and along with receiving
advice and assistance from a financial perspective including advice on valuation of
the Company Shares and the policy for negotiations with the Offerors, the Company
obtained the Share Valuation Report dated May 16, 2022.
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 meeting of the special
committee, the special committee confirmed that there is no issue with theindependence of Nomura Securities and approved Nomura Securities as theCompany’s financial advisor and third-party appraiser.
(a)Outline of calculations regarding the Target Company Shares
Nomura Securities calculated the share value of the Target Company using
the average market price analysis method given that the Target Company is listedon the Prime Market of the TSE which provides market pricing, using thecomparable company analysis method given that there are several listed companies
that engage in businesses that are relatively similar to the Target Company’s and ananalogy of share prices by comparison with similar companies is possible, and using
discounted cash flow analysis in order to reflect the impact of future businessactivities on the valuation. The Target Company has not obtained an opinion on thefairness of the price of the Tender Offer (a fairness opinion) from Nomura Securities.
In terms of the reason for not acquiring 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 of a target company from general shareholders at less than fair value, but inthis matter 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 Target Company decided that rather than separately
acquiring a fairness opinion, it could be addressed by granting a certain premium37

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 theTarget 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 the announcement
date of the Tender Offer, and the per share value of one share the Target 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 Target Company’s sharesof JPY 1,659, the simple average of the closing prices during the immediately
preceding five business days, equal to JPY 1,647, the simple 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 theTarget Company Shares is calculated to be in a range between JPY 2,052 and JPY
3,196 by calculating the Target Company’s share value through a comparison withthe market share price and financial statements showing earnings, etc. of listedcompanies engaged in businesses determined to be comparable to the Target
Company.
Under the DCF analysis, the share value per one share is calculated to be in arange between JPY 1,886 and JPY 3,974 by valuing enterprise value and share pricederived from the discounted present value of the forecast free cash flow expected
to be generated by the Target Company from the fiscal year ending March 2023
onwards, taking into consideration assumptions considered to be reasonable suchas profit forecasts and investment plans based on financial forecasts for the fiscal
years ending March 2023 to March 2027 as prepared by the Target Company (the“Business Plan”). Given the difficulty at 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-onyear increases or decreases are forecast.
As noted in the section above titled “(i) Establishment of an independent
special committee at the Target Company” the special committee has received an
explanation from the Target Company on the assumptions set in formulating thefinancial forecasts and conditions that form the basis of the Business Plan and has
conducted a Q&A on these assumptions and values, and has not found any points
to be particularly unreasonable. The special committee has confirmed that thesecalculation methods and calculation outcomes are reasonable.
Note: Nomura Securities, has calculated the share value of the Target Company
Shares on the assumption that all of the information either publicly available
or provided to Nomura Securities is accurate and complete, and has notconducted any independent investigations to verify the accuracy orcompleteness thereof. Nomura Securities has not independently appraised,38

valued or investigated the assets and liabilities of the Target Company
including any analysis and valuation of individual assets and liabilities(including financial derivatives, off-balance sheet assets and liabilities, andother contingent liabilities), and no third party has been requested to makeany appraisal or investigation thereof. The Target Company’s financial
forecasts (including profit forecasts and other information) are assumed to bereasonably considered and prepared based on the best and good faith forecasts
and decisions of the Target Company’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 thesole purpose of providing a reference to the board of directors of the Target
Company in examining the share value of the Target Company Shares.
(b)

Outline of 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 Target Company Share for each Stock Acquisition
Right by the number of Target Company Shares that underlie each such Stock
Acquisition Right (200 per stock acquisition right), it was determined that theTender Offer provides a reasonable opportunity for all 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(iv) Obtainment by the special committee of advice from independent legal
advisor
As stated above in “(b) Background to examination” under “(i) Establishmentof an independent special committee at the Target Company,” the special committee
appointed the outside legal advisor Anderson Mori & Tomotsune and is receiving
necessary legal advice regarding various procedures for the Transactions, themethod and process of deliberations by the special committee pertaining to theTransactions, and other points to note upon making decisions concerning the Tender
Offer from that law firm.
Anderson Mori & Tomotsune does not constitute an affiliated party of theOfferors, KKR, or the Target Company and has no material interest in the Business
Combination (including the Tender Offer).
(v)

Approval of all the directors in the Target Company and opinions that there
has been no objection from any of the Target Company’s independent
statutory auditors
Based on the content of the Share Valuation Report and the legal advice from
Nishimura & Asahi and giving maximum regard to the content of the Reportobtained from the special committee, the Target Company’s board of directors
carefully discussed and examined the various terms and conditions concerning theBusiness Combination (including the Transactions) from the perspective ofenhancing corporate value.
Consequently, as stated above in “(iii) Decision-making process and reasonsof the Target Company to issue the opinion to support the Tender Offer” under “(2)Background, purpose, and decision-making process leading to the decision to39

conduct the Tender Offer, and management policy following the Tender Offer,”
because along with the Business Combination (including the Transactions) being
expected to enhance the Target Company’s corporate value, the Tender Offer Priceand other terms and conditions of the Tender Offer constitute an appropriate pricethat ensures the benefits that should be enjoyed by the Target Company’s generalshareholders and the Tender Offer provides a reasonable opportunity for the Target
Company’s general shareholders to sell their shares at a price with an appropriate
premium, the Target Company’s board of directors determined that it is appropriate
for the Target Company’s general shareholders and that the Tender Offer provides
a reasonable opportunity for of the Target 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 found by
multiplying the difference between the Tender Offer Price and the exercise price
per Target Company Share for each Stock Acquisition Right by the number ofTarget Company Shares that underlie each such Stock Acquisition Right (200perstock 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 Target Company’s board of directors held on
May 16, 2022, it was resolved that if the Tender Offer is commenced, the positionof the company as of this date is that it will declare a position in support of theTender Offer and that it will recommend that the Target Company’s shareholders
and Stock Acquisition Right Holders accept the Tender Offer.
At that meeting of the board of directors, all seven of the Target 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 the Target Company’s
threeauditors, 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 Target 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 Target Company, such as agreements including deal
protection provisions prohibiting the Target Company from contacting parties
proposing a purchase other than the Offerors (“Competing Purchase Proposer”),
they shall not prevent any Competing Purchase Proposer from having theopportunity to make a purchase proposal, and have taken care to ensure the fairnessof the Tender Offer.
Additionally, although the minimum tender offer period stipulated by laws
and regulations is 20 business days, the Offerors have made the period of the Tender
Offer (the “Tender Offer Period”) 21business days. The Tender Offer is a so-called
tender offer with prior announcement, and ensuring a certain period until thecommencement of the Tender Offer after announcing a series of transaction terms
and conditions, including the Tender Offer Price, ensures that all of the Target
Company’s shareholders and Stock Acquisition Right Holders have an appropriate
opportunity to determine whether to tender in response to the Tender Offer, ensures40

