(Translation)

February 4, 2022
To Whom It May Concern:
GOO CHEMICAL CO., LTD.
Haruki Fujimura, President andDirector
4962,
Naotake Amako, Corporate Officer andGeneral Manager of General Affairs
Department, Administration
Headquarters(TEL.0774-46-7777）

ON

GOO CHEMICAL CO., LTD. (the “Company”) hereby announces that the Company
resolved at its board meeting held on the date hereof to express an opinion in favor of the tender
offer (the “Tender Offer”) for common stocks in the Company (the “Company’s Share(s)”) tobe conducted by GC Holdings Co., Ltd. (the “Offeror”) as part of so-called Management
Buyout (MBO) (Note) as follows, and to recommend that the shareholders of the Company
tender their shares in the Tender Offer.
’s.
(Note) The “Management Buyout (MBO)” means a transaction in which the Offeror
conducts a tender offer based on an agreement with the Company’s officers and hasinterests in common with the Company’s officers.
Particulars

(1)
(2)

Location

GC Holdings Co., Ltd.
6-1 Marunouchi 1-chome, Chiyoda-ku, Tokyo(3)

Representative Director, Wataru Kojima(4)

To acquire and hold share certificates, etc. issued by theCompany1

(Translation)

(5)
(6)

25,000 yen
January 14, 2022
MCP5 Investment Business Limited Liability Partnership,
100.00%

(7)
(8)

the
Not Applicable
Not Applicable
Not Applicable
Not Applicable

2. Tender Offer Price
1,730 yen per common stock
3. Details, Grounds and Reasons of the Opinion regarding the Tender Offer(1) Details of the opinion
Based on the grounds and reasons described in “(2) Grounds and reasons of the opinion”
stated below, the Company’s board meeting which was held on the date hereof adopted aresolution expressing an opinion in favor of the Tender Offer and recommending that theCompany’s shareholders tender their shares in the Tender Offer.
The above board resolution was adopted in the manner described in “(6) Measures toensure the fairness of the Tender Offer such as measures to ensure the fairness of the Tender
Offer Price and to avoid conflicts of interest, (iv) Unanimous approval by all of theCompany’s disinterested directors (including Audit and Supervisory Committee Members)”
stated below.
(2) Grounds and reasons of the opinion
The description about the Offeror stated in this “(2) Grounds and reasons of the opinion”
is based on explanations given by the Offeror.
(i)

Overview of the Tender Offer
Company’’’“

Company’2”

(Translation)

MCP, since the incorporation of MCP Partners Co., Ltd. on February 22, 2000, hasbeen providing services of private equity investment and related operations. Over the
recent 21 years, MCP has, through the funds to which it provides services to, made a
total of 34 investments such as in JAPAN PURE CHEMICAL CO., LTD., JCU
Corporation (formerly EBARA UDYLITE CO., LTD.), SDS Biotech K.K., OAT Agrio
Co., Ltd., NOMURA CORPORATION, TDM, Co. Ltd., New-Quick CO. LTD.,NISSEI Limited, TAKASAKIJIMUKI Corporation, KOMINE CO., LTD., and JAPANHOME SHIELD CORPORATION. MCP has a goal to achieve growth of small to
medium-sized companies by not only providing financing solution but by providing
and aims to enhance corporate value together with theinvested companies.
The Offeror has decided to conduct this Tender Offer to acquire all of the Company’s
Shares listed on the second section (“TSE Second Section”) of Tokyo Stock Exchange,
Inc. (“TSE”) (excluding the treasury shares held by the Company and the Company’s
Shares held by GOO Sangyo Co., Ltd. (“GOO Sangyo”) (Number of shares held:
1,210,000 shares, Shareholding Ratio (Note 1): 19.23%) (the “GOO Sangyo’s NonTendering Shares”), a company which all of its issued shares (excluding treasury
shares) are held by Mr. Haruki Fujimura (“Mr. Fujimura”), President andRepresentative Director of the Company, and which manages the assets of the Target,and is the largest shareholder of the Company) as part of the series of transactions totake the Company’s Shares private (the “Transaction”).
“

”
’
“

’

”

Company’GOO Sangyo’s
Non-Tendering Shares

’

2

“

”

3

(Translation)“”“4. Matters Concerning
Material Agreements between the Offeror and the Company’s Shareholders, Directors,
etc. regarding the Application for the Tender Offer”
.

2

’s
’
’
Company’’“
Company’

”
“

’

”

“
”
the
GOO Sangyo’s Non-Tendering Shares“4. Matters Concerning Material
Agreements between the Offeror and the Company’s Shareholders, Directors, etc.
regarding the Application for the Tender Offer”
for details on the Tender Offer
Agreement and Non-tender Agreement.

“

”
“

“
”
GOO Sangyo’s Non-Tendering Shares”’

GOO Sangyo’s
Non-Tendering Shares’’’
GOO Sangyo’s Non-Tendering Shares
4

(Translation)

.

“

”

Company’

27

3“4. Matters Concerning Material Agreements between the Offeror
and the Company’s Shareholders, Directors, etc. regarding the Application for theTender Offer ”
for details on the Share Transfer Agreement.
3’
GOO
Sangyo’s Non-Tendering Shares’
the GOO Sangyo’s NonTendering Shares in the same amounts as the total of the amounts of theirprincipal and interest.
’

for Mr. Fujimura’s Tendering Shares, he will be able to repay his debt and theOfferor decided that there are no problems to the debtor’s means as of the5(Translation)

“

“

”

”

“4. Matters Concerning
Material Agreements between the Offeror and the Company’s Shareholders, Directors,
etc. regarding the Application for the Tender Offer ” below for details on the Master
Agreement and the Shareholders Agreement.
’

Company’
Company’“”’GOO Sangyo’s Non-Tendering
SharesCompany’

“4

“two

””

Company’
’
“

”
’

6

(Translation)

’
’

’
’
.
Company’
Company’GOO Sangyo’s Non-Tendering Shares

If the Offeror is unable to acquire all of the Company’s Shares
GOO Sangyo’s Non-Tendering Shares throughthe Tender Offer, then, as described in “(4) Policy regarding reorganization, etc.,
following completion of the Tender Offer (so-called “two-step acquisition”)” below,
after the successful completion of the Tender Offer, the Offeror is scheduled to assume
a series of procedures to make the Offeror and GOO Sangyo the sole shareholders of
the Company and to take the Company’s Shares private (the “Squeeze-out Process”).
After the completion of the Squeeze-out Process, the Offeror and the Company arescheduled to conduct absorption-type merger where the Company will be the absorbing
and surviving company and the Offeror and GOO Sangyo will be the absorbed anddissolving companies, with the Company’s Shares as consideration (the “Merger”), andafter the Merger, the investment ratio of MCP5 Investment Business Limited Liability
Partnership and Mr. Fujimura in the Company will be 80% and 20%, respectively. The
specific merger ratio and schedule, etc. for the Merger are undecided as of today.
The Transaction including the Tender Offer will be financed by borrowings from the
Bank of Kyoto, Ltd. and MUFG Bank, Ltd. (the “Bank Loans”) and investment from
MCP5 Investment Business Limited Liability Partnership (the “Investment”). On
condition that the Tender Offer is successfully completed, the Offeror is scheduled toreceive the Bank Loans by no later than one business day prior to the commencement
date of the settlement for the Tender Offer, and the Investment by no later than two
business days prior to the commencement date of the settlement for the Tender Offer.
(ii)

Background to, and objectives and decision-making process leading to the decision
to implement the Tender Offer and management policy after the Tender Offer
7

(Translation)

A. Background to the decision to implement the Tender Offer
The Company has manufactured and distributed chemical industrial products fordiverse fields and applications, beginning with oiling agents and sizing agents for
textiles and also including cosmetics, electronic materials, paper and metals based on
the “GOO spirit” of “meeting needs together and growing together” with the aim of“contributing to society through unique technology” since its founding in Fushimi-ku,
Kyoto-shi in November 1953 for the purpose to manufacture and distribute chemicalgrade, industrial-grade and agricultural-grade chemical products, oil and fat products
and processed agricultural products. As of the date hereof, the Company’s group iscomposed of 5 companies; the Company itself, 2 consolidated subsidiary companies,
1 affiliate company and another associated company (hereinafter collectively referred
to as the “Group”) and its primary business is to manufacture and distribute reactingsystem products (Note 4) and miscible-system products (Note 5).
(Note 4) The term “reacting-system products” means chemical industrial products fora wide range of use to be manufactured mainly by caldron equipment suchas sizing agents and oiling agents for textiles, resin for cosmetics, resin for
papermaking and printing and resin for transfer printing.
(Note 5) The term “miscible-system products” means products to be manufactured
mainly by milling equipment and used for electronic components, etc. suchas resist ink for printed-wiring board.
The Company relocated its head office and plant to Uji-shi, Kyoto Prefecture inJune 1967 after its start of business in Fushimi-ku, Kyoto-shi, and expanded its
business operation through newly-established sales offices in the Hokuriku and Kanto
districts and a newly-established plant in Fukui Prefecture and so on. In November
1996, the Company had its shares listed on the Kyoto Stock Exchange in order tomainly improve its social credibility and name recognition. Afterward, as a result of
the merger of the Kyoto Stock Exchange with the Osaka Securities Exchange in March
2001, the shares were listed on the Osaka Securities Exchange Second Section, andsince July 2013, as a result of the consolidation of the cash equity markets of the Osaka
Securities Exchange and the Tokyo Stock Exchange, the shares have been listed on the
TSE Second Section. The Company has expanded its business operation through the
expansion of its customers based on the improvement of its social credibility and namerecognition.
The Company believes that as to the business environment of the industry to which
the Group belongs, all the businesses of the Group strongly depend on producttechnology development capabilities, and in particular, for miscible-system products,
due to its characteristic, it is necessary to introduce new products and services to
respond to change to technology and customer needs by investment in manufacturing
plant and equipment and continuous business operation reform for better productivity
and performance. Under such business environment, understanding change tocustomer needs accurately and conducting marketing of products and services to8(Translation)

respond to such change to customer needs on a steady basis, the Company has aimed
to further streamline the production process while keeping the high quality of products
and services. Since April 2020, the Company has proceeded with efforts to enhance
its corporate value by shifting to a system to develop characteristic and uniqueproducts, distribute products to industries other than those to which the Company has
already distributed products and find new markets apace through facilitating sharing
technology and information in the Company by changing its business department
structure from individual business department system to individual research/sales
department system.
On the other hand, Mr. Fujimura, as the Company’s President and Representative
Director, has been considering the measures to continuously increase the corporate
value of the Company. However, in early September 2021, he felt that there was a limit
to responding to changes in the management environment, such as productdevelopment, intensified competition to acquire human resources, and increased
capital investment burden resulting from technological innovation in the chemical
products industry to which the Company belongs, only with the Company’s
management resources, and considered various options such as collaboration withcustomers, alliances with other companies, and M&As. As a result, he has come tobelieve that it would be a powerful option not only to strengthen businesscompetitiveness of the Company and aim for further business growth, but also to carryout drastic reforms including a review of the capital structure and to form an alliancewith a third party that has an advanced management know-how and human resources
network. Under such circumstances, while seeking solutions to the above-mentioned
management issues with Nomura Securities Co., Ltd. (“Nomura Securities”), withwhich Mr. Fujimura had a long history of communication, he asked Nomura Securities
to introduce candidates for alliance which could be potential partners for making theCompany’s Shares to be privately held and implementing Management Buyout(MBO) from the perspective of increasing the corporate value. As a result, in early
September 2021, Mr. Fujimura received introductions from Nomura Securities to 6
companies including MCP and started the process of selecting candidates for allianceand, in late September 2021, he held discussions regarding the Company’s businessstrategies and growth measures with 5 companies, with the exception of a company
that declined to participate in the selection process.
In the course of continuing discussions with Mr. Fujimura regarding businessstrategies and growth measures of the Company from late September 2021 to midNovember 2021, MCP recognized that the Company has a history of approximately
70 years as a company that provides a wide range of products in response to theindividual needs of customers in the chemical industry, as well as that the Company
has continued a style in which executives and employees with expertise in various
fields such as textile oil and glue, cosmetics, electronic materials, paper and metals,
who understand the situation in the field, work together with customers to create
products in response to customer requests. MCP thus came to understand that the9(Translation)

