[Translation][NOTICE: Please note that the following is a translation of the Japanese language original for
convenience purposes only, and in the event of any discrepancy, the Japanese language original
shall prevail.]August 30, 2017
For immediate release
Company:
Representative:

Nisshinbo Holdings Inc.
President Masaya Kawata

Securities Code:3105
TSE (First Section); NSE (First Section); SSE; FSE

Notice Regarding Absorption-Type Demerger and Sale of Subsidiary Shares by Nisshinbo Brake
Inc. for the Purpose of Transferring the Foundation Brake BusinessAt the Board of Directors meeting held today (August 30, 2017), Nisshinbo Holdings Inc. resolved totransfer (the “Transaction”) the Foundation Brake Business (the “Transferred Business”), part of theAutomobile Brake Business of its consolidated subsidiaries including Nisshinbo Brake Inc.
(“Nisshinbo Brake” or the “Demerging Company”), to Hosei Brake Industry Co., Ltd. (“HoseiBrake Industry”), a major subsidiary of the Aisin Seiki Group (the “Aisin Group”).
The Transaction is intended to consist of the transfer of the assets, liabilities, rights, and obligations
held by Nisshinbo Brake with respect to the Transferred Business to a wholly-owned subsidiary thatNisshinbo Brake will newly establish (the “New Company” or the “Successor Company”) through ademerger (the “Demerger”), followed by the sale of all of the outstanding shares of the New
Company to Hosei Brake Industry (the “Share Sale”).
I.

Purpose of the Transaction
The Nisshinbo Group operates its various businesses with the aim of being a group of“Environment and Energy Companies” that contributes to a secure society by proposing
solutions to the problems that humanity faces, such as environmental degradation and global
warming. As we pursue our growth strategy of unity through diversity, we will first seek tofocus our management resources on automotive and super-smart society businesses.
The Nisshinbo Group’s Brake Business has a 70-year history with a focus on automobile friction
materials. Lauded by automotive manufacturers, the Friction Materials Business reachedannual sales revenue of 130 billion yen through the 2011 acquisition of the prominent European
friction materials manufacturer TMD Friction Group S.A. As part of our core business, weintend to establish and expand business locations to support global production by automotive
manufacturers, and continue to make investments to maintain our strong market position indeveloping and producing friction materials that meet copper regulations.
Meanwhile, the Transferred Business’s sales revenue has remained low, at approximately 15billion yen annually. The future of the brake market is uncertain, partly due to the move toelectric park brakes, and large scale capital expenditure and R&D investment will be necessary inorder to maintain our competitiveness.
In this context, we sought discussions about future technology with a manufacturer that possesses
electric park brake technology, and we found that we could expect the Transferred Business tohave success with the Aisin Group, which possesses brake systems. Having comprehensively
considered aspects such as our growth strategy, the Transferred Business’s prospects within ourgroup, and Hosei Brake Industry’s evaluation of the Transferred Business, we determined that it
would bring further success for the Transferred Business and further satisfaction for our clientsand suppliers for us to sell the Transferred Business to Hosei Brake Industry, an automotive parts
manufacturer which is the world’s top manufacturer of drum brakes and which possesses electricpark brake technology within its group.
Nisshinbo Brake will sell all of the outstanding shares of the New Company after transferring tothe New Company all of the assets (including shares of Nisshinbo Commercial Vehicle Brake(“NCB”)), liabilities, and other rights and obligations held by Nisshinbo Brake with respect to1

[Translation]

the Transferred Business. It has also been determined that, before the Transaction takes place,
Nisshinbo Holdings Inc. will make an in-kind contribution to Nisshinbo Brake of the real estateand other facilities and intellectual property rights that Nisshinbo Holdings Inc. holds inconnection with the Transferred Business, and the employees of Nisshinbo Holdings Inc. who areemployed in the Transferred Business will be transferred to the New Company, and thatsimultaneously with the Transaction, all of the assets, liabilities, and other rights and obligations