the opportunity for purchase proposals from Competing Purchase Proposers, andtherefore aims to ensure the appropriateness of the Tender Offer Price.
(vii) Creation of minimum to satisfy the majority of minority condition
As set forth in the section above titled “(1) Summary of the Tender Offer”,
the minimum number of share certificates, etc. to be purchased 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 Target Company Shares
owned by shareholders of the Target Company who do not have an interest in theOfferors or a so-called “majority of minority.” The Offeror believes that the Tender
Offer, by not being concluded if it does not obtain the support of a majority ofshareholders of the Target Company who do not have an interest in the Offerors,
gives serious consideration to the intention of the minority shareholders of theTarget Company.
(4)

Policy for organizational restructuring after the Tender Offer (matters relating to the“Two-Step Acquisition”)
If the Offeror is unable to acquire all of the Target Company Shares and theStock Acquisition Rights through the Tender Offer, then the Offeror intends to takeone of the following actions after the successful completion of the Tender Offer tomake the Target Company a wholly-owned subsidiary of the Offeror.
(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 Target Company after the successful completion of theTender Offer, the Offeror intends to demand, promptly after the settlement of
the Tender Offer, that all shareholders of the Target Company (excluding theOfferor and the Target Company) (“Selling Shareholders”) sell all of theTarget Company Shares that they own (“Shares to be Sold”) to the Offeror(the “Demand for the Sale of Shares”) and demand that all of the holders of
the Stock Acquisition Rights (excluding the Offeror) (the “Selling Stock
Acquisition Right Holders”) sell all of the Stock Acquisition Rights that theyown (“Selling Stock Acquisition Rights”) to the Offeror (the “Demand for theSale of Stock Acquisition Rights”; together with the Demand for the Sale ofShares, the “Demand for the Sale of Shares, Etc.”), pursuant to the provisionsof Article 172, Paragraphs 1 and 2 of the Companies Act. In the event of a
Demand for the Sale of Shares, the Offeror intends to determine that each of
the Selling Shares owned by the Selling Shareholders will be exchanged for
cash consideration equal to the Tender Offer Price, and in the event of a
Demand for the Sale of Stock Acquisition Rights, the Offeror intends todetermine that each of the Selling Stock Acquisition Rights owned by the
Selling Stock Acquisition Right Holders will be exchanged for cash
consideration equal to the Stock Acquisition Rights Tender Offer Price. In
such an event, the Offeror will notify the Target Company of the Demand for41

the Sale of Shares, Etc. and seek the Target Company’s approval thereof. If
the Target Company approves the Demand for the Sale of Shares, Etc. by aresolution of the board of directors, then, in accordance with the procedures
provided for in relevant laws and regulations and without requiring thespecific 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, the Offeror will deliver
an amount of cash consideration per Target Company Share equal to theTender Offer Price to each Selling Shareholder and an amount of cash
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 Target Company Shares owned by the Selling
Shareholders and the Selling Stock Acquisition Rights owned by the Selling
Acquisition Right Holders.
In addition, according to the Target Company’s Press Release, if theOfferor conducts a Demand for the Sale of Shares, Etc., the Target Company
intends to approve the Demand for the Sale of Shares, Etc.
According to the provisions of the Companies Act that aim to protect
the rights of minority shareholders in relation to the Demand for the Sale ofShares, Etc., the Selling Shareholders and the Selling Stock Acquisition Right
Holders will be able to file a petition with the court for a determination of thesale price for the Selling Shares and the Selling Stock Acquisition Rights. The
sale price for the Selling Shares and Selling Stock Acquisition Rights by thismethod 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 Target Company after the successful completion of theTender Offer, the Offeror will request the Target Company to hold anextraordinary shareholders’ meeting at which the following proposals will be
submitted (the “Extraordinary Shareholders’ Meeting”): (i) to conduct a
consolidation of the Target Company Shares (the “Share Consolidation”), and(ii) to make an partial amendment to the Target Company’s Articles ofIncorporation to abolish the share unit number provisions on the condition
that the Share Consolidation becomes effective. The Offeror intends toapprove each of 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 Target Company will come toown the number of Target Company Shares proportionate to the ratio of the
Share Consolidation that is approved at the Extraordinary Shareholders’Meeting as of the effective date of the Share Consolidation. In such case, if,
due to the Share Consolidation, the number is a fraction less than one, eachshareholder of the Target Company who holds such fractional shares will
receive an amount of cash obtained by selling the Target Company Shares42equivalent to the total number of shares less than one unit (with suchaggregate sum rounded down to the nearest whole number; the same applies
hereinafter) to the Target Company or the Offeror as per the procedures
specified in Article 235 of the Companies Act and other relevant laws andregulations. The purchase price for the aggregate sum of shares less than one
unit in the Target Company 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 Target Company Shares owned by each suchshareholder. The Offeror will request the Target Company to file a petition to
the court for permission to purchase such Target Company Shares on thisbasis. Although the ratio of the Share Consolidation of the Target Company
Shares has not been determined as of today, it is intended that the shares ofshareholders who did not tender their shares in the Tender Offer (excluding
the Offeror and the Target Company) will be classified as shares less than one
unit in order for the Offeror to become the sole owner of all of the Target
Company Shares (excluding treasury shares held by the Target Company).
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 Target
Company may request that the Target Company purchase all such shares lessthan one unit at a fair price, and such shareholders may file a petition to thecourt to determine the price of the Target Company Shares in accordance with
Articles 182-4 and 182-5 of the Companies Act and other relevant laws andregulations. The purchase price per share by this method will be finallydetermined by the court.
If the Tender Offer has been successfully completed but the Offeror
does not own at least 90% of the number of the voting rights of allshareholders of the Target Company, and if the Offeror is unable to acquire
all of the Stock Acquisition Rights in the Tender Offer and any Stock
Acquisition Rights remain unexercised, then the Offeror plans either torequest the Target Company to implement, or to itself implement, theprocedures reasonably required for carrying out the Transactions, such as theacquisition of the Stock Acquisition Rights by the Target Company or arecommendation by the Target Company to the 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 Target Company awholly-owned subsidiary of the Offeror by a method whereby theshareholders of the Target Company who do not tender their shares in theTender Offer (excluding the Target Company) will ultimately receive cash
consideration equal to the number of Target Company Shares held by suchshareholder multiplied by the Tender Offer Price. If cash is paid to the holders
43