Company is a company that has the ability to provide products that are believed tohave a high level of QCD (Note 6) based on its advanced polymer blending skills andthe ability to flexibly respond to individual customer needs.
(Note 6) “QCD” QCD is an acronym for Quality, Cost, and Delivery that are
generally considered important for production management in the
manufacturing industry.
As a result of discussions with the abovementioned 5 companies, in late October
2021, Mr. Fujimura received proposals (the “Initial Proposal”) from 3 companies
including MCP, excluding the 2 companies that declined to participate in the selection
process, regarding the business strategies, growth measures and capital policy of theCompany after making the Company’s Shares to be privately held, as well as the tender
offer price assumed at that time. Among such 3 companies, 2 companies including
MCP, which Mr. Fujimura evaluated as having relatively deep knowledge of thechemical industry and understanding of the Company’s business and offered relatively
higher tender offer price, met with the Company’s management in mid-November
2021. Then, in late November 2021, Mr. Fujimura compared and examined the
proposals from the 2 companies that met with the Company’s management, and he
was impressed by MCP’s extensive experience in investing in companies in thechemical industry, its deeper knowledge of the chemical industry and deeper
understanding of the Company’s business than the other candidates, its strong stanceof emphasizing dialogue with the Company, and it strong desire to achieve businessgrowth. Therefore, he reached the conclusion that he would like to aim for mediumto long-term growth of the Company by setting MCP, which offered the highest tender
offer price for both upper and lower limits, as partner. In addition, he has come tobelieve that MCP would be able to provide hands-on support to the Company byproviding the management know-how and human resources network that MCP
possesses with respect to various measures that will lead to the increase in thecorporate value of the Company and the expansion of its business.
In addition, in late November 2021, MCP and Mr. Fujimura continued further
discussions and considerations on various measures to increase the corporate value
and expand the business as described above. As a result, MCP and Mr. Fujimura havecome to believe that it would be an effective option to combine Mr. Fujimura’s
management capabilities, MCP’s accumulated know-how and knowledge, and MCP’s
management resources with the Company’s business strengths, such as its ability toprovide products that are believed to have a high level of QCD based on its advanced
polymer blending skills that it has accumulated since its foundation and its ability toflexibly respond to individual customer needs, and thereby to grow the water-soluble
polyester resin and cosmetic resin businesses, which are expected to grow in the future,
while stably growing the textile glue and electronic materials businesses and, whilebased on the existing business foundations, to make upfront investments such as
capital investments necessary for business expansion with the aim of advancing into10(Translation)

upstream and downstream areas and optimizing research, development and production
through development of new products in existing business development areas andalliances and M&As with other companies, as well as to actively carry out expansionof business areas, collaboration with customers, and alliances and M&As with othercompanies as an option for growth strategy.
On the other hand, in late November 2021, MCP and Mr. Fujimura have come tobelieve that the promotion of business structural reforms, such as upfront investments
and M&As as described above, may cause a decline in profit levels and deteriorationin cash flow of the Company in the short term and it would be difficult for theCompany to take these measures while maintaining its listing, because it cannot bedenied that such measures, if undertaken without having its stock delisted, may havea negative impact on the market price of the Company’s Shares. This led MCP and Mr.
Fujimura to a common understanding that in order for the Company to deal withmanagement issues flexibly without being affected by short-term fluctuations in its
business performance and to increase its corporate value over the medium to long term
under a stable management system, the most effective means is to make theCompany’s Shares to be held privately to enable agile and flexible decision-making,and to develop the Company’s business expansion measures by making maximum useof MCP’s management support such as its management know-how and utilization of
its human resources network.
Based on the above-mentioned considerations, in late November 2021, MCP and
Mr. Fujimura jointly decided to submit a proposal for the Transaction to the Company,
and on November 29, 2021, MCP and Mr. Fujimura submitted to the Company aninitial proposal concerning the process of the Transaction by making the Company’s
Shares to be privately held through the Tender Offer, the outline of such scheme, andthe outline of the expected schedule, and informed by the Company on such date that
it would consider such proposal. Then, MCP and Mr. Fujimura agreed to proceed withdiscussions with the Company regarding the advisability and terms and conditions of
the Transaction.
Based on the then progress of the due diligence on the Company that was conductedfrom the beginning of December 2021 to January 5, 2022, MCP and Mr. Fujimuraconsidered, with reference to a diverse and comprehensive analysis regarding thebusiness and financial of the Company, all 26 examples of premiums (average andmedian of premiums on the closing price on the date immediately before the date of
publication were 38.28% (rounded to the second decimal place; hereinafter the samein the calculation of the premium) and 37.90%, respectively; average and median ofpremiums on the simple average closing price in the past 1 month up to such date were
39.43% and 36.15%, respectively; average and median of premiums on the simple
average closing price in the past 3 months up to such date were 45.90% and 41.13%,
respectively; and average and median of premiums on the simple average closing pricein the past 6 months up to such date were 46.68% and 45.63%, respectively, in eachcase) in other Management Buyout (MBO) cases where the tender offer was successful11(Translation)

before January 4, 2022 as published on or after June 28, 2019, on which date the
Ministry of Economy, Trade and Industry published its “Guidelines for Fair M&A”
(the “M&A Guidelines”), and trend of market price of the shares of the Company inthe past 1 month, 3 months and 6 months up to January 4, 2022, that 1,620 yen, whichis the sum of 1,098 yen, the closing price of the Company’s Shares on January 4, 2022
and the premium of 47.54%, the sum of 1,097 yen (rounded to the nearest whole
number; hereinafter the same in the calculation of the simple average closing price),the simple average closing price of the Company’s Shares in the past 1 month up to
January 4, 2022 and the premium of 47.68%, the sum of 1,089 yen, the simple averageclosing price in the past 3 months, and the premium of 48.76%, or the sum of 1,084
yen, the simple average closing price in the past 6 months, and the premium of 49.45%,
is a price at which a sufficient premium is added to the average share price for the mostrecent and past certain periods, and proposed to the Company to set the Tender Offer
Price at 1,620 yen on January 5, 2022.
Subsequently, on January 17, 2022, the Company requested an increase in theTender Offer Price on the grounds that the Special Committee (as defined below)
expressed the opinion that it would be appropriate to request for an increase in theTender Offer Price of 1,620 yen, in light of the situation of the net assets of theCompany in comparison with other cases of tender offers based on the assumption that
the Company would go private, as is the case with the Transaction. In response, theOfferor, MCP and Mr. Fujimura reconsidered the Tender Offer Price and, on January
18, 2022, made a proposal to the Company to set the Tender Offer Price at 1,670 yen.
Subsequently, on January 21, 2022, the Company again requested an increase in theTender Offer Price on the grounds that the Special Committee expressed the opinion
that it would be appropriate to request for an increase in the Tender Offer Price of
1,670 yen, taking into consideration the situation of minority shareholders who havebeen holding the Company’s Shares for the medium to long term, in light of thecomparison with other cases of tender offers based on the assumption that theCompany would go private, as is the case with the Transaction, and the long-term trendof the market share price. In response, the Offeror, MCP and Mr. Fujimurareconsidered the Tender Offer Price and, on January 24, 2022, made a proposal to theCompany to set the Tender Offer Price at 1,700 yen. Subsequently, on January 27,
2022, the Company again requested an increase in the Tender Offer Price from theperspective of considering the interests of the Company’s minority shareholders asmuch as possible. In response, the Offeror, MCP and Mr. Fujimura reconsidered theTender Offer Price and, on January 31, 2022, made a proposal to the Company to set
the Tender Offer Price at 1,720 yen. Subsequently, on February 1, 2022, the Company
again requested an increase in the Tender Offer Price in order to maximize the interestsof minority shareholders based on the discussions in the Special Committee. In
response, the Offeror, MCP and Mr. Fujimura reconsidered the Tender Offer Price and,on February 2, 2022, made a proposal to the Company to set the Tender Offer Price at
1,730 yen.
12

(Translation)

Subsequently, on February 3, 2022, the Offeror received a response from theCompany that it will accept the Offeror’s proposal on the assumption that the final
decision making will be made through the resolution by the Company’s Board of
Directors based on the report of the Special Committee.
After late November 2021, when MCP was selected as the partner, MCP and Mr.
Fujimura respectively continued considerations regarding the capital structure of theCompany after making the Company’s Shares to be privately held based on the Initial
Proposal made in late October 2021. On December 15, 2021, at the interview between
Mr. Fujimura and MCP, Mr. Fujimura indicated his intention to maintain theownership ratio of the Company’s Shares after the reinvestment at the same ratio as
the total ownership ratio of the Company’s Shares held by Mr. Fujimura and GOO
Sangyo prior to the Transaction. Then, at the interview between MCP and Mr.
Fujimura held on January 6, 2022, since MCP thought that it was important to respect
Mr. Fujimura’s intention upon conducting the Transaction with Mr. Fujimura, MCP
proposed to Mr. Fujimura that Mr. Fujimura will make a capital contribution of 20%,
which approximates to the total ownership ratio of the Company’s Shares held by Mr.
Fujimura and GOO Sangyo prior to the Transaction, to the Offeror on the date ofcompletion of the Squeeze-out Process, subject to the completion of the Squeeze-out
Process, and Mr. Fujimura accepted such proposal and reached an agreement on suchproposal on January 10, 2022. Subsequently, on January 25, 2022, when the Offeror
conveyed such reinvestment ratio to the Company, the Company replied, on January
30, 2022, that the fact that Mr. Fujimura is expected to make a 20% capital contribution
to the Offeror indicates his high level of commitment to the management of theCompany after the Transaction, and the Company considered that this will bebeneficial to enhancement of the Company's corporate value over the medium to longterm from the perspective of maintaining and developing relationships with theCompany’s officers and employees, business partners and other stakeholders.
In addition, in the Initial Proposal made in late October 2021, MCP made a proposal
to Mr. Fujimura on the Transfer of Shares, in which the Offeror acquire the GOO
Sangyo’s Shares from Mr. Fujimura as of the commencement date of the settlement
for the Tender Offer, from the viewpoint of maximizing the transfer price after taxationby choosing a tax-advantageous method. Then, based on the comparison andconsideration of the economic logic of the compensation for the transfer after taxationin the event of the Transfer of Shares and in the event where GOO Sangyo tenders its
shares with his personal tax advisor, Mr. Fujimura reached a conclusion that theTransfer of Shares is a tax-advantageous method, and then agreed to adopt this schemeon January 4, 2022.
After repeated discussions regarding the terms and conditions of the Transaction
including the Tender Offer Price as described above, the Offeror decided today, tocommence the Tender Offer as part of the Transaction with the Tender Offer Price as
1,730 yen.

13

(Translation)

B. Management policy after the Tender Offer
After the completion of the Tender Offer and the Transaction, the Offeror plans toutilize MCP’s management know-how and human resources network, and thereby topromote measures to increase the corporate value of the Company mainly through themeasures described in “A. Background to the decision to implement the Tender Offer”
above.
The Transaction is so-called a Management Buyout (MBO), and Mr. Fujimura hasentered into the Reinvestment Agreement with the Offeror and agreed that subject tothe completion of the Squeeze-out Process, Mr. Fujimura will make a capital
contribution of 20% to the Offeror on the date of completion of the Squeeze-out
Process, and will continue to manage the Company even after the successful
completion of the Tender Offer.
The management structure of the Company after the successful completion of theTender Offer is undecided as of today. However, while respecting the current
management structure of the Company, including having Mr. Fujimura continue toserve as Representative Director, it is planned to dispatch officers from MCP to theCompany in the future. Furthermore, there are no specific assumptions regarding thenumber of officers and other specific details at this time, and it is planned to make adecision after consultation with the Company in the future.
In addition, after the completion of the Squeeze-out Process, the Offeror and theCompany are scheduled to conduct the Merger where the Company will be theabsorbing and surviving company and the Offeror and GOO Sangyo will be theabsorbed and dissolving companies, with the Company’s Shares as consideration, andafter the Merger, the investment ratio of MCP5 Investment Business Limited Liability
Partnership and Mr. Fujimura in the Company will be 80% and 20%, respectively. The
specific merger ratio and schedule, etc. for the Merger are undecided as of today.
(iii) Process and reasons of decision making of the Company to agree to the Tender Offer
As stated in “A. Background to the decision to implement the Tender Offer ” of “(ii)Background to, purpose of, and decision-making process, of the Tender Offer, andmanagement policy after the Tender Offer” above, on November 29, 2021, MCP and Mr.
Fujimura submitted an initial written proposal concerning the background of theTransaction regarding the going private of the Company’s Shares through the Tender
Offer, scheme overview thereof, outline of the expected schedule. On the same day, theCompany informed MCP and Mr. Fujimura that it would consider the proposal and theCompany agreed with MCP and Mr. Fujimura to proceed with discussion on the pros
and cons of implementing the Transaction and its conditions. In the review of thecontents of the proposal, the Company appointed YAMADA Consulting Group Co., Ltd.
(“YAMADA Consulting”) as a financial adviser and third-party valuation institution andCity-Yuwa Partners as a legal adviser as of December 10, 2021 to ensure fairness of theTender Offer Price and fairness of the Transaction including other features of the Tender
Offer as stated in “(6) Measures to ensure the fairness of the Tender Offer such as
14

