September 10, 2018
Company name

Kaga Electronics Co., Ltd.

Securities code
Head office
Representative
Contact person

8154 First Section of Tokyo Stock Exchange
20 Kandamatsunagacho, Chiyoda‐ku, Tokyo, Japan
President & COO
Ryoichi Kado
Managing Director
Eiji Kawamura

TEL

81‐(0)3‐5657‐0111

Notice Regarding Acquisition of Shares in Fujitsu Electronics Inc. (and Making It a Subsidiary)

At the board of directors meeting held on September 10, 2018, Kaga Electronics Co., Ltd. (TSE:8154, “KagaElectronics” or “the Company”) resolved to acquire shares in Fujitsu Electronics Inc. (the “Target Company”) and to
make the Target Company its subsidiary (the “Share Acquisition”).
1.

Reasons Behind the Share Acquisition
Since its foundation, Kaga Electronics has been expanding the scope of its operations by responding to avariety of customer needs under its corporate philosophy of “Everything we do is for our customers.” As anindependent general trading company with a specialization in electronics, Kaga Electronics is engaged in awide variety of business activities and offers a variety of services to customer both in Japan and abroad,
ranging from the Electronic Parts and Semiconductor business where it distributes electronic parts andsemiconductors by leveraging its expertise in the segment, the EMS business (contracted manufacturing ofelectrical substrates) where it has a competitive advantage in high‐mix low‐volume production, to theInformation Equipment business and New Business where it supports to customers in planning, development
and design of their products, creation of software/ video images, provision of network solutions and othersystem support services.
However, the business environment surrounding the electronics trading industry, where many players arecompeting each other, has been changing more dramatically in recent years on the back of accelerated
consolidation and integration of suppliers including semiconductor/device manufacturers. We believe that thecompetition between electronics trading companies will intensify further in the future as their policy changes
concerning distribution agents, a growing trend that customers shift their assembly of finished products
overseas, changes in demand and supply and also in prices in both domestic and overseas markets, andshortening product lifecycles as a result of ongoing technological innovations.
Under these circumstances, Kaga Electronics developed “Medium‐term Management Plan 2018” (releasedon November 4, 2015), in which the company has attached utmost importance to “establishment of profit‐oriented management.” In accordance with the plan, the company is focused on increasing sales of electronic
devices to existing major customers and expanding the EMS business primarily in overseas markets. The
Share Acquisition this time is part of the efforts to fulfill its growth strategies embodied in the Medium‐termManagement Plan, and is expected to produce the synergies as follows:① Market share expansion for the Electronic Parts and Semiconductor business
Seek to strengthen our abilitiy to respond to customer needs and expand our shares in the electronicparts and semiconductors markets by complementing our offerings and sales channels that KagaElectronics globally develops with those of the Target Company.
② Expansion in scale of the EMS business
Achieve discontinuous growth of the high‐value‐added EMS business, which we are specialized in, byadding the Target Company’s broad customer base, one of its competitive advantages, to our existing- 1 -global network of EMS business bases.
③ Further improvement in management efficiency through collaborationof businesses of the twocompanies
Seek to improve the profitability of both Kaga Electronics and the Target Company by optimizing andsharing, to the greatest extent possible, their sales related organizations and other functions.
Post the Share Acquisition, we evolve into a corporate group with total net sales of about 500 billion yen
and can solidify our management foundation towards the goal of becoming the “industry leader in Japan,” as
set out in its Medium‐term Management Plan. Also, by leveraging this solid management foundation andthrough continued efforts to expand the group’s scale and improve its management quality, we seek toachieve sustainable growth as a world‐class company which can stand up to overseas competitors with theirsales crossing the trillion yen mark.

2. Overview of the Target Company (Fujitsu Electronics Inc.)
(1)

Name

(2)

Address of Head Office(3)

Representative’s title andname

Fujitsu Electronics Inc.
Shin‐Yokohama Chuo Building, 2‐100‐45, Shin‐Yokohama, Kohoku‐ku,
Yokohama, Kanagawa Prefecture, Japan
President and Representative Director Junji Ogihara(4)

Business

Design, development and sale of electronic devices(5)

Capital4,878 million yen(6)Date of establishment

May 2, 1952

(7)

(8)

(9)

Major shareholders andtheir ownership ratios
Relationships with Kaga
Electronics Co., Ltd.