of Stock Acquisition Rights of the Target Company who did not tender 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 shall be calculated sothat such amount is equal to the amount obtained by multiplying therespective purchase price per unit of the Stock Acquisition Rights in theTender Offer by the number of such Stock Acquisition Rights of the Target
Company owned by such holder of the Stock Acquisition Rights.
(5)

Expected delisting and reasons therefor
The Target Company Shares are currently listed on the Prime Market of theTokyo Stock Exchange as of today. However, since the Offerors have not set a limiton the maximum number of share certificates, etc. to be purchased in the Tender
Offer, the Target Company Shares may be delisted through prescribed proceduresin accordance with the stock delisting criteria of the Tokyo Stock Exchange,depending on the result of the Tender Offer.
Also, even in the event that the delisting standards are not met uponcompletion of the Tender Offer, if the Squeeze-Out Procedures are carried out asstated above in the section titled “(4) Policy for organizational restructuring after
the Tender Offer (matters relating to the “Two-Step Acquisition”)” after the
successful completion of the Tender Offer, then the Target Company Shares will bedelisted through the prescribed procedures in accordance with the stock delisting
criteria of the Tokyo Stock Exchange. After delisting, the Target Company Shares
will no longer be traded on the Prime Market of the Tokyo Stock Exchange.

(6)

Matters relating to material agreements regarding the Tender Offer
As stated above in the section titled “(1) Summary of the Tender Offer”,
HoldCo, Crosby US and Crosby UK has executed the Business Combination
Agreement with the Target Company on May 16, 2022. According to the Business
Combination Agreement, the Target Company shall, until the expiration of theTender Offer Period, maintain the Opinion to Support and Recommend to Tenderin the Tender Offer and shall not adopt any resolution of its board of directors towithdraw or modify the Opinion to Support and Recommend to Tender in theTender Offer, on the condition that the special committee of the Target Company
has submitted to the board of directors of the Target Company an opinion that it isappropriate for the board of directors to issue the Opinion to Support andRecommend to Tender in the Tender Offer and that such opinion has not been
withdrawn or modified.
In addition, the Target Company and its subsidiaries shall not, directly or
indirectly, actively solicit a third party for any acquisition proposal for shares,
business or assets of the Target Company or its subsidiaries by purchase, merger,
demerger, business combination, tender offer or otherwise or any other transactionthat could reasonably considered to compete with or otherwise impede or delay the
implementation of the Transaction (“Competing Transaction”). If the Target
Company receives any proposal regarding a Competing Transaction or any
indication thereto, the Target Company shall immediately notify HoldCo, Crosby
US and Crosby UK of the details of such proposal or indication, provide othermaterial information regarding such Competing Transaction, and discuss in good44

faith with HoldCo, Crosby US and Crosby UK the response to the Competing
Transaction (to the extent permitted by applicable law).
The Target Company may withdraw or modify the Opinion to Support andRecommend to Tender in the Tender Offer if a third party publicly announces orcommences a counter tender offer for all shares of the Target Company or makes
any bona fide offer as a Competing Transaction, and in each case the board of
directors of the Target Company reasonably determines in good faith after taking
into account all relevant factors (including any financing conditions, regulatory
approvals, timing, consent or other conditions, as well as deal certainty, potential
synergies, and other effects that may be realized through the Business Combination
to enhance the enterprise value of the Target Company) and advice from its outside
legal counsel, that the failure to take such actions would reasonably be expected toconstitute a breach of the Target Company directors’ duty of care. However, it isconditioned that the Target Company shall, at least three (3) Business Days before
a withdrawal or modification of the Opinion to Support and Recommend to Tenderin the Tender Offer or entering into a definitive agreement regarding the Competing
Transaction, send to HoldCo, Crosby US and Crosby UK a written notice of intent
to take such action(s) together with a summary of the material terms and conditionsof the Competing Transaction and the identity of the person making any such
Competing Transaction to provide HoldCo, Crosby US and Crosby UK with anopportunity to update their offer, and engage in good faith discussion with HoldCo,
Crosby US and Crosby UK until the earlier of (i) three (3) Business Days after such
notice and (ii) five (5) business days prior to the final date of the Tender Offer
Period. In case the Target Company withdraws or modifies the Opinion to Support
and Recommend to Tender in the Tender Offer due to withdrawal or modificationof the opinion of the special committee that it is appropriate for the board of
directors of the Target Company to issue the Opinion to Support and Recommend
to Tender in the Tender Offer or in accordance with the aforementioned agreementon the withdrawal or modification of the Opinion to Support and Recommend to
Tender in the Tender Offer, HoldCo, Crosby US or Crosby UK or the Target
Company may terminate the Business Combination Agreement, and HoldCo canreceive from the Target Company JPY 1,000,000,000 .
The Business Combination Agreement provides, among others, (i) the mattersrelating to the terms and conditions of the Tender Offer, (ii) the Tender Offer
Conditions Precedent, (iii) HoldCo, Crosby US and Crosby UK’s obligation to
make efforts to obtain the necessary approvals and the Target Company’s obligation
to cooperate therewith, (iv) the matters relating to the implementation of thesqueeze out and the Merger, (v) the Target 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 and Crosby UK and the Target Company, (vii)the obligation of the Target Company to cooperate with financing, (viii) the Target
Company’s obligation to make efforts to obtain consents from the other party to any
material contracts that require such consent, (ix) Holdco, Crosby US and Crosby
UK and their affiliates’ standstill obligations to the shares of the Target Company,(x) the obligation relating to the prohibition of the dividend payments other than
dividends with a record date of March 31, 2022 by the Target Company, (xi) the
Target Company's obligation to make efforts to implement any required procedures
relating to the labor unions of the Target Company Group, (xii) the Target
Company’s obligation to cooperate in encouraging the Stock Acquisition Rights
45