(Translation)measures to ensure the fairness of the Tender Offer Price and to avoid conflicts of interest”
below. In addition, on December 10, 2021, the Company established a special committee
to review the proposal relating to the Transaction (the “Special Committee”; thecomposition of the Special Committee and its specific activities, etc. are stated in “(i)Establishment of a special committee and obtainment of a written response by theCompany” of “(6) Measures to ensure the fairness of the Tender Offer such as measures
to ensure the fairness of the Tender Offer Price and to avoid conflicts of interest” below)
and has built a framework for discussion and negotiation relating to the Transaction.
Then, with respect to the purpose of the Transaction, management structure andpolicies after the Transaction, and the conditions of the Transaction, etc., the Company
has been engaged in review of appropriateness of the Transaction through multiple
discussions and negotiations with MCP, Mr. Fujimura and the Offeror from December
16, 2021 to February 3, 2022 based on the negotiation policy acknowledged by theSpecial Committee in advance as well as its opinions, instructions, requests, etc. in
critical phases of negotiation and in consultation with YAMADA Consulting and CityYuwa Partners.
With respect to the Tender Offer Price, the Company received the proposal to set theTender Offer Price at 1,620 yen per share from MCP and Mr. Fujimura on January 5,2022 and then, based on the report on the estimate of share price valuation of theCompany’s Shares provided by YAMADA Consulting and opinions of the Special
Committee on the negotiation policy, from the perspective of considering the interestsof the Company’s minority shareholders as much as possible, on January 17, 2022, theCompany expressed its request to increase the Tender Offer Price. With respect to therequest, the Special Committee expressed its opinion at the meeting held on January 14,2022 that the Company should express its opinion to increase the Tender Offer Price inconsideration of the following reason: compared to the cases of Management Buyout(MBO) and acquiring 100% shares in a company by its parent company for the purposeof going private similar to the Transaction (63 cases announced after June 28, 2019,
when the Ministry of Economy, Trade and Industry published the “M&A Guidelines”),
it is true that the proposed price of 1,620 yen has a certain degree of reasonableness interms of premium to market share price (the average premium to market share price inthe above 63 cases is 41.56% compared to the closing price on the business day
immediately preceding the announcement date, and 44.73% compared to simple averageclosing price for the month prior to the announcement 48.43% compared to simple
average closing price for the three months prior to the announcement, and 49.72%
compared to simple average closing price for the six months prior to the announcement.
On the other hand, the premium of the proposed price of 1,620 yen with respect to market
share price (calculated based on the closing price on the reference date, January 13, 2022,
and simple average closing prices for the most recent one month, three months, and six
months) was calculated to be approximately 48% to 49%.) , but in consideration of theCompany’s net assets and other factors where its price book-value ratio (P/B ratio) basedon the proposed price will be 0.72, the Company should express its opinion to increase15

(Translation)

the Tender Offer Price. In response to such request, on January 18, 2022, the Company
received a second proposal from Offeror, MCP and Mr. Fujimura to set the Tender Offer
Price at 1,670 yen per share. In response, on January 21, 2022, the Company requested
Offeror, MCP and Mr. Fujimura to further increase the Tender Offer Price from the same
perspective as the above request on January 14, 2022, i.e., from the perspective ofconsidering the interests of the Company’s minority shareholders as much as possible.
The Special Committee expressed its opinion at the meeting held on January 20, 2022
that, in addition to the opinion expressed at the meeting held on January 14, 2022, basedon the possibility that there are shareholders who acquired the Company’s Shares at a
price of 1,710 yen per share on November 2, 2017, the highest closing price during theperiod for which the share price can be confirmed (since March 1, 2001, when the
Company was listed on the Osaka Securities Exchange), it would be appropriate torequest further increase in the Tender Offer Price, taking into consideration of thesituation of minority shareholders who have held the Company’s Shares for the medium
to long term. In response to such request, on January 24, 2022, the Company received athird proposal from Offeror, MCP and Mr. Fujimura to set the Tender Offer Price at 1,700
yen per share. In response, on January 27, 2022, the Company requested Offeror, MCP
and Mr. Fujimura to further increase the Tender Offer Price from the perspective ofconsidering the interests of the Company’s minority shareholders as much as possible.
The Special Committee expressed its opinion at the meeting held on January 26, 2022,
based on the opinion expressed at the meeting held on January 20, 2022, that it would
be appropriate to request further increase in the Tender Offer Price, taking into
consideration of the situation of minority shareholders who have held the Company’s
Shares for the medium to long term and the Company’s net assets, etc. In response tosuch request, on January 31, 2022, the Company received a fourth proposal from Offeror,
MCP and Mr. Fujimura to set the Tender Offer Price at 1,720 yen per share. In response,
on February 1, 2022, the Company requested Offeror, MCP and Mr. Fujimura to further
increase the Tender Offer Price from the perspective of considering the interests of theCompany’s minority shareholders as much as possible. The Special Committee
expressed its opinion at the meeting held on February 1, 2022, that although the price of
1,720 is considered to be within the range of reasonable levels for minority shareholders,
it would be appropriate to request further increase in the Tender Offer Price from theperspective of securing the interests of minority shareholders to the maximum extent
possible. After such negotiation, the Company received the final proposal to set theTender Offer Price at 1,730 yen per share from the Offeror, MCP and Mr. Fujimura on
February 2, 2022. The Company confirmed appropriateness of the proposal with theSpecial Committee and reviewed it carefully based on the share price valuation reportprovided by YAMADA Consulting as of February 3, 2022 (the “Share Price Valuation
Report”), and consequently, has judged that the price is reasonable and determined toaccept the proposal for the following reasons: (i) The price is at (a) 58.72 % premiumcompared to 1,090 yen, the closing price of the Company’s Shares on the Second Sectionof the Tokyo Stock Exchange on February 1, 2022, which is the most recent trade date16

(Translation)of the announcement date of the Tender Offer (b) 59.01 % premium compared to 1,088
yen, simple average closing price of the Company’s Shares for the past one month up to
February 3, 2022, (c) 58.86 % premium compared to 1,089 yen, simple average closing
price of the Company’s Shares for the past three months, and (d) 59.01 % premiumcompared to 1,088 yen, simple average closing price of the Company’s Shares for the
past six months. Therefore, the price can be deemed reasonable as being at a reasonablepremium to the market price of the Company’s Share in comparison with the averagepremiums to market share price in the past 63 cases in which the premiums are 41.56%
compared to the closing price on the business day immediately preceding theannouncement date, 44.73% compared to simple average closing price for the monthprior to the announcement , 48.43% compared to simple average closing price for thethree months prior to the announcement, and 49.72% compared to simple averageclosing price for the six months prior to the announcement. (ii) In addition, the priceexceeds the upper value of the range of the calculation result using the market priceanalysis by YAMADA Consulting as described in “(3) Matters regarding calculation”
below and exceeds the median of the range of calculation results based on the Discounted
Cash Flow analysis (“DCF Analysis”). The Tender Offer Price is below the net assets
amount per share (2,257 yen) calculated from the book value of the Company’s net assets
as of September 30, 2021, but considering the difficulty of asset sales and substantial
additional costs associated with liquidation, the book value of net assets will not berealized as it is and it is expected to be substantially impaired. Further, as mentioned
above, the Company negotiated over the price considering its net assets and other factors
in order to give maximum consideration to its minority shareholders (as a result, the P/B
ratio based on the initial proposed price of 1,620 yen was 0.72 but such ratio based on
the Tender Offer Price was increased to 0.77) but it believes that as the value of net assets
indicate a company’s liquidation value and do not reflect its future profitability, it is notreasonable to focus on the Company’s net assets when calculating the corporate value of
the Company which is a going concern. As such, the Company has continuously
negotiated the Tender Offer Price with MCP, Mr. Fujimura and the Offeror.
Furthermore, the Company received necessary legal advices regarding the method andprocess of decision making by the board of directors of the Company including
procedures for the Transaction and other points to note from City-Yuwa Partners as its
legal adviser and also received the written response as of February 3, 2022 (the “Written
Response”) from the Special Committee (the overview of the Written Response andspecific activities, etc. of the Special Committee are described in “(i) Establishment of a
special committee and obtainment of a written response by the Company” of “(6)Measures to ensure the fairness of the Tender Offer such as measures to ensure thefairness of the Tender Offer Price and to avoid conflicts of interest”). Then, in
consideration of the legal advice received from City-Yuwa Partners and the Share Price
Valuation Report obtained from YAMADA Consulting, and fully respecting the Written
Response submitted by the Special Committee, the Company conducted careful
discussion and review from the standpoint of whether the Transaction could improve the17(Translation)

Company’s corporate value, whether the conditions of the Transaction, including theTender Offer Price, are reasonable, and whether interests to be enjoyed by generalshareholders are secured by the Transaction to be conducted through fair procedures.
As described in “A. Background to the decision to implement the Tender Offer ” of“(ii) Background to, and objectives and decision-making process leading to the decision
to implement the Tender Offer and management policy after the Tender Offer” above,
the Group has provided products in various fields and for different uses such as
cosmetics, electronic materials, paper and metals including oiling agents and sizing
agents for textiles and developed the business relating to manufacturing and sales ofchemical industrial products by addressing customer needs. The circumstances
surrounding the business of the Group have been changing such as shrinking domestic
textile production in the textile industry, increased price competition in the electronicmaterials industry and the like, and, under such circumstances, the Company recognizes
that, while identifying higher-growth areas, it needs to proactively and continuously
develop new products and new features that can be source of competitiveness and makecapital investments, etc. to improve productivity in order to respond to technologicalinnovations in various industries and related changes in customer needs. However, while
the Company responds to specific customer’s request, provide a wide variety of products
and carefully responds to market needs, it has not driven proactive capital investments
and innovation of its business structure based on its policy that it must secure andmaintain a certain level of profit as a listed company, and as a result, its sales amount in
the consolidated financial statements, from a mid-to long-term perspective, during thepast 20 years from the fiscal year ending March 2002 to the fiscal year ending March
2021 has been in the range of approximately 6.3 to 7.6 billion yen and has failed toachieve continued growth.
Under such circumstances, in the course of discussion and negotiation on theTransaction, as described in “A. Background to the decision to implement the Tender
Offer” of “(ii) Background to, and objectives and decision-making process leading to
the decision to implement the Tender Offer and management policy after the Tender
Offer” above, MCP and Mr. Fujimura have indicated the policy that, by utilizing Mr.
Fujimura’s management skills, MCP’s accumulated knowhow and knowledge,
management resources held by MCP, etc. together with the business advantage such as
the ability to provide products considered to be of QCD standards based on advanced
polymer compounding skills and the ability to respond flexibly to customer’s specificneeds developed by the Company since its establishment, the Company will develop
water-soluble polyester resin and cosmetic resin business which is expected to growgoing forward, while steadily developing the businesses of sizing agents for textiles andelectronic materials, make up-front investment such as entry into upstream anddownstream areas and capital investment required for business expansion with the aimof optimizing R&D and production through the development of new products in existing
business areas, alliances with other companies, and mergers and acquisitions while being18