Fujitsu Semiconductor Limited
Capital relationships

None

Personal relationships

None

Business relationships

100%

Concerned has some business relations with Kaga
Electronics

Consolidated business performance and financial position over the last three years

Fiscal period

FYE March 2016

FYE March 2017

FYE March 2018

Consolidated net assets

33,092 million yen

35,691 million yen

35,379 million yen

Consolidated total assets

98,316 million yen

93,063 million yen

92,516 million yen

1,243 yen

1,340 yen

1,329 yen323,569 million yen

242,797 million yen

258,703 million yen

Consolidated operating income

6,138 million yen

3,719 million yen

2,631 million yen

Consolidated ordinary income

5,896 million yen

3,841 million yen

2,232 million yen

3,888 million yen

2,979 million yen

1,547 million yen

146 yen112 yen58 yen‐ yen

16 yen

68 yenConsolidated net assets pershareConsolidated net sales

Ordinary income attributable toowners of parent
Consolidated net income pershare
Dividends per share

Note : Fujitsu Electronics plans to pay a cash dividend of 10 billion yen (“the cash dividend”) during fiscal year
ending March 31, 2019, prior to the Phase 1 as described later.

- 2 -3. Overview of the Selling Shareholder
(1)

Name

(2)

Address of head office(3)

Representative’s title andname

Fujitsu Semiconductor Limited
Shin‐Yokohama Chuo Building, 2‐100‐45, Shin‐Yokohama, Kohoku‐ku,
Yokohama, Kanagawa Prefecture, Japan
President and Representative Director

Kagemasa Magaribuchi(4)

BusinessBusinesses related to system memories, wafer foundry and sales(5)

Capital60,000 million yen(6)Date of establishment

March 21, 2008(7)

Net assets

88,922 million yen(8)

Total assets

107,474 million yen

(9)

(10)

Major shareholders andtheir ownership ratios

Fujitsu Limited

100%

Capital relationships

None

Relationships with Kaga

Personal relationships

None

Electronics Co., Ltd.

Business relationships

None

Related party status

None

4. Number of Shares to Be Acquired, Acquisition Price and Share Ownership Before and After Acquisition(1)

Shares held before the0 shareacquisition(Voting rights: 0, Percentage of voting rights held: 0%)
Phase 1: 18,641,972 shares (Voting rights: 18,641)(2)

Shares to be acquired

Phase 2: 3,995,000 shares (Voting rights: 3,995)
Phase 3: 3,995,000 shares (Voting rights: 3,995)
Shares of common stock in Fujitsu Electronics Inc.

(3)

Acquisition price

20,413 million yen
130 million yen

Advisory and other fees (estimate)

20,543 million yen

Total (estimate)Phase 1:18,641,972 shares(Voting rights: 18,641, Percentage of voting rights held: 70.0%)(4)

Shares held after theacquisition

Phase 2:22,636,972 shares(Voting rights: 22,636, Percentage of voting rights held: 85.0%)
Phase 3
26,631,972 shares(Voting rights: 26,631, Percentage of voting rights held: 100.0%)

Note 1: In orderfor Fuji Electronics to continue operating smoothly within our group, the Share Acquisition will becompleted through three phases of share transfer. Phase 1 is scheduled to take place on January 1, 2019, Phase 2 on
December 28, 2020 and Phase 3 on December 28, 2021 and upon completion of the three phases of share transfer,
Fujitsu Electronics becomes a wholly‐owned subsidiary of Kaga Electronics.
Note 2: The acquisition price for each phase, based on the agreement of the Share Acquisition, is scheduled to be theprice that is adjusted for such changes in the amount of consolidated net assets of the Target Company. Therefore,(3) Acquisition Price is the estimate of the total acquisition price (after paying the cash dividend).

- 3 -5. Timeline of the Share Acquisition(1)

Board of directors
meeting(2)Execution of theagreement(3)

Execution of the ShareAcquisition

September 10, 2018
September 10, 2018
Phase 1: January 1, 2019 (scheduled)
Phase 2: December 28, 2020 (scheduled)
Phase 3: December 28, 2021 (scheduled)

6. Overview of the Target Company after the Share Acquisition
(1)

Name

Fujitsu Electronics Inc.

(2)

Address of head office

Shin‐Yokohama Chuo Building, 2‐100‐45, Shin‐Yokohama, Kohoku‐ku,
Yokohama, Kanagawa Prefecture, Japan(3)

Representative’s title andChairman and Representative Director Isao Tsukamoto

namePresident and Representative Director Junji Ogihara

7. Financing
Kaga Electronics intends to finance the Share Acquisition with cash on hand and new bridge loans. As forthe bridge loans, the company will consider refinancing to a variety of longer‐term funds.

8. Future Prospects
The effects that the Share Acquisition will have on the business performance of Kaga Electronics arecurrently under review. If matters to be disclosed arise, such matters will be disclosed promptly.

End- 4 -