held by the Stock Acquisition Right Holders and shares held by the employee
ownership shareholding association and the business partner shareholding
association of the Target Company to be tendered in the Tender Offer, (xiii)
representations and warranties by HoldCo, Crosby US, Crosby UK and the Target
Company (Note), (xiv) confidentiality obligation, and (xv) the provision pertaining
to termination by the Holdco, Crosby US and Crosby UK or the Target Company
in the event of the Target Company withdraws or modifies the Opinion to Support
and Recommend to Tender in the Tender Offer, breach of representations andwarranties and obligations, in the event that a petition for commencement ofbankruptcy proceedings is filed against the other party, or in the event that theTender Offer is not commenced by March 31, 2023 (the “Outside Date”). In
addition, in case the necessary approvals under competition laws to complete theBusiness Combination have not been obtained by the Outside Date and the Business
Combination Agreement is terminated despite the satisfaction or waiver of all other
Tender Offer Conditions Precedent, except in the case attributable to the Target
Company, including the Target Company’s breach of its obligation to cooperate in
obtaining the necessary approvals, the Target Company can receive from HoldCo
JPY 1,000,000,000.
In addition to the change of the company name of HoldCo into Kito | Crosby
after the completion of the Squeeze-Out Procedures, the following matters relating
to the governance and operation of the integrated 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 Target Company
Group being valued equally as “One Company, One Team and One Mission”,
which balances a degree of autonomy of the businesses of the Target
Company and Crosby Group with the coordinated and cohesive managementof Kito | Crosby as a whole.
During the first 18 months after completion of the Business Combination (the“Initial Period”), an ELT (as defined below) and the Combined Company’sboard will discuss and consider the most appropriate operating structure toensure a smooth integration and to maximize the corporate value of the
Combined Group.
(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 would be initially a total of nine (9)directors, and three (3) directors shall be nominated by the Target Company,
one (1) director shall be the Group CEO of the Combined Company, and five(5) directors shall be nominated by the shareholders of the Combined Group.
The CEO of the Combined Company shall be elected by the Combined
Company’s board.
The chairperson of the board of directors of the Combined Company shall be
appointed from among the directors nominated by the Target Company. The
46

COO shall be appointed from among the directors of the Combined Company
nominated by the Target Company during the Initial Period.
(iv) Executive Leadership TeamThe Combined Group will form an Executive Leadership Team (the “ELT”).
The ELT will take primary responsibility on matters regarding the businessand operation of the Combined Group and the Combined Group CEO will
execute his or her duties in accordance with guidance/instructions from the
ELT and the Combined Group Board. During the Initial Period, the ELT shallconsist of the Target Company’s incumbent CEO, COO and one additional
appointee of the Target Company and Crosby Group’s incumbent CEO,
Crosby Group’s incumbent CFO and one additional appointee of Crosby.
The incumbent CEO of the Target Company and Crosby Group will be the
Co-Head of the ELT.
The ELT’s responsibilities include the following matters regarding thebusiness and operation of the Combined Group.
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
(v)

material changes to organizational design, talent development andcompensation;
value creation plan, strategy and execution;
integration, prioritization and resourcing;commercial and operational escalation;
capital budgeting and approval, subject to approval by the board of
directors of the Combined Company;
consolidated Annual Operating Plan development and achievement
including relevant incentive compensation plans;bolt-on M&A sourcing & execution; andother material matters relating to the common strategy and leadership
regarding the Combined Group.

Divisional Leadership TeamNo sooner 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 (the “DLT Period”), theCombined Group will form a divisional leadership team (“DLT”) for each of
the Kito division and the Crosby division. Each DLT shall consist of a
Divisional President and other executives of each division and the Divisional
President of the Kito Division shall be nominated by the Target Company
during the DLT Period.
Each DLT will operate within the confines of the annual budgets approved by
the board of directors of the Combined Company and will follow the visionand strategy of the Combined Group CEO. Each DLT is responsible andaccountable for the operation and strategy of their respective divisions andreports to the Combined Group CEO.

(vi) Matters requiring more than 75% approval of the board.
More than 75% approval of the directors of the Combined Company’s board
is required for the matters below.
i.
Discontinuation of the principal brand or any material product category
Crosby or the Target Company
47

ii.
iii.
iv.

Renaming of the Combined Group (Kito | Crosby)
Large-scale personnel reorganization
Large-scale facility closure(vii) Business Strategy after the Business Combination
After completion of the Business Combination, the Combined Group envision
implementing the (a) analysis of product development and production
technology, and consolidation of quality standards, (b) improvement of the
production system efficiency, (c) expansion of product portfolios andstrengthening of customer base, (d) consolidation of personnel andorganizational structure to obtain new sales opportunities, organization 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:

2.

In the Business Combination Agreement, HoldCo, Crosby US and Crosby
UK represent and warrant (1) the validity of the incorporation andexistence, (2) the validity and enforceability of the Business Combination
Agreement, (3) the ability necessary for the execution and performance of
the Business Combination Agreement, the performance of procedures
required by internal rules for the execution and performance of theBusiness 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 Target Company represents andwarrants (1) the validity of its incorporation and existence, (2) the validity
and enforceability of the Business Combination Agreement, (3) the ability
necessary for the execution and performance of the Business Combination
Agreement, the performance of procedures required by internal rules forthe execution and performance of the Business Combination Agreement,
and the absence of any conflict with laws and regulations, (4) the absenceof any transaction or involvement with antisocial forces, and (5) the
accuracy of the Target Company’s Annual Securities Reports andQuarterly Reports for the fiscal year ended March 31, 2021 and thereafter.