(Translation)

based on the existing business foundation, and proactively carry out expansion ofbusiness areas, collaboration with customers, alliance with other companies and M&As
as an option for growth strategies, and in early January 2022, the Company has
determined that such measures will enable the Company to realize swift and optimal
distribution of management resources in the respective businesses by expanding into
upstream and downstream areas, developing new products in existing business areas,
and optimizing R&D and production through alliances with other companies and M&Afrom a mid- to long-term perspective with the cooperation of MCP while maintaining
and utilizing the Company’s business foundation as a company manufacturing andselling chemical products with unique functionality, with the Company’s ability toprovide products considered to be of QCD standards based on its advanced polymer
compounding skills and the ability to respond flexibly to customer’s specific needs, andserve to the Company’s sustainable growth and improvement of its corporate value bymaking up-front investments such as capital expenditures necessary for businessexpansion, and by expanding business areas as an option for growth strategies.
However, pursuit of such proactive measures may, although it is expected to serve toimprovement of the Company’s corporate value in the mid- to long-term, not necessarily
work immediately and contribute to the Company’s performance, but rather may cause
deterioration in the Company’s profit level and cash flows in the short-term with theincrease in depreciation and payments for upfront investments due to capital
expenditures and other upfront investments required for business expansion. In the event
the Company carries out such measures while maintaining the listing, there is a concernthat the Company may not gain recognition on such measures from the capital market
and may cause disadvantage to the Company’s shareholders such as decline in the priceof the Company’s Shares in the short-term. In order to address such concern and torealize future sustainable growth, the Company has come to a decision that the best
choice for achievement of improvement of its corporate value is to establish the
management structure that enables swift and flexible decision making from a mid- tolong-term perspective, without being caught up in short-term performance fluctuation
excessively, by taking the Company private, and to establish a network with suppliers
and manufacturers and to establish an educational system and structure for humanresources, including the development of next generation of management by making
maximum use of MCP’s management knowhow which enables hands-on assistance andmanagement support such as human resources network, etc. In addition, by going private,
the Company can reduce the costs to maintain the listing (such as the cost for continuous
information disclosures such as annual securities reports, etc., audit fee, cost of
management of shareholders meeting and entrustment of administrative processes, etc.),
and eliminate other managerial encumbrances involved in keeping it listed such as costs
for maintaining administration department which is necessary as a listed company andother costs, which enables the Company to concentrate its management resources on
business growth.
On the other hand, by going private, the Company loses funding through equity
19

(Translation)

financing from the capital market, and recruitment of excellent human resources andexpansion of business, etc. thanks to the increase of social credibility and visibility
enjoyed by the Company because of being listed may be affected. However, considering
the Company’s current level of cash and deposits and the recent low-interest
environment in indirect financing, the Company believes that equity financing is notnecessary. Furthermore, recruitment of excellent human resources and expansion ofbusiness, etc. thanks to the increase of the Company’s social credibility and visibility aremostly acquired and maintained through its business activities, and the Company
recognizes that the necessity to maintain the listing of the Company’s Shares is relatively
decreasing. In addition, as Mr. Fujimura, who has served as President and Representative
Director of the Company since June 2013 and is quite familiar with the Company’sbusiness, will continue to manage the Company, the Company will be able to takeadvantage of its business strengths, such as the ability to provide products considered to
be of QCD standards based on the advanced polymer compounding skills that theCompany has cultivated since its establishment, and the ability to flexibly respond to
customer’s specific demands, while adopting policies and measures based on MCP’s
resources and network. Therefore, the Company believes that it is reasonable for Mr.
Fujimura to continue to manage the Company through Management Buyout (MBO).
Furthermore, the fact that Mr. Fujimura is expected to make a 20% capital contribution
to the Offeror on the completion date of the Squeeze-out Process also indicates his highlevel of commitment to the management of the Company after the Transaction. The
Company considered that this will be beneficial to enhancement of the Company’s
corporate value over the medium to long term from the perspective of maintaining anddeveloping relationships with the Company’s officers and employees, business partners
and other stakeholders.
Based on the above, the Company has determined at its board meeting held today that
the Company’s going private by the Transaction including the Tender Offer in the formof Management Buyout (MBO) with re-investment by Mr. Fujimura contributes toimproving the Company’s corporate value.
Furthermore, (a) the Tender Offer Price (1,730 yen) exceeds the upper value of thecalculation result using the market price analysis and exceeds the median of the rangeof the calculation results using the DCF Analysis as shown by the share price valuation
results for the Company’s Shares provided by YAMADA Consulting as described in “(3)Matters regarding calculation”; (b) using February 3, 2022, the business day
immediately preceding the announcement date of the Tender Offer, as the reference date,
the Tender Offer Price is at i) 58.72 % premium compared to 1,090 yen, which is theclosing price of the Company’s Share on the TSE Second Section on February 1, 2022,
the most recent trade date of the announcement date of the Tender Offer; ii) 59.01 %premium compared to 1,088 yen, which is the simple average closing price for 1 month
immediately preceding the reference date; and iii) 58.86 % premium compared to 1,089
yen, which is the simple average closing price for 3 months immediately preceding the20

(Translation)reference date; and iv) 59.01 % premium compared to 1,088 yen, which is the simple
average closing price for the immediately preceding 6 months, and these premiums are
deemed to be equivalent to or higher than the average premium level (as stated above,
the average premium to market share price is 41.56% compared to the closing price on
the business day immediately preceding the announcement date, 44.73% compared tosimple average closing price for the month prior to the announcement, 48.43% comparedto simple average closing price for the three months prior to the announcement, and49.72% compared to simple average closing price for the six months prior to theannouncement) in other cases (63 cases) of Management Buyout (MBO) and acquiring
100% shares in a company by its parent company announced after June 28, 2019, when
the Ministry of Economy, Trade and Industry published “ M&A Guidelines”; (c) the
Transaction takes care of the interests of the Company’s general shareholders such as
adopting measures to avoid conflicts of interest, etc. as described in “(6) Measures toensure the fairness of the Tender Offer such as measures to ensure the fairness of theTender Offer Price and to avoid conflicts of interest” below; (d) the Tender Offer Pricehas been decided after said measures to avoid conflicts of interest were taken, andthrough several occasions in which the Offeror, MCP, Mr. Fujimura and the Company
were engaged in discussions and negotiations equivalent to those in an arms-lengthtransaction, more specifically, decided through sincere and consecutive discussions andnegotiations with MCP, Mr. Fujimura and the Offeror and in light of consultations with
the Special Committee, advices from YAMADA Consulting based on details of thecalculation results of the share value of the Company’s Shares and financial aspect andlegal advices from City-Yuwa Partners and so on; and (e) the Special Committee
confirmed the negotiation policy in advance, received reports on progress of thenegotiations in timely manner and gave opinions, instructions and requests, etc. in
critical phases in the negotiations, and it has expressed its opinion that the conditions of
the Transaction including the Tender Offer Price are appropriate. In light of the foregoing,
the Company decided at its board meeting held on the date hereof that the Tender Offer
Price and other conditions of the Tender Offer are appropriate for the Company’s
shareholders and the Tender Offer provides the shareholders with a reasonable
opportunity to sell their Company’s Shares. The Tender Offer Price is below the net
assets amount per share (2,257 yen) calculated from the book value of the Company’s
net assets as of September 30, 2021, but considering the difficulty of asset sales andsubstantial additional costs associated with liquidation, the book value of net assets will
not be realized as it is, and it is expected to be substantially impaired. Further, theCompany believes that as net assets indicate a company’s liquidation value and do notreflect its future profitability, it is not reasonable to focus on the net assets whencalculating the corporate value of the Company which is a going concern. Since theTender Offer Price exceeds the median value in the DCF Analysis of share value
calculation by YAMADA Consulting and cash equivalents, which the Company holds
in large amounts, are reflected in the share value as surplus cash and deposit except forthe minimum required working capital (1 to 1.5 months’level of the total amount of cost21

(Translation)of sales and selling, general and administrative expenses less depreciation), theCompany determined the Tender Offer Price is reasonable after consideration based on
the result of analysis using the DCF Analysis in addition to the market price analysis.
On the basis of the foregoing, at the Company’s board meeting held on the date hereof,
the Company, with unanimous assent of 7 directors who participated in the deliberation
and resolution (Mr. Yasuto Fukushima, Mr. Tokuzan Miyake, Mr. Teruo Furukawa, Mr.
Masato Matsumura and Mr. Toru Watanabe, and Mr. Kenichi Nishikawa and Mr.
Hirofumi Yoshida as Audit and Supervisory Committee Members) other than Mr.
Fujimura and Mr. Hisayoshi Tanaka, passed the resolution representing its opinion infavor of the Tender Offer and recommending that the Company’s shareholders tendertheir Company’s Shares in the Tender Offer. As Mr. Fujimura, Representative Directorof the Company, plans to invest in the Offeror, while continuing to be involved in the
management of the Company after successful completion of the Tender Offer, and Mr.
Hisayoshi Tanaka, Director (Audit and Supervisory Committee Member) of theCompany, plans to provide services to Mr. Fujimura as a tax accountant after completionof the Transaction, with a view to avoiding suspicion of conflicts of interest, both of them
did not participate in the deliberations or resolutions in the said board meeting and were
not involved on the Company’s side in the discussions or negotiations with MCP, Mr.
Fujimura or the Offeror.
(3) Matters regarding calculation(i) Name of valuation institution and a relationship between the Company and the Offeror
When stating its opinion in relation to the Tender Offer, in order to ensure the fairnessof the decision-making regarding the Tender Offer Price offered by the Offeror, theCompany requested YAMADA Consulting, the financial advisor and third-party
valuation institution that is independent from the Offeror, the Company, MCP and Mr.
Fujimura, to calculate the share value of the Company’s Shares and obtained the Share
Price Valuation Report on February 3, 2022.
YAMADA Consulting is not a related party to the Offeror, the Company, MCP and
Mr. Fujimura and has no material interest in the Transaction including the Tender Offer.
Substantial part of the fees to be paid to YAMADA Consulting in relation to theTransaction shall be transaction fees the payment of which is conditional on theannouncement of the Transaction and the completion of the Squeeze-out Process, andthe Company selected YAMADA Consulting as its financial advisor and third-party
valuation institution based on the above fee structure after considering generalcustomary practices, etc. for same type of transactions. Further, during the first meeting,
the Special Committee approved YAMADA Consulting as the Company’s financial
advisor and third-party valuation institution after confirming that there were no issues of
its independence.
(ii) Outline of calculation
22

(Translation)

Based on its decision that it is appropriate to evaluate the Company’s Shares frommany sides after considering the calculation method for the Tender Offer and under thepremise that the Company is a going concern, YAMADA Consulting calculated the sharevalue of the Company by adopting the market value analysis because the Company’s
Shares are listed on the TSE Second Section, and the DCF Analysis in order to reflect
the Company’s future business activities in the calculation. YAMADA Consulting has
not adopted the comparable company analysis as a calculation method for the valuationof the Company’s Shares in light of the restrictions on the similarity of the Company’sbusiness and profitability, and has not adopted the net asset analysis because theCompany plans to continue its business as a going concern. In addition, it should be
noted that the Company has not obtained any opinion on the fairness of the Tender Offer
Price (fairness opinion) from YAMADA Consulting.
The range of the share value per the Company’s Share calculated by YAMADA
Consulting by using each of the analyses is as follows:
Market price analysis: 1,088 yen - 1,090 yen
DCF Analysis: 1,407 yen - 1,824 yen
For the market price analysis, the reference date is February 3, 2022, and the price pershare of the Company’s Shares was calculated to be in the range from 1,088 yen to 1,090
yen, on the basis of the following prices per share of the Company’s Shares on the TSE
Second Section: the closing price on the reference date (1,090 yen) (Since there were notransactions on the reference date, the closing price on February 1, 2022, which was themost recent trade date, was used.); the simple average closing price for the past 1 month(from January 4, 2022 to February 3, 2022) (1,088 yen); the simple average closing pricefor the past 3 months (from November 4, 2021 to February 3, 2022) (1,089 yen); and thesimple average closing price for the past 6 months (from August 4, 2021 to February 3,2022) (1,088 yen).
For the DCF Analysis, the corporate value and the share value were evaluated bydiscounting free cash flow that the Company is expected to create in and after the fourth
quarter of the fiscal year ending March 2022 by a certain discount rate on the basis of
the business plan prepared by the Company for the period from the fiscal year ending
March 2022 through the fiscal year ending March 2027, the financial information for thethird quarter of the fiscal year ending March 2022 and publicly available information,etc. This analysis showed that the price per share of the Company’s Shares was in therange from 1,407 yen to 1,824 yen. The cash equivalents are reflected in the share value
except for the minimum required working capital (1 to 1.5 months’ level of the total
amount of cost of sales and selling, general and administrative expenses lessdepreciation). The discount rate between 6.43% and 8.43% was adopted and in
calculating the going concern value, the permanent growth analysis was adopted and thepermanent growth rate ±0.5% was used in the analysis.
The following table shows the financial forecasts based on the Company’s business23

(Translation)plan, which YAMADA Consulting used as a premise for the DCF Analysis. It should be
noted that the business plan used by YAMADA Consulting in the DCF Analysis covers
fiscal years in which a large increase or decrease in earnings compared to the previous
fiscal year is expected. As the specific factors for such increase or decrease, thedepreciation cost of fixed assets and the operating income for the fiscal year ending
March 2023 are expected to increase and decrease respectively due to a large-scale
capital investment in the fiscal year ending March 2022 and the operating income for the
fiscal year ending March 2024 is expected to increase as a result of sales growth of thereacting-system products and so on.
Furthermore, in the business plan, synergistic effects expected to be realized throughthe Transaction and the effects of various measures expected to be implemented after theTransaction are not taken into account because it is difficult to specifically estimate such
effects at this moment.
(Unit: million yen)

Sales
AmountOperating
IncomeEBITDAFree CashFlow

FY
endingMarch2022 (3months)FY
ending
March
2023

FY
ending
March
2024

FY
ending
March
2025

FY
ending
March
2026

FY
ending
March
2027

1,856

7,368

7,562

7,683

7,870

8,093

85

244

343

415

508

642

245

948

1,056

1,134

1,246

1,351

▲605

280

192

276

337

391

When calculating the share value of the Company’s Shares, YAMADA Consulting
used the information provided by the Company and generally available information andso on without modifying, editing or making any change as a general rule and did not
independently verify the accuracy and completeness of such materials and informationon the basis that those are accurate and complete. YAMADA Consulting neither
conducted its own evaluation or appraisal of the assets and liabilities of the Company(including off-balance-sheet assets and liabilities and any other contingent liabilities) nor
requested any third-party institution to appraise or evaluate the above. In addition, theinformation on the financial forecasts of the Company is supposed to have beenreasonably prepared based on the best forecast and decision by the Company’s
management team available as of this moment. However, YAMADA Consulting did
confirm the rationality of the Company’s business plan used as a basis for the calculationby having several Q&A sessions with the Company and understanding how the businessplan was prepared and the actual condition of the Company and in terms of the fact thatno illogical point was found therein. The calculation conducted by YAMADA
24

(Translation)

Consulting reflects the information on the above up to February 3, 2022.
(4) Policy regarding reorganization, etc., following completion of the Tender Offer (so-called“two-step acquisition”)
Company’’
Shares“(i) Overview of the Tender
Offer” of “(2) Grounds and reasons of the opinion”
Out

,

“
Out”

Company’

“

Out”

4

Out

Company’.

Out.
Company’.

Company’
Company’
Out.
Out,
Company’

’

’

.
Out
Company’25

(Translation).

Company’’“’

Company’

“

”
”

’
’

Company’

Company’’
Company’

Company’
Company’

Company’GOO Sangyo
Company’
Company’
Company’

26

Company’(Translation)

Company’’
Company’
Company’’

Company’

Company’

Company’
Company’
any’
Company’

Company’GOO Sangyo

Company’
Company’
Company’’dr isCompany’

Company’
Company’
Company’

Company’
Company’27

(Translation).
Company’

After the completion of the, the Offeror, the Company, and GOO
Sangyo plan to implement the Merger. The specific merger ratio and schedule, etc. for
the Merger are undecided as of today.
(5) Prospects for delisting and its reasons
Company’.

Company’
Company’
“4
“two

””

Company’
Company’

Company’(6) Measures to ensure the fairness of the Tender Offer such as measures to ensure the fairnessof the Tender Offer Price and to avoid conflicts of interest
In light of factors such as the Tender Offer being carried out as part of a so called
Management Buyout (MBO), where there may be an inherent conflict of interest, and fromthe perspective of ensuring the fairness of the Tender Offer Price, eliminating arbitrarinessin the decision-making process behind the decision to implement the Tender Offer, andavoiding conflicts of interest, the Offeror and the Company have carried out the following
measures to ensure the fairness of the Transaction including the Tender Offer.
Matters set forth below that concern measures carried out by the Offeror are based on
the explanations given by the Offeror.
Establishment of a special committee and obtainment of a written response by theCompany
In view of the facts that the Transaction is conducted as part of the so-called
Management Buyout (MBO) and the Company’s consideration of the Transaction may
cause structural conflicts of interest, the Company established the Special Committee
consisting of the following three members during the Company’s board meeting held on
December 10, 2021: the Company’s Outside Director and Independent Director, Toru
28

(Translation)

Watanabe (attorney), and external experts with sufficient knowledge and experience of
M&A transactions, Toru Matsumoto (certified public accountant and tax accountant at
Toru Matsumoto Certified Public Accountant Office) and Yusuke Takaya (attorney at
Iwaida Partners), independent from the Offeror, the Company, MCP and Mr. Fujimura
in order to carefully make decisions in relation to the Transaction, avoid arbitrarinessand conflicts of interest in the decision-making process of its board of directors, andensure its fairness. The Company appointed the above three persons as members of theSpecial Committee since its establishment, and none of the members of the Special
Committee has been changed. In addition, by mutual election by the members of theSpecial Committee, Toru Watanabe, the Company’s Outside Director and Independent
Director, has taken a position of chairperson of the Special Committee. The
remuneration of the members of the Special Committee is fixed remuneration only
which is payable regardless of the success or failure of the Transaction, and contingency
fees the payment of which is conditional on the announcement or closing of theTransaction are not included.
The Company, based on the resolution of the board of directors above, tasked theSpecial Committee with providing advice as to (a) the appropriateness andreasonableness of the purpose of the Transaction (including improvement of theCompany’s corporate value through the Transaction); (b) the fairness of the conditionsof the Transaction (including the Tender Offer Price); (c) the fairness of the course ofnegotiations and decision-making procedures relating to the Transaction; (d) whether theTransaction (including the Company’s decision relating to the procedures of theTransaction) is against the interest of minority shareholders of the Company; and (e) thepros and cons of the Company’s board meeting expressing its opinion in favor of theTender Offer and recommending to the Company’s shareholders that they tender theirshares in the Tender Offer, based on (a) through (d) above ((a) through (e) above shallbe hereinafter collectively referred to as the “Questions”) and submitting a written
response to the Company’s board meeting regarding these matters.
Further, the Company’s board meeting has resolved that, when making its decision in
relation to the Transaction at its board meeting, it shall give as much weight as possible
to the written response of the Special Committee to the Questions and if it determinesthat the terms and conditions of the Transaction are unreasonable, it shall not approve
the Transaction. In addition, the Company’s board meeting grants the following authority
to the Special Committee: to negotiate with the Offeror by itself; to receive status reports
in a timely manner and state its opinion, provide instructions and make requests in a
crucial phase, even if the negotiations with the Offeror are conducted by related persons
in the Company and its advisor, thereby enabling itself to make a substantive impact on
the negotiation process concerning transaction conditions; to select the Special
Committee’s own outside advisors as necessary (the costs thereof shall be paid by theCompany); and to appoint or approve (including subsequent approval) outside advisors
selected by the Company.
From December 16, 2021 to February 3, 2022, the Special Committee held a total of29

(Translation)

8 meetings for a total of 11.5 hours and carefully reviewed the Questions by expressing
its opinions, exchanging information, gathering information, etc. via emails, etc. outside
the meetings, having discussion at any time as necessary.
More specifically, during the first meeting held on December 16, 2021, the Special
Committee approved the financial advisor and third-party valuation institution, and legal
advisor selected by the Company after confirming that there were no issues of their
independence. Further, the Special Committee confirmed during this meeting that whilenegotiations with the Offeror shall be conducted by persons within the Company and its
advisors as a principle, it shall receive status reports from persons in charge of thenegotiations in a timely manner and state its opinions, provide instructions and makerequests in a crucial phase, thereby enabling itself to be substantively involved in thenegotiation process, and that the Special Committee is authorized to request the officers,
employees, advisors, etc. of the Company to gather all information necessary to prepare
its response.
Additionally, the Special Committee received explanations from the Company about
the business, performance history and major management issues of the Company;
advantages and disadvantages expected to be provided by the Transaction for theCompany’s business; and the details of the Company’s business plan and its
development procedures which will be a basis for consideration of the conditions of theTransaction, and Q&A sessions have been held with the Company. In addition, theSpecial Committee received explanations from MCP, Mr. Fujimura and the Offeror
regarding the deliberation process that led to the proposal of the Transaction, the detailsof the measures expected after the Transaction, the details and degree of the advantages
and disadvantages and other impacts that can be expected from the Transaction, and theCompany’s management policies, etc. expected after the Transaction, and Q&A sessions
have been held with them. Further, the Special Committee received explanations
regarding the calculation of the share price of the Company’s Shares from YAMADA
Consulting, the Company’s financial advisor and third-party valuation institution, andexamined the reasonableness of such valuation after having Q&A sessions (please notethat YAMADA Consulting held Q&A sessions with the Company several times
regarding the Company’s business plan which was the basis of the calculation of the
DCF Analysis; analyzed and reviewed its details; and confirmed the reasonableness ofthe details of the plan and its development process in light of the interest of theCompany’s general shareholders). The Special Committee also received advice from
City-Yuwa Partners, the Company’s legal advisor, regarding the measures to ensure thefairness of the procedural aspects of the Transaction including the meaning and roles of
the Special Committee, and the method and process of the decision-making of theCompany’s board meeting and the details of other measures to avoid conflicts of interest.
The Special Committee received timely reports from the Company regarding the process
and details of the discussions and negotiations with respect to the Transaction between
the Company, MCP, Mr. Fujimura and the Offeror; discussed it internally; and stated its
opinions to the Company several times that the requests should be made to MCP, Mr.
30

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Fujimura, and the Offeror to increase the Tender Offer Price and was thereby
substantially involved in the negotiation process, until it received a proposal from theOfferor that the Tender Offer Price shall be 1,730 yen per share after the negotiation as
described in “(2) Grounds and reasons of the opinion”, “(iii) Process and reasons ofdecision making of the Company to agree to the Tender Offer” above.
The Special Committee carefully examined and reviewed the Questions based on theprocess above and as a result, on February 3, 2022, it submitted the Written Response of
the following details to the Company’s board meeting with the unanimous approval of
all the committee members.
(a) Details of response
It is believed that the Transaction contributes to the improvement of theCompany’s corporate value and the purpose of the Transaction is valid andreasonable.
b. It is believed that the fairness of the conditions of the Transaction including theTender Offer Price is ensured.
It is believed that the fairness is ensured with regard to the negotiation process andprocedures leading to the decision-making regarding the Transaction.
d. It is believed that the Transaction (including the decision in relation to theCompany’s procedures of the Transaction) is not against the interest of theCompany’s minority shareholders.
Comprehensively considering (a) through (d) above, it is believed to be reasonable
for the Company’s board meeting expressing its opinions in favor of the Tender
Offer and recommending to the Company’s shareholders that they tender theirshares in the Tender Offer.
(b) Reasons of response
Validity and reasonableness of the purpose of the Company (including
improvement of the Company’s corporate value through the Transaction)
Taking the following points into comprehensive consideration, it can be said
that the Transaction will contribute to the improvement of the Company’s
corporate value, and the purpose of the Transaction is valid and reasonable.
According to the Company, the business environment for each group has been
in a difficult situation due to the shrinking domestic textile production in the
textile industry, increased price competition in the electronic materials
industry, and the shrinking screen-printing industry. In addition, the provisionof a wide range of products in response to specific customer’s request has led
to increased production costs and difficulties in carrying out flexible researchand development. The Company has not driven proactive capital investments
and innovation of its business structure based on its policy that it must securea certain level of profit as a listed company. On the other hand, MCP and Mr.
31