Outline of the Tender Offer(1)

Outline of the Target Company

(i)
(ii)
(iii)

Name
Address
Name and Title ofRepresentative
Director
Businesses

(iv)
(v)
(vi)
(vii)

KITO CORPORATION
2000, Tsuijiarai, Showa-cho, Nakakoma-gun, Yamanashi
President, CEO and Representative Director Yoshio Kito

Manufacture and sale of lifting hardware (hoist) and craneetc.
Capital
3,976,000,000 yen (as of March 31, 2022)
Date of Foundation
July 1944
Major Shareholders • The Master Trust Bank of Japan, Ltd. (Trust Account) –48

(viii)andOwnership
13.11%
Percentage, as of • MISAKI ENGAGEMENT MASTER FUND (Standing
September 30, 2021
proxy: The Hongkong and Shanghai Banking
Corporation Limited, Tokyo Branch, Custody
Department) – 9.94%• THE BANK OF NEW YORK-JASDECNON-TREATYACCOUNT (Standing proxy: Mizuho Bank, Ltd.,
Settlement & Clearing Services Department) – 4.83%• Custody Bank of Japan, Ltd. (Trust Account) – 4.66%• GOVERNMENT OF NORWAY (Standing proxy:
Citibank, N.A., Tokyo Branch) – 4.35%• YK Capital Co., Ltd. – 3.59%• Custody Bank of Japan, Ltd. (Trust Account 9) –3.37%• Sumitomo Mitsui Banking Corporation – 3.25%• THE BANK OF NEW YORK MELLON 140042(Standing proxy: Mizuho Bank, Ltd., Settlement &Clearing Services Department) – 2.06%• Kito Business Partner Stock Ownership Association –1.85%
Relationships Between the Offeror and the Target Company
Capital Relationships
Not applicable
Personal
Not applicable
Relationships
Business
Not applicable
Relationships
RelatedParty
Not applicable
Relationships
Note: “(vii) Major Shareholders and Ownership Percentage, as of September 30,
2021” is taken from “Status of the Major Shareholders” in the 78th Q2 Reportsubmitted by the Target Company on November 5, 2021 (the “Target Company’s
Quarterly Report”).

(2)

Schedule
The Offeror plans to promptly commence the Tender Offer on the date that is (i)within 10 business days after the Tender Offer Conditions Precedent are satisfied or
waived and (ii) agreed among HoldCo, Crosby US, Crosby UK and the Target
Company. As of today, the Offeror aims to commence the Tender Offer on or aroundlate October 2022, but it is difficult to accurately estimate the amount of timerequired for procedures, etc. as they involve domestic and foreign competition
authorities. Given that fact, the detailed timeline for the Tender Offer will bepromptly announced once it is decided. The period of the tender offer is expected
to be set for 21business days.

(3)

Price of tender offer(i)

Common stock: 2,725 yen per share of common stock
49

(ii)

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, theFourteenth Series Stock Acquisition Rights, and the Fifteenth Series
Stock Acquisition Rights are hereinafter collectively referred to as the“Stock Acquisition Rights.”)(4)

Basis for the calculation of the Tender Offer Price(i)

Basis of calculation(a) Common stock
In determining the Tender Offer Price, the Offerors considered all
relevant factors including the alternatives to unlock the value,
management and operational plans, the recent performance of theTarget 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 throughcomplementary products), price trend of the Target Company’s shares,
equity market trend, economic sentiment, whether the Target
Company’s management and the special committee could endorse the50transaction, and the prospect of the shareholders tendering their sharesin the Tender Offer. In light of the fact that the Target Company Sharesare traded on a financial instruments exchange, the Offerors also
referred to (i) the closing price (1,659 yen) of the Target Company
Shares on the Prime Market of the Tokyo Stock Exchange as of May 13,2022 (which was the business day immediately preceding May 16, 2022,
the announcement date of the Tender Offer), and (ii) the simple averageclosing prices of the Target Company Shares over the preceding onemonth period (from April 14 2022 to May 13, 2022), three-month
period (from February 14, 2022 to May 13, 2022), and six-month period(from November 14, 2022 to May 13, 2022) (1,671 yen, 1,692 yen, and
1,762 yen, respectively) (rounded to the nearest whole yen).
As the Offerors have determined the price by comprehensively taking
into consideration the factors described above, the Offerors have notobtained a share valuation report from any third-party appraiser.
The Tender Offer Price (2,725 yen) also represents (i) a premium of
64.26% (rounded to two decimal places) on 1,659 yen, the closing priceof the Target Company Shares on the Prime Market of the Tokyo Stock
Exchange as of May 13, 2022 (which was the business day immediately
preceding May 16, 2022, the announcement date of the Tender Offer),(ii) a premium of 63.08% on 1,671 yen, the simple average closing pricefor the preceding one-month period, (iii) a premium of 61.05% on 1,692
yen, the simple average closing price for the preceding three-month
period, and (iv) a premium of 54.65% on 1,762 yen, the simple averageclosing price for the preceding six-month period.
(b)