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Fujimura are aware of the management issues such as the need to identify
growth markets, increased competition for product development and humanresources in the chemicals industry to which the Company belongs, and theneed to allocate resources strategically, which has been insufficient due to theneed to respond to customer’s specific demands, and considers it necessary totake measures to expand into upstream and downstream areas, to form
external alliances, including M&A, in existing business areas, and to improve
productivity with regard to production systems and raw material procurement,
as a new growth strategy. The Special Committee has not found any particular
discrepancy between the Company, MCP and Mr. Fujimura’s perceptions of
the Company’s business environment and management issues, nor have theSpecial Committee found any unreasonable points in any of their explanations.
According to MCP and Mr. Fujimura, MCP and Mr. Fujimura envision steadydevelopment and expansion in existing business areas and the implementationof new growth measures by utilizing Mr. Fujimura’s management skills,
MCP’s knowhow, knowledge, management resources and network, and theCompany’s advantages such as the ability to provide products and the ability
to respond to customer’s specific needs developed by the Company since its
establishment, after the completion of the Transaction. The Company
recognizes that each of the measures envisioned by MCP and Mr. Fujimura
will contribute to the resolution of the Company’s management issues and will
enhance the Company’s corporate value over the mid- to long-term, and theSpecial Committee also considers that it can affirm the rationality of theselection and content of these growth measures.
According to the Company, MCP and Mr. Fujimura, each of the abovemeasures will not necessarily work immediately and contribute to theCompany’s performance, but rather may cause deterioration in the Company’s
profit level and cash flows in the short-term with the increase in depreciationand payments for upfront investments due to capital expenditures and otherupfront investments required for business expansion, and disadvantage to theCompany’s shareholders such as decline in the price of the Company’s Sharesin the short-term. There is nothing particularly unreasonable in these
explanations, and it is considered that there is reasonableness in the judgmentthat it is necessary to establish a management system that can swiftly andflexibly execute each measure from a medium- to long-term perspective. In
addition, it is considered that the MCP and Mr. Fujimura’s implementation of
the Transaction in the form of Management Buyout (MBO) with reinvestment by Mr. Fujimura will enable the Company to make maximum useof management skills of Mr. Fujimura who is quite familiar with theCompany’s business, as well as MCP’s resources and network, which will bebeneficial to enhancement of the Company’s corporate value.
The Special Committee has examined the possible disadvantages of the32

(Translation)delisting of the Company’s Shares as a result of the Transaction throughinterviews with the Company, MCP, and Mr. Fujimura, and have determinedthat the impact on business partners, future funding, the compliance system,
future recruitment of personnel and existing employees are expected to belimited.
b. Fairness of the conditions of the Transaction (including the Tender Offer Price)Taking the following points into comprehensive consideration, the conditions of
the Transaction, including the Tender Offer Price, are considered to be fair.
As a result of the Q&A session with YAMADA Consulting regarding the
calculation of the value of the Company’s Shares, no particularly
unreasonable points were found in the selection of the calculation method by
YAMADA Consulting or the calculation process using each calculation
method. With respect to the Company’s business plan used as a basis for the
calculation of the DCF Analysis, based on the details of the sales plan (netsales) and operating income, as well as the hearing regarding the process of
its preparation, no unreasonable points were found, especially from theviewpoint of the interests of the Company’s general shareholders. Therefore,
it can be said that the calculation results of the Company’s Shares value by
YAMADA Consulting are reasonable to a certain extent. The Tender Offer
Price exceeds the upper bound of the calculation range of the market value
analysis and the median of the calculation range of the DCF Analysis among
the calculation results by YAMADA Consulting, and is considered to be at areasonable level in light of such calculation results.
Using February 3, 2022, the business day immediately preceding theannouncement date of the Tender Offer, as the reference date, the Tender Offer
Price is a price with a premium of 58.72 % (reference date), 59.01 % (mostrecent one month), 58.86 % (most recent three months) and 59.01 % (mostrecent six months) to the closing price of the Company’s Shares on February
1, 2022, the most recent trade date of the reference date, simple averageclosing prices for the most recent one month, three months, and six months,
respectively. Compared with the average premiums in similar cases referred
to in the negotiation process between the Company and Mr. Fujimura and
MCP, the level of premiums for the Tender Offer Price is considered to bereasonable. Although the Company has been negotiating with MCP and Mr.
Fujimura based on the price book-value ratio (PBR) based on the proposed
price, this was positioned as one of the negotiation points in order tomaximize consideration for the interests of the Company’s minority
shareholders and to extract an increase in the purchase price as much as
possible, and there is no particular contradiction between such negotiation
stance and the fact that the net asset value analysis was not adopted by
YAMADA Consulting.
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The method and conditions of the Squeeze-out Process are also considered tobe reasonable, as it can be said that consideration is given to the interests ofthe general shareholders who did not tender their shares in the Tender Offer.
As described in c. below, fairness is considered to have been ensured in thenegotiation process and the procedures leading to the decision-making
regarding the Transaction, and it is recognized that the terms and conditionsof the Transaction including the Tender Offer Price, have been determinedthrough such fair procedures.
Fairness of the negotiation process and procedures leading to the decision-making
regarding the Transaction
Taking the following points into comprehensive consideration, it is consideredthat fairness has been ensured in the negotiation process and procedures leading to
the decision-making regarding the Transaction.
In considering the Transaction, it is considered that the Company has
established the Special Committee as part of the measures to ensure fairness.
The Special Committee was established based on the content of the “M&A
Guidelines”, with members who are independent of MCP, Mr. Fujimura andthe Offeror, and at a reasonable time in practice. It is considered that, basedon the authority granted by the board of directors of the Company, the Special
Committee has sincerely examined and reviewed the purpose and conditionsof the Transaction, and has been substantially involved in the negotiation
process between the Company, Mr. Fujimura and MCP, and have functioned
as an effective measure to ensure fairness.
In order to ensure the fairness of the decision-making process related to theTransaction, the Company has received the Share Price Valuation Report from
YAMADA Consulting, a financial adviser and third-party valuation institution
and has received legal advice from City-Yuwa Partners, an independent legal
advisor, regarding the decision-making process and methods of theCompany’s board of directors in relation to the Transaction and other points
to be considered in making decisions regarding the Transaction, including theTender Offer.
The directors of the Company who may have conflicts of interest with theCompany in the Transaction are not scheduled to participate in the
deliberations and resolutions of the board of directors of the Company, which
will pass resolutions to express opinions, etc. on the Tender Offer, and havenot participated in any deliberations or negotiations with MCP, Mr. Fujimuraor the Offeror on behalf of the Company with respect to the Transaction.
The Offeror has set a minimum number of shares to be purchased in theTender Offer, and such minimum number of shares will exceed the number
equivalent to a majority of the Company’s Shares held by the Company’s
shareholders who have no interest in the Offeror, that is, the number34

(Translation)equivalent to so-called “Majority of Minority”.
In the Tender Offer, it is planned that the tender offer period will be set at 30
business days, which is longer than the minimum period of 20 business days
stipulated by law. In addition, Mr. Fujimura decided to execute theTransaction with MCP which evaluates the Company at the highest pricerange in the proposal regarding the Tender Offer Price after implementing
bidding procedure with several candidates including MCP as part of securing
opportunities for competitive takeover proposals (market check) andreceiving a proposal from potential acquirers other than MCP and comparing
such proposals and the results of interviews with each company, and therefore,
it is considered that Mr. Fujimura was proactively creating other transaction
opportunities such as purchase of the Company’s Shares by parties other than
MCP. Further, the Offeror and the Company have not entered into any
agreement that will prevent the competing offeror from contacting theCompany.
It can be said that the Company plans to disclose in the press release
concerning the Transaction information that is reasonable for the Company’s
general shareholders to judge the appropriateness of the conditions of theTransaction.
d. Whether the Transaction (including the Company’s decision relating to theprocedures of the Transaction) is against the interest of minority shareholders of
the Company
As described above, (a) it can be said that the Transaction will contribute to theimprovement of the Company’s corporate value, and the purpose of theTransaction is considered to be valid and reasonable, (b) the conditions of theTransaction including the Tender Offer Price are considered to be fair, and (c) it
can be said that fairness has been ensured in the negotiation process and procedures
leading to the decision-making regarding the Transaction. Since there are no
special circumstances that should be considered as disadvantageous to theCompany’s minority shareholders other than the above considerations, it isconsidered that the Transaction (including the Company’s decision on theprocedures for the Transaction) is not disadvantageous to the Company’s minority
shareholders.
Pros and cons of the Company’s board meeting expressing its opinion in favor of
the Tender Offer and recommending to the Company’s shareholders that theytender their shares in the Tender Offer based on (a) through (d) above
Taking into comprehensive consideration (a) through (d) above, it is consideredreasonable for the board of directors of the Company to express its opinion in favorof the Tender Offer and to recommend that the shareholders of the Company tendertheir shares in the Tender Offer.
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Obtainment of a share price valuation report by the Company from an independent thirdparty valuation intuition
When stating its opinion in relation to the Tender Offer, in order to ensure the fairnessof the decision-making regarding the Tender Offer Price offered by the Offeror, theCompany requested YAMADA Consulting, the financial advisor and third-party
valuation institution that is independent from the Offeror, the Company, MCP and Mr.
Fujimura, to calculate the share value of the Company’s Shares and obtained the Share
Price Valuation Report on February 3, 2022. For the outline of the Share Price Valuation
Report, please see “(3) Matters regarding calculation” above.
YAMADA Consulting is not a related party to the Offeror, the Company, MCP and
Mr. Fujimura and has no material interest in the Transaction including the Tender Offer.
Substantial part of the fees to be paid to YAMADA Consulting in relation to theTransaction shall be transaction fees the payment of which is conditional on theannouncement of the Transaction and the completion of the Squeeze-out Process, andthe Company selected YAMADA Consulting as its financial advisor and third-party
valuation institution based on the above fee structure after considering generalcustomary practices, etc. for same type of transactions. Further, during the first meeting,
the Special Committee approved YAMADA Consulting as the Company’s financial
advisor and third-party valuation institution after confirming that there were no issues of
its independence.
(iii) Advice to the Company from an independent legal advisor
In order to ensure the fairness and appropriateness of the decision-making process of
the Company’s board meeting in relation to the Transaction including the Tender Offer,
the Company selected City-Yuwa Partners as a legal advisor independent from theOfferor, the Company, MCP and Mr. Fujimura and received necessary legal advice fromthe firm regarding the course and methods of the decision-making of the Company’sboard meeting and other matters to note relating to the Transaction including the Tender
Offer.
City-Yuwa Partners is not a related party to the Offeror, the Company, MCP or Mr.
Fujimura and has no material interest regarding the Transaction including the Tender
Offer. Further, City-Yuwa Partners’ fees for the Transaction shall be calculated bymultiplying its hourly rates by the number of hours worked regardless of the success or
failure of the Transaction, and contingency fees the payment of which is conditional on
the announcement or closing of the Transaction are not included. During the first meeting,
the Special Committee approved City-Yuwa Partners as the Company’s legal advisor
after confirming that there were no issues of its independence.
(iv) Unanimous approval by all of the Company’s disinterested directors (including Audit
and Supervisory Committee Members)36

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The Company, taking into account the Share Price Valuation Report received from
YAMADA Consulting and legal advice from City-Yuwa Partners and giving as muchweight as possible to the Written Response submitted by the Special Committee,
carefully discussed and examined the terms and conditions of the Transaction including
the Tender Offer.
As a result, the Company determined that in light of (i) the prospect that theTransaction, including the Tender Offer, improves the corporate value of the Company
by establishing a management structure that enables flexible and agile decision-making
based on a medium- to long-term perspective without being concerned with short-term
fluctuations in business performance too much, and by achieving the flexible andoptimal distribution of management resources through proactive measures with thecooperation of MCP; and (ii) the results of the calculation in the Share Price Valuation
Report, the premium level of the Tender Offer Price, the negotiation process with MCP,
Mr. Fujimura and the Offeror, and the process of determining the Tender Offer Price,and so on, the Tender Offer Price and other conditions regarding the Tender Offer arereasonable to its shareholders; and the Tender Offer provides the Company’s
shareholders with reasonable opportunities to sell their shares, as stated in “(2) Grounds
and reasons of the opinion”, “(iii) Process and reasons of decision making of theCompany to agree to the Tender Offer” above and adopted a resolution at its board
meeting held today expressing its opinion in favor of the Tender Offer andrecommending that the Company’s shareholders tender their shares in the Tender Offer,with the unanimous approval of the Company’s directors who participated in the
deliberations and resolution (7 Directors (Mr. Yasuto Fukushima, Mr. Tokuzan Miyake,
Mr. Teruo Furukawa, Mr. Masato Matsumura and Mr. Toru Watanabe, and Mr. Kenichi
Nishikawa and Mr. Hirofumi Yoshida who are Audit and Supervisory Committee
Members) other than Mr. Fujimura and Mr. Hisayoshi Tanaka).
As, among the Company’s directors, Mr. Fujimura plans to invest in the Offeror, while
continuing to be involved in the management of the Company after successful
completion of the Tender Offer, and Mr. Hisayoshi Tanaka plans to provide services to
Mr. Fujimura as a tax accountant after completion of the Transaction, with a view to
avoiding suspicion of conflicts of interest, both of them did not participate in the
deliberations or resolutions in the said board meeting and were not involved on the
Company’s side in the discussions or negotiations with MCP, Mr. Fujimura or the Offeror.
(v)

Setting the minimum number of shares to be purchased that exceeds the number
equivalent to a majority of minority
The Offeror has set the minimum number of shares to be purchased in the Tender
Offer at 2,984,800 shares (shareholding ratio: 47.44%), and if the total number ofTendered Shares is less than the minimum number of shares to be purchased (2,984,800
shares), the Offeror will not purchase any of the Tendered Shares. The minimum numberof shares to be purchased, 2,984,800 shares (shareholding ratio: 47.44%), will exceed
the number of shares equivalent to a majority of 4,878,285 shares (shareholding ratio:37

(Translation)

77.53%) (2,439,143 shares, shareholding ratio: 38.77%; this is the equivalent of the
majority of the number of the Company’s Shares held by the Company’s shareholders
who do not have an interest in the Offeror, i.e., so-called “majority of minority”). (the4,878,285 shares stands for the total number of issued shares of the Company as ofDecember 31, 2021 as stated in the Company’s Financial Summary (6,992,000 shares),less the number of treasury shares held by the Company as of the same date (699,882
shares), the Mr. Fujimura’s Tendering Shares (number of shares: 203,100 shares;
shareholding ratio: 3.23%), GOO Sangyo’s Non-Tendering Shares (number of shares:
1,210,000 shares; shareholding ratio: 19.23%) and the number of shares of the Company
indirectly held by Mr. Fujimura through the officers’ stock ownership association of theCompany (number of shares: 733 shares; shareholding ratio: 0.01%). Accordingly, if theOfferor is unable to obtain the approval of the majority of the Company’s shareholders
other than those who have interest in the Offeror, the Offeror will not conduct theTransaction (including the Tender Offer) respecting the intention of the minority
shareholders of the Company.
(vi)

Ensuring of objective circumstances to ensure fairness of the Tender Offer
The Offeror has set as the Tender Offer Period a period of 30 business days, whereas
the statutory minimum period is 20 business days. By setting a comparatively long
period as the Tender Offer Period, the Offeror intends to ensure an appropriate Tender
Offer Price by securing for the Company’s shareholders an appropriate opportunity fordecision-making regarding tendering shares in the Tender Offer and securing an
opportunity for counterbidders to make counteroffer etc. for the Company’s Shares.
In addition, as stated in “A. Background to the decision to implement the Tender Offer”
of “(ii) Background to, and objectives and decision-making process leading to thedecision to implement the Tender Offer and management policy after the Tender Offer”
of “(2) Grounds and reasons of the opinion ” above, as part of securing opportunities formaking a counterbid (market check), Mr. Fujimura conducted a bidding process forseveral candidates, including MCP, and received proposals from candidates other than
MCP, and through comparison of such proposals and the results of interviews with eachcompany, Mr. Fujimura decided to conduct the Transaction with MCP, who evaluated
the Company at the highest price in both the maximum and the minimum price, and isactively creating the opportunities for parties other than MCP to purchase or otherwise
trade the Company’s Shares. Furthermore, the Offeror and the Company have notentered into any agreement that restricts counterbidders from contacting the Company,
such as an agreement containing a deal protection provision that prohibits the Company
from contacting any counterbidder or restrictions that prevent the Company fromwithdrawing its statement of opinion in favor of the Tender Offeror. In this way, together
with the setting of the Tender Offer Period above, consideration is being given to
ensuring the fairness of the Tender Offer by securing the opportunities for counterbids.

4. Matters Concerning Material Agreements between the Offeror and the Company’s
38

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Shareholders, Directors, etc. regarding the Application for the Tender Offer
Tender Offer Agreement
The Offeror has entered into an agreement with Mr. Fujimura as of today, and agreed
to tender Mr. Fujimura’s Tendering Shares (203,100 shares, Shareholding Ratio:
3.23%) into the Tender Offer, except where the Company passes a resolution on nonapproval of the Tender Offer or where the Company revokes its approval of the Tender
Offer. The Tender Offer Agreement does not provide for the conditions precedent to theabove tendering. Even if the Company passes a resolution of the board of directors on
non-approval of the Tender Offer or if the Company revokes its approval of the Tender
Offer, Mr. Fujimura will not be restricted from tendering for the Tender Offer at his
discretion.
Non-tender Agreement
The Offeror has made an agreement with GOO Sangyo as of today, and it was agreed
that GOO Sangyo will not to tender GOO Sangyo’s Non-Tendering Shares (1,210,000
shares, Shareholding Ratio: 19.23%) into the Tender Offer, or will not transfer, establish
a security interest on, or otherwise dispose of the same to any third party, or will notacquire the Company’s Shares. The Non-tender Agreement does not provide for theconditions precedent to the performance of the above obligations of GOO Sangyo or
any termination event.
Share Transfer Agreement
The Offeror and Mr. Fujimura have entered into the Share Transfer Agreement asof today, and Mr. Fujimura has agreed to sell to the Offeror all of the GOO Sangyo’s
Shares held by him and the Offeror has agreed to purchase the same as of thecommencement date of settlement of the Tender Offer under the Share Transfer
Agreement.
The performance of Mr. Fujimura’s obligation to transfer GOO Sangyo’s Shares to
the Offeror under the Share Transfer Agreement is conditional on the fact (i) that the
representations and warranties of the Offeror under the Share Transfer Agreement aretrue and correct in material respects (Note 1), (ii) that the Offeror has performed orcomplied with its obligations under the Share Transfer Agreement in material respects(Note 2), and (iii) that the Tender Offer has been completed successfully.
(Note 1) Under the Share Transfer Agreement, the Offeror made the following
representations and warranties as of the date of execution of the Share
Transfer Agreement and the date of commencement of settlement of theTender Offer: (a) that the Offeror is duly and validly incorporated, is inexistence, and is authorized, (b) that the Offeror has the authority and39

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power to execute and perform the Share Transfer Agreement, (c) the
enforceability of the Share Transfer Agreement, (d) that the execution
and performance of the Share Transfer Agreement by the Offeror do notconflict with laws and regulations, (e) that the Offeror has obtained thepermissions and authorizations, etc. under laws and regulations required
for the execution or performance of the Share Transfer Agreement, (f)that the Offeror is not anti-social forces, and (g) that the Offeror is not
subject to insolvency procedures under law.
(Note 2) Under the Share Transfer Agreement, the Offeror assumes, (a) other thanits obligation to receive GOO Sangyo’s Shares, (b) the Offeror’s
obligations under the Share Transfer Agreement or the obligation tocompensate for the damages incurred by Mr. Fujimura arising out of orin connection with any breach of the Offeror’s representations andwarranties set forth in (Note 1) above, and (c) the confidentiality
obligations and other obligations based on the general provisions of the
Share Transfer Agreement.
Furthermore, the performance of the Offeror’s obligation to acquire GOO
Sangyo’s Shares from Mr. Fujimura under the Share Transfer Agreement isconditional on the fact (i) that the Mr. Fujimura’s representations and warranties under
the Share Transfer Agreement are true and correct in material respects (Note 3), (ii)that Mr. Fujimura has performed or complied with his obligations under the Share
Transfer Agreement in material respects (Note 4), (iii) that the Tender Offer has been
completed successfully, (ⅳ) that an agreement on the transfer of GOO Sangyo’s assets
has been executed by and between Mr. Fujimura and GOO Sangyo and is validly
existing, and there are no circumstances that serve as a basis for its termination,
cancellation, invalidity, etc., and (v) that GOO Sangyo’s general meeting ofshareholders has approved the transfer of GOO Sangyo’s Shares.
(Note 3) Under the Share Transfer Agreement, Mr. Fujimura made the following
representations and warranties: (a) Mr. Fujimura’s legal capacity to holdrights, mental capacity, and legal capacity to act, (b) the enforceability of
the Share Transfer Agreement, (c) that the execution and performance of
the Share Transfer Agreement by Mr. Fujimura do not conflict with laws
and regulations, (d) that Mr. Fujimura has obtained the permissions andauthorizations, etc. under laws and regulations required for the execution
or performance of the Share Transfer Agreement, (e) Mr. Fujimura’s rightto GOO Sangyo’s Shares, (f) that Mr. Fujimura is not anti-social forces,40

(Translation)(g) that Mr. Fujimura is not subject to insolvency procedures under law,(h) that GOO Sangyo is duly and validly incorporated, is in existence,and is authorized, (i) the ownership of GOO Sangyo’s Shares and the factthat there are no encumbrances such as security interest in respect of
GOO Sangyo’s Shares, (j) that GOO Sangyo has no assets other than
GOO Sangyo’s Non-Tendering Shares, cash and deposits, andloan

claims, (k) that GOO Sangyo has no debts other than its borrowings, (l)that GOO Sangyo is not anti-social forces, (m) that there are no pending
litigations, etc. in respect of GOO Sangyo, (n) that GOO Sangyo is not
subject to insolvency procedures under law, (o) that GOO Sangyo has no
subsidiaries or affiliates, (p) the adequacy of tax returns and payments by
GOO Sangyo, and (q) the correctness of the disclosed information.
(Note 4) Under the Share Transfer Agreement, Mr. Fujimura assumes, (a) otherthan his obligation to transfer GOO Sangyo’s Shares to the Offeror, (b)the duty of care of a prudent manager with respect to GOO Sangyo’s
execution of operations, (c) the obligation to pay the debt obligations to
GOO Sangyo, (d) the obligation to submit to GOO Sangyo a notice of theeffect that he will resign as director of GOO Sangyo on the date ofsettlement of the Tender Offer, (e) the obligation not to terminate oramend the agreement by and between Mr. Fujimura and GOO Sangyo on
the transfer of GOO Sangyo’s assets, (f) Mr. Fujimura’s obligations under
the Share Transfer Agreement or the obligation to compensate for thedamages incurred by the Offeror arising out of or in connection with any
breach of Mr. Fujimura’s representations and warranties set forth in (Note3) above, and (g) the confidentiality obligations and other obligations
based on the general provisions of the Share Transfer Agreement.
The purchase price of GOO Sangyo’ s Shares paid to Mr. Fujimura under the Share
Transfer Agreement is: (i) the amount obtained by multiplying the number of GOO
Sangyo’ s Non-Tendering Shares by the Tender Offer Price, deducted by (ii) the total
amount of the principal and interest of the borrowings by GOO Sangyo as of thecommencement date of settlement of the Tender Offer, plus (iii) the cash and deposits
and the total amount of the principal and interest of the loan claims held by GOO
Sangyo as of the commencement date of settlement of the Tender Offer.
Master Agreement
MCP5 Investment Business Limited Liability Partnership and Mr. Fujimura hasentered into the Master Agreement as of today which includes the following with regard
41

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to the terms of the Transaction:
A. MCP5 Investment Business Limited Liability Partnership ensures that the Offeror
commences the Tender Offer as part of the Transaction in accordance with theconditions of the Tender Offer specified in the Master Agreement;
B. Mr. Fujimura enters into to the Tender Offer Agreement and tenders Mr. Fujimura’s Tendering Shares into the Tender Offer;
C. Mr. Fujimura ensures that GOO Sangyo enters into the Non-tender Agreement, andthat GOO Sangyo does not tender GOO Sangyo’ s Non-Tendering Shares into theTender Offer;
D. MCP5 Investment Business Limited Liability Partnership and Mr. Fujimura
successively carry out each of the series of transactions of the Transactions (theInvestment, the Transfer of Shares, the Squeeze-out Process, the Reinvestment, andthe Merger), or cause the same to be carried out, after the successful completion of
the Tender Offer, and
E. MCP5 Investment Business Limited Liability Partnership and Mr. Fujimura enter
into the Shareholders Agreement.
Shareholders Agreement
MCP5 Investment Business Limited Liability Partnership and Mr. Fujimuraentered into the Shareholders Agreement as ofwith regard to their claims as

shareholders of the Offeror after the Reinvestment and as shareholders of theCompany after the Merger, which contains (i) a clause on restriction on transfer underwhich they may not transfer the Offeror’s shares (after the Merger, the Company’s
Shares) held by them to any third party except to their associates without the priorconsent of the other party, (ii) a clause on the rights of first refusal of MCP5
Investment Business Limited Liability Partnership and Mr. Fujimura (the right of thecounterparty to the party who desires such transfer to purchase the Offeror’s Shares(after the Merger, the Company’s Shares) held by such party who desires the transfer
under the same conditions as those desired by such party) and the tag along rights of
MCP5 Investment Business Limited Liability Partnership and Mr. Fujimura (the rightof the counterparty to the party who desires such transfer to request such party who
desires the transfer to cause such third party to purchase the Offeror’s Shares (after
the Merger, the Company’s Shares) held by such counterparty simultaneously withand under the same conditions as those of such transfer) and a clause on the dragalong right of MCP5 Investment Business Limited Liability Partnership (the right of
MCP5 Investment Business Limited Liability Partnership to request Mr. Fujimura tosell the Offeror’s Shares (after the Merger, the Company’s Shares) held by Mr.
Fujimura to such third party simultaneously with and under the same conditions as
those of such transfer), in the case where the Offeror’s shares (after the Merger, the42(Translation)

Company’s Shares) held by them are transferred to a third party, and (iii) a clause on
confidentiality obligations and other general provisions.