Stock Acquisition Rights
With regard to the Stock Acquisition Rights, the exercise price of each
Stock Acquisition Right per Target Company Share (the Tenth Series
Stock Acquisition Rights: 853 yen; the Eleventh Series Stock
Acquisition Rights: 1,140 yen; the Thirteenth Series Stock Acquisition
Rights: 891 yen; the Fourteenth Series Stock Acquisition Rights: 1,206
yen: the Fifteenth Series Stock Acquisition Rights: 2,394 yen) falls
below the Tender Offer Price (2,725 yen) and the exercise periods foreach Stock Acquisition Right have arrived as of today. Therefore, theOfferors have determined that the purchase price per Stock Acquisition
Right is to be obtained by multiplying the difference of the Tender Offer
Price (2,725 yen) and the exercise price of each Stock Acquisition Right
per Target Company Share by the number of Target Company Shares
underlying each Stock Acquisition Right. Specifically, the Offerors
have determined that (i) the purchase price per Tenth Series Stock
Acquisition Right is to be 374,440 yen, which is obtained bymultiplying the difference (1,585 yen) of the Tender Offer Price (2,725
yen) and the exercise price of each Tenth Series Stock Acquisition Right
per Target Company Share (853 yen) by the number of Target Company
Shares underlying each Tenth Series Stock Acquisition Right (200shares), (ii) the purchase price per Eleventh Series Stock Acquisition
Right is to be 317,000 yen, which is obtained by multiplying the51difference (1,585 yen) of the Tender Offer Price (2,725 yen) and theexercise price of each Eleventh Series Stock Acquisition Right per
Target Company Share (1,140 yen) by the number of Target Company
Shares underlying each Eleventh Series Stock Acquisition Right (200shares), (iii) the purchase price per Thirteenth Series Stock Acquisition
Right is to be 366,800 yen, which is obtained by multiplying thedifference (1,834 yen) of the Tender Offer Price (2,725 yen) and theexercise price of each Thirteenth Series Stock Acquisition Right per
Target Company Share (891 yen) by the number of Target Company
Shares underlying each Thirteenth Series Stock Acquisition Right (200shares), (iv) the purchase price per Fourteenth Series Stock Acquisition
Right is to be 303,800 yen, which is obtained by multiplying thedifference (1,519 yen) of the Tender Offer Price (2,725 yen) and theexercise price of each Fourteenth Series Stock Acquisition Right per
Target Company Share (1,206 yen) by the number of Target Company
Shares underlying each Fourteenth Series Stock Acquisition Right (200shares), and (iv) the purchase price per Fifteenth Series Stock
Acquisition Right is to be 66,200 yen, which is obtained by multiplying
the difference (331 yen) of the Tender Offer Price (2,725 yen) and theexercise price of each Fifteenth Series Stock Acquisition Right per
Target Company Share (2,394 yen) by the number of Target Company
Shares underlying each Fifteenth Series Stock Acquisition Right (200shares).
As stated above, since the Offerors have determined the purchase priceof the Stock Acquisition Rights, they have not obtained a valuation
report from any third-party appraiser.
(ii)

Process of calculation
After submitting the Letter of Intent on February 14, 2022, Crosby conducted
the analysis and assessment regarding the Target Company through due
diligence conducted between mid-March and late April in 2022. Considering
these results, Crosby proposed the Tender Offer Price of JPY 2,400 as theFirst Proposal.
After the submission of the First Proposal, on May 2, 2022, the Target
Company requested Crosby to increase the Tender Offer Price to JPY 3,000
because the Target Company did not believe the Tender Offer Pricesufficiently reflected the corporate value of the Target Company, based on
discussions with the special committee. In addition, the Target Company
requested to propose the Stock Acquisition Rights Tender Offer Price.
In response to the request from the Target Company, Crosby sincerely
considered raising the price, and on May 5, 2022, submitted the Second
Proposal that the Tender Offer Price shall be JPY 2,550 (the premiums on themarket prices of the Target Company Shares as of May 2, 2022 were (a)50.71% on the simple average closing prices of the Target Company Shares
over the preceding one-month period of JPY 1,692, (b) 50.18% on the simple
average closing prices of the Target Company Shares over the preceding
three-month period of JPY 1,698, and (c) 44.39% on the simple averageclosing prices of the Target Company Shares over the preceding six-month
period of JPY 1,766) and the Stock Acquisition Rights Tender Offer Price52

shall be the amount obtained by multiplying 200, which is the number of theTarget Company Shares represented by each of such stock acquisition rights,
by the difference between the Tender Offer Price and the exercise price ofeach stock acquisition right per the Target Company’s common share.
After the submission of the Second Proposal, on May 10, 2022, the Target
Company requested Crosby to increase the Tender Offer Price to JPY 2,900,
because the Tender Offer Price did not sufficiently reflect the corporate value,
based on discussions with the special committee.
In response to the request from the Target Company, Crosby sincerely
considered raising the price, and on May 10, 2022, submitted the Third
Proposal that the Tender Offer Price shall be JPY 2,650 (the premiums on themarket prices of the Target Company Shares as of May 9, 2022 were (a)58.11% on the simple average closing prices of the Target Company Shares
over the preceding one-month period of JPY 1,676, (b) 56.25% on the simple
average closing prices of the Target Company Shares over the preceding
three-month period of JPY 1,696, and (c) 50.14% on the simple averageclosing prices of the Target Company Shares over the preceding six-month
period of JPY 1,765).
After the submission of the Third Proposal, on May 11, 2022, the Target
Company requested Crosby to increase the Tender Offer Price to JPY 2,900
because the Target Company did not believe the Tender Offer Pricesufficiently reflected the corporate value of the Target Company, based on
discussions with the special committee.
In response to the request from the Target Company, Crosby sincerely
considered raising the price, and on May 13, 2022, submitted the Fourth
Proposal that the Tender Offer Price shall be JPY 2,725 (the premiums on themarket prices of the Target Company Shares as of May 12, 2022 were (a)63.08% on the simple average closing prices of the Target Company Shares
over the preceding one-month period of JPY 1,671 (b) 60.96% on the simple
average closing prices of the Target Company Shares over the preceding
three-month period of JPY 1,693, and (c) 54.57% on the simple averageclosing prices of the Target Company Shares over the preceding six-month
period of JPY 1,763). As a result, Crosby received a response from the Target
Company to accept the Tender Offer Price under the Fourth Proposal on thecondition that Crosby submits a binding final offer setting the Tender Offer
Price at JPY 2,725. Based on such response from the Target 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 obtained by multiplying 200, which is the numberof the Target Company Shares represented by each stock acquisition right, by
the difference between the Tender Offer Price and the exercise price of eachstock acquisition right per the Target Company’s common shares and, on thesame date, the Target Company agreed on such final offer.
Based on the response from the Target Company, on May 16, 2022, Crosby
determined the Tender Offer Price to be JPY 2,725 and the Stock Acquisition
Rights Tender Offer Price to be the amount obtained by multiplying 200,
which is the number of the Target Company Shares represented by each stockacquisition right, by the difference between the Tender Offer Price and theexercise price of each stock acquisition right per the Target Company Shares,
considering all relevant factors including the alternatives to unlock the value,53management and operational plans, the recent performance of the Target
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), pricetrend of the Target Company’s shares, equity market trend, economic
sentiment, whether the Target Company’s management and the special
committee could endorse the Tender Offer, and the prospect of theshareholders tendering their shares in the Tender Offer and the Offeror
determined today to commence the Tender Offer subject to satisfaction or
waiver of the Tender Offer Conditions Precedent.
(iii) Relationships with appraisers
As the Offerors did not obtain a share price valuation report or an opinion
regarding the fairness of the Tender Offer Price (fairness opinion) from any
third-party appraiser when determining the Tender Offer Price, this matter is
not applicable.
(5)

Number of shares certificates, etc. to be purchased

Class of sharecertificates, etc.

Maximum number of
Number of shares to be Minimum number ofsharestobepurchasedshares to be purchased
purchased

Common stock

20,726,019 (shares)

13,817,400 (shares)- (shares)

Total

20,726,019 (shares)

13,817,400 (shares)- (shares)

Note 1:

If the total number of Tendered Share Certificates, Etc. is less than theminimum number of shares to be purchased (13,817,400 shares), theOfferor will not purchase any of the Tendered Share Certificates, Etc.
If the total number of Tendered Share Certificates, Etc. is equal to or
exceeds the minimum number of shares to be purchased (13,817,400
shares), the Offeror will purchase all the Tendered Shares Certificates,
Etc.

Note 2:In the Tender Offer, the Offeror has not set a maximum number ofshares to be purchased, so the number of shares to be purchased is statedas the Total Number of Shares After Considering Potential Shares(20,726,019 shares), which is the maximum number of sharecertificates, etc. that can be acquired by the Offeror through the Tender
Offer.

Note 3:

Shares less than one unit are also subject to the Tender Offer. If a rightto request a purchase of shares less than one unit is exercised byshareholders in accordance with the Companies Act, the Target
Company may purchase its own shares less than one unit during theperiod of the Tender Offer in accordance with procedures required bylaws and regulations.
54

(6)

Note 4:The Offeror does not intend to acquire the treasury shares held by theTarget Company through the Tender Offer.

Note 5:

The figures in “Number of shares to be purchased” and “Minimum
number of shares to be purchased” above are tentative figures that rely
on information as of today. Due to factors including fluctuation in thenumber of treasury shares after the same date, actual figures in theTender Offer may differ from the figures above. The “Number of shares
to be purchased” and “Minimum number of shares to be purchased”
will be finally determined prior to the commencement of the Tender
Offer based on the latest number of treasury shares held by the Target
Company available at the time of the commencement of the Tender
Offer.

Changes to share ownership ratios due to the tender offer

Number of voting rights represented
by share certificates, etc. held by theOfferor prior to the tender offer
Number of voting rights represented
by share certificates, etc. held byspecial related parties prior to thetender offer
Number of voting rights represented
by share certificates, etc. held by theOfferor after the tender offer
Number of voting rights represented
by share certificates, etc. held byspecial related parties after the tender
offer
Total number of voting rights of allshareholders of the Target Company- Proportion of ownership of sharecertificates, etc. prior to the tender
offer: -%- Proportion of ownership of sharecertificates, etc. prior to the tender
offer: -%207,260 Proportion of ownership of sharecertificates, etc. after the tender
offer: 100%
- Proportion of ownership of sharecertificates, etc. after the tender
offer: -%205,642

Note 1:The “Number of voting rights represented by share certificates, etc. heldby the Offeror after the tender offer” is the number of voting rights
represented by the number of shares to be purchased (20,726,019
shares) in the Tender Offer stated in “(5) Number of share certificates,etc. to be purchased” above.

Note 2:The “Total number of voting rights of all shareholders of the Target
Company” is the number of voting rights of all shareholders stated in
the Target Company’s Quarterly Report. However, since shares lessthan one unit are also subject to the Tender Offer, when calculating the“Proportion of ownership of share certificates, etc. prior to the tender
offer” and the “Proportion of ownership of share certificates, etc. after
the tender offer,” 207,260 voting rights represented by the Total
Number of Shares After Considering Potential Shares is used as adenominator.

Note 3:The “Proportion of ownership of share certificates, etc. prior to the55tender offer” and the “Proportion of ownership of share certificates, etc.
after the tender offer” have been rounded to the second decimal place.
(7)

Purchase price (scheduled)
56,478,401,775 yen
Note: The above “Purchase price” has been calculated by multiplying the numberof shares to be purchased in the Tender Offer stated in “(5) Number of sharecertificates, etc. to be purchased” above by the Tender Offer Price (2,725 yen).
Therefore, the purchase price is subject to change if the actual number ofshares to be purchased in the Tender Offer is altered due to fluctuation, etc.
hereafter.

(8)

Other conditions and methods of purchase(i)

Other conditions and methods of purchase
As with “(2) Schedule” above, the Offeror will promptly announce themethod of settlement, the date of public notice of commencement of theTender Offer, and other conditions and methods of purchase that are not statedin (ii) and (iii) below as soon these details are determined. The Offeror plans
to appoint SMBC Nikko Securities Inc. as a tender offer agent.

(ii)

Conditions set forth in each item of Article 27-13, Paragraph 4 of the Act andthe details thereof
If the total number of Tendered Share Certificates, Etc. is less than theminimum number of shares to be purchased (13,817,400 shares), the Offeror
will not purchase any of the Tendered Share Certificates, Etc. If the total
number of the Tendered Share Certificates, Etc. is equal to or exceeds theminimum number of shares to be purchased (13,817,400 shares), the Offeror
will purchase all the Tendered Share Certificates, Etc.