Reinvestment Agreement
The Offeror has made an agreement with Mr. Fujimura as ofthat,

the Squeeze-out Process, Mr. Fujimura makes a 20% investment in
the Offeror by subscribing for the common shares of the Offeror,
the Squeeze-out Process.
5. Details of the Provisions of Benefits by the Offeror or its Special Related Parties
Not applicable.
6. Measures regarding the Basic Policy on Control of the Company
Not applicable.
7. Questions to the Offeror
Not applicable.
8. Request for Extension of the Tender Offer Period
Not applicable.
9. Future Outlook
Please refer to “(2) Grounds and reasons of the opinion”, “(ii) Background to, and objectives
and decision-making process leading to the decision to implement the Tender Offer andmanagement policy after the Tender Offer”; “(4) Policy regarding reorganization, etc.,
following completion of the Tender Offer (so-called “two-step acquisition”)”; and “(5)Prospects for delisting and its reasons ” in “3. Details, Grounds and Reasons of the Opinion
regarding the Tender Offer” above.
10．Other Information(1) Release of “March 2022 Fiscal Year Third Quarter Financial Results (Japanese GAAP)(Consolidated)”
The Company releases the Company’s Summary Financial Results as of today. For moredetail, please refer to the detail of the release.
(2) Release of “Announcement Regarding the Revision of the Year-End Dividend Forecast
for Fiscal Year Ending March 2022 (No Dividend)”
As stated in “Announcement Regarding the Amendment (No Dividend) on the YearEnd Dividend Forecast of March 2022 Fiscal Year”, the Company resolved at its board
meeting held today that it will amend the dividend forecast of March 2022 Fiscal Year
43

(Translation)

released on May 14, 2021 and will not distribute end of term dividends for the Fiscal Yearending March 2022 on condition that the Tender Offer is successfully completed. For moredetail, please refer to the detail of the release.
End(Reference) “Notice Concerning Commencement of Tender Offer for Share Certificates of
GOO CHEMICAL CO., LTD. (Securities Code: 4962)” dated February 4, 2022 (attached)

44

(TRANSLATION)
February 4, 2022
To whom it may concern:
Company Name:
Name of Representative:

GC Holdings Co., Ltd.
Wataru Kojima
Representative Director

Notice Concerning Commencement of Tender Offer for Share Certificates of
GOO CHEMICAL CO., LTD. (Securities Code: 4962)
GC Holdings Co., Ltd. (the "Offeror") hereby announces that on February 4, 2022, it has decided toacquire the common shares (the "Target's Shares") of GOO CHEMICAL CO., LTD. (Securities Code: 4962,
listed on the Tokyo Stock Exchange, Inc. (the "TSE"), Second Section; hereinafter the "Target") throughtender offer (the “Tender Offer”) pursuant to the Financial Instruments and Exchange Act (Act No. 25 of1948, as amended).

The Offeror is a stock company incorporated on January 14, 2022 for the primary purpose of holding
the Target's Shares and to control and manage the Target's business activities. As of today, all of the Offeror'sissued shares are directly held by MCP5 Investment Business Limited Liability Partnership, a fund in which
MCP Capital Co. Ltd. (hereinafter referred to as "MCP" collectively with MCP Partners Co., Ltd. that holds
all of the issued shares of MCP Capital Co., Ltd.) invests in and provides services to concerning relevant
operations. As of today, MCP, MCP5 Investment Business Limited Liability Partnership, and the Offeror
do not own any of the Target's Shares.

MCP, since the incorporation of MCP Partners Co., Ltd. on February 22, 2000, has been providing
services of private equity investment and related operations. Over the recent 21 years, MCP has, throughthe funds to which it provides services to, made a total of 34 investments such as in JAPAN PURE
CHEMICAL CO., LTD., JCU Corporation (formerly EBARA UDYLITE CO., LTD.), SDS Biotech K.K.,
OAT Agrio Co., Ltd., NOMURA CORPORATION, TDM, Co. Ltd., New-Quick CO. LTD., NISSEILimited, TAKASAKIJIMUKI Corporation, KOMINE CO., LTD., and JAPAN HOME SHIELDCORPORATION. MCP has a goal to achieve growth of small to medium-sized companies by not only
providing financing solution but by providing management advisory support based on a middle to longterm perspective on various issues faced by the companies and aims to enhance corporate value together
with the invested companies.

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The Offeror has decided to conduct this Tender Offer to acquire all of the shares of the Target listedon the second section of the TSE (excluding the treasury shares held by the Target and the Target's Shares
held by GOO Sangyo Co., Ltd. ("Goo Sangyo ") (Number of shares held: 1,210,000 shares, Shareholding
Ratio (Note 1): 19.23%) (the "GOO Sangyo's Non-Tendering Shares"), a company which all of its issued
shares (excluding the treasury shares) are held by Mr. Haruki Fujimura ("Mr. Fujimura"), President andRepresentative Director of the Target, and which manages the assets of the Target, and is the largest
shareholder of the Target) as part of the series of transactions to take the Target's Shares private.

(Note 1): "Shareholding Ratio" refers to the ratio (rounded to the second decimal place) against
6,292,118 shares, i.e., the total number of issued shares (6,992,000 shares) as of December 31, 2021
indicated in the Target's Financial Summary for the 3rd Quarter of the Fiscal Year Ending in March2022 (JGAAP) (consolidated) announced by the Target on February 4, 2022 less the number oftreasury shares (699,882 shares) held by the Target as of December 31, 2021).

The Transaction is conducted as part of the so-called Management Buyout (MBO) (Note 2), which is
conducted for the purpose of friendly acquisition of all of the Target's Shares (excluding the treasury shares
held by the Target and the GOO Sangyo's Non-Tendering Shares) and is supported by the Target's board of
directors. Also, Mr. Fujimura (Number of shares held: 203,100 shares (Note 3), Shareholding Ratio: 3.23%)
is scheduled to continue to assume management of the Target after the Tender Offer is successfullycompleted. To cause Mr. Fujimura to share a common goal with the Offeror to enhance the corporate value,
the Offeror and Mr. Fujimura executed an investment agreement on February 4, 2022, pursuant to which,on condition that the series of transactions to be executed after the successful completion of the Tender
Offer to cause the Offeror and GOO Sangyo to be the sole shareholders of the Target and to take the Target's
Share private (the "Squeeze-out Process") is completed, Mr. Fujimura will invest 20% in the Offeror.

(Note 2)"Management Buyout (MBO)" refers to a transaction in which the offeror carries out atender offer based on an agreement with the officers of the target, and shares a common interest withsuch officer of the target.
(Note 3) Mr. Fujimura indirectly holds the Target's Shares equivalent to 733 shares (fractional sharesdiscarded) as his equity ownership through the Target's officers' stock ownership association. However,
the above number of shares held by Mr. Fujimura (203,100 shares) does not include 733 shares of theTarget's Shares indirectly held by him through the above officers' stock ownership association.

The Outline of the Tender Offeror is as follows.

(1)

Name of the Target:
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GOO CHEMICAL CO., LTD.

(2)Type of share certificates, etc. to be purchased:
Common shares(3)

Tender offer period:(4)

Price of tender offer:
JPY 1,730 per common share

(5)

(6)

Number of share certificates, etc. to be purchased:Type of sharecertificates, etc.

Number of shares
scheduled to bepurchased

Minimum number ofshares scheduled tobe purchased

Maximum numberof shares scheduled
to be purchased

Common shares

5,082,118 shares

2,984,800 shares- sharesTotal

5,082,118 shares

2,984,800 shares- shares

Commencement date of settlement:
March 30, 2022 (Wednesday)(7)

Tender offer agent:
Nomura Securities Co., Ltd.
13-1, Nihombashi 1-chome, Chuo-ku, Tokyo

For specific details of the Tender Offer, please refer to the Tender Offer Statement to be filedby the Offeror in connection with the Tender Offer on February 7, 2022.
END

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[Soliciting Regulations]This Press Release is intended to announce the Tender Offer to the public and has not been prepared for the
purpose of soliciting an offer to sell shares. If shareholders wish to make an offer to sell their shares, theyshould first read the Tender Offer Explanation Statement concerning the Tender Offer and make an offer tosell their shares at their own discretion. This press release shall neither be, nor constitute a part of, an offer
or solicitation to sell, or solicitation of an offer to purchase any securities, and neither this Press Release(or a part of this Press Release) nor its distribution shall be interpreted to constitute the basis of any
agreement in relation to the Tender Offer, and this Press Release may not be relied upon at the time ofentering into any such agreement.

[U.S. Regulations]
The Tender Offer will be implemented in compliance with the procedures and information disclosure
standards that are stipulated by the Financial Instruments and Exchange Act of Japan but these procedures
and standards are not necessarily the same as those of the U.S. In particular, the Securities Exchange Actof 1934 of the U.S., Article 13 (e) and Article 14 (d) and the rules stipulated thereunder do not apply to theTender Offer and the Tender Offer are not in accordance with these procedures and standards.

All procedures concerning the Tender Offer shall be conducted in Japanese unless otherwise indicated. Allor part of the documents concerning the Tender Offer will be prepared in English, however, if any
inconsistency arises between such English document and the Japanese documents, the Japanese document
shall prevail.

[Forward-looking statements]
This Press Release contains forward-looking statements defined in Article 27A of the U.S. Securities Act
of 1933 (as amended) and Article 21E of the U.S. Securities Act of 1934. Actual results may be significantly
different from the forecasts expressly indicated or implied as “forward-looking statements” due to known
or unknown risks, uncertainties, and other factors. The Offeror, the Target, or their affiliate cannot promisethat forecasts expressly indicated or implied as “forward-looking statements” will turn out to be correct.
The “forward-looking statements” in this Press Release were prepared based on information held by theOfferor and the Target as of the date of this Press Release and unless obligated by laws, the Offeror, Target,or their affiliate shall have no obligation to update or revise such description to reflect such future eventsor circumstances. All financial information in this Press Release are based on Japanese Generally Accepted
Accounting Principals ("J-GAAP"), which may significantly be different from the generally accepted
accounting standards of the US or other countries. The Offeror and the Target are companies incorporated
outside of the U.S. and as some or all of their officers are not U.S. residents, it may be difficult to exercise
the rights and demands that arise under U.S. securities laws. It might not be possible to file legal procedures4

in courts outside of the U.S, towards non-U.S. companies and its officers on grounds of breach of U.S.
securities laws. In addition, jurisdiction of the U.S. courts might not be admitted towards non-U.S.
companies and such companies’ subsidiaries and affiliates.

The Offeror, the respective financial advisor of the Offeror and the Target, and the Tender Offer Agent(including their related parties) may, within their ordinary course of business, purchase, or conduct any act
toward the purchase of, the shares of the Target for their own account or for their customers' accounts
outside the Tender Offer prior to the commencement of the Tender Offer or during the Tender Offer inaccordance with the requirements of Rule 14e-5(b) under the Securities Exchange Act of 1934 of the U.S.
to the extent permitted under the Financial Instruments and Exchange Act and other applicable laws andregulations in Japan. If any information concerning such purchase is disclosed in Japan, the disclosure ofsuch information will be made in English on the website of the person who made such purchase (or otherdisclosing methods.)[Other Countries]
The announcement, issuance, or distribution of this Press Release may be legally restricted in somecountries or territories. In such case, shareholders should be aware of and comply with such restriction. The
announcement, issue or distribution of this Press Release shall not be interpreted as an offer to purchase orsolicitation of an offer to sell shares concerning the Tender Offer, but simply as a distribution of information.

5