(iii) Others
This press release has been prepared for the purpose of informing the
public of the Tender Offer and has not been prepared for the purpose ofsoliciting an offer to sell, or making an offer to purchase, any securities.
If shareholders wish to make an offer to sell their shares in the Tender
Offer, they should first read the Tender Offer Explanation Statement for
the Tender Offer and offer their shares or stock options for sale at theirown discretion. This press release shall neither be, nor constitute a partof, an offer to sell or purchase, or a solicitation of an offer to sell orpurchase, any securities, and neither this press release (or a part thereof)
nor its distribution shall be interpreted to be the basis of any agreement
in relation to the Tender Offer, and this press release may not be reliedon at the time of entering into any such agreement.
-

The shares of the Target Company, a company incorporated in Japan, is
subject to the Tender Offer. The Tender Offer will be conducted inaccordance with the procedures and information disclosure standards
prescribed in the laws of Japan, which may differ from the procedures56

and information disclosure standards in the United States. In particular,
Section 13(e) and Section 14(d) of the U.S. Securities Exchange Act of1934 (as amended; hereinafter the same) and the rules prescribed
thereunder do not apply to the Tender Offer, and the Tender Offer does
not conform to those procedures and standards. Financial information
contained in this press release has been prepared in accordance withJapanese accounting standards, which may be materially different fromthe generally accepted accounting standards in the U.S. or othercountries. In addition, as the Tender Offeror is a legal entity establishedoutside the United States and all or some of its officers are non-U.S.
residents, it may become difficult to exercise rights or requests which
would be claimed under the U.S. securities laws. Furthermore, it may
not be possible to commence legal proceedings against the legal entity
established outside the United States and its officers in a non-U.S. court
for violations of the U.S. securities laws. Furthermore, U.S. courts may
not necessarily have jurisdiction over legal entities and their respective
subsidiaries and affiliates outside the United States.
-

Unless otherwise specified, all procedures relating to the Tender Offer
are to be conducted entirely in Japanese. If all or any part of a document
relating to the Tender Offer is prepared in the English language andthere is any inconsistency between the English language documentationand the Japanese language documentation, the Japanese language
documentation will prevail.

-This press release includes statements that fall under the “forwardlooking statement” defined in Section 27A of the U.S. Securities Act of1933 (as amended) and Section 21E of the U.S. Securities Exchange
Act of 1934. Due to the known and unknown risks and uncertainties,
the actual results might differ significantly from the statements that are
implicitly or explicitly forward-looking. The Offeror and its affiliates
do not guarantee for such implicit and explicit forward-looking
statements to materialize. The “forward-looking statements” in thispress release were prepared based on the information obtained by theOfferor as of the date hereof, unless required by law, the Offeror and its
affiliates are not obligated to amend or revise such forward-looking
statements to reflect future matters and situation.

-

The financial advisors to the Offeror and the Target Company as wellas the Tender Offer Agent (including their respective affiliates) may,within their ordinary course of business, engage during the Tender Offer
Period in the purchase of or arrangement to purchase Target Company
Shares for their own account or for their customers’ accounts outside
the Tender Offer in accordance with Rule 14e-5(b) of the U.S. Securities
Exchange Act of 1934, to the extent permitted under Japanese securities
regulations and other applicable laws and regulations. Such purchases
may be made at the market price through market transactions, or at a
price determined by negotiation outside of the market. In the event that
information regarding such purchases is disclosed in Japan, suchinformation will also be disclosed on the English website of the57

financial advisor, the Target Company, or the Tender Offer Agent
conducting such purchases or will otherwise be made publicly available.
-

3.

If a right to request a purchase of shares less than one unit is exercisedby shareholders in accordance with the Companies Act, the Target
Company may purchase its own shares less than one unit during theTender Offer Period in accordance with procedures required by laws
and regulations.

Post-tender offer policy and future outlook
For the policy, etc. after the Tender Offer, please refer to the section above titled “1.
Purpose of the Tender Offer.”

4.

Others(1)

Agreements between the Offeror and the Target Company or its officers, and thecontents thereof(i)Expressions of Support for the Tender Offer
According to the Target Company’s Press Release, at the board of directors
meeting of the Target Company held on May 16, 2022, a resolution was madethat if the Tender Offer commences, the position of the Target Company as ofthis date is that it will declare a position in support of the Tender Offer andthat it will recommend that the Target Company’s shareholders and Stock
Acquisition Right Holders accept the Tender Offer. As stated above, since theOfferor plans to commence the Tender Offer on the date that is (i) within 10
business days after the Tender Offer Conditions Precedent are satisfied or
waived and (ii) agreed among HoldCo, Crosby US, Crosby UK and the Target
Company and the Offeror aims to commence the Tender Offer on or aroundlate October 2022, the Target Company also resolved at the above meeting of
the board of directors to express an opinion on the Tender Offer again when
the Tender Offer is commenced.
For details of the decision-making process of the Target Company’s board of
directors, please refer to the section above titled “(iv) Approval of all the
directors in the Target Company and opinions that there has been no objection
from any of the Target Company’s independent statutory auditors” under “(3)Measures to ensure the fairness of the Tender Offer Price and avoid conflictsof interest, and other measures to ensure the fairness of the Tender Offer” of“1. Purpose of the Tender Offer.”(ii)

The Business Combination Agreement
Please refer to “(6) Matters relating to material agreements regarding theTender Offer” of “1. Purpose of the Tender Offer” above and “Announcement
Regarding the Business Combination of KITO CORPORATION and Crosby
Group” announced by the Target Company today.
58

(2)

Other information considered necessary for investors to decide whether to tender
into the tender offer(i)

Release of “Business Results for the Fiscal Year Ending March 2022
(Japanese GAAP) (Consolidated)”
The Target Company released the Target Company’s Business Results today
and the summary of that release is as follows. The details of the Target
Company’s Business Results have not been audited by an audit firm asprovided for in Article 193-2, Paragraph 1 of the Act. The outline below is apartial excerpt of the information released by the Target Company. For details,
please refer to the release concerned.
(a)Profits and losses (consolidated)
Fiscal Period

Net sales
Cost of sales
Selling, general, and administrative
expensesNon-operating income
Non-operating expenses
Net income attributable to theshareholders of the parent company(b)

16,546 million yen
631 million yen
399 million yen
4,563 million yen

Profits and losses per share (consolidated)
Consolidated Fiscal Year(from April 1, 2021 to March 31, 2022)
221.97 yen
44.00 yen

Fiscal Period
Net income per share
Dividends per share(ii)

Consolidated Fiscal Year (from April 1,
2021 to March 31, 2022)
62,506 million yen
39,775 million yen

Release of “Notice on Dividend of Surplus (No Dividend)”
According to the Notice on Dividend of Surplus (No Dividend) released by
the Target Company on May 16, 2022, at the board of directors meeting of
the Target Company held on the same date, it was resolved there will be nondividend of surplus with a record date of September 30, 2022 (the end of thesecond quarter) and March 31, 2023 (the end of the fiscal year). For details,
please refer to the notice.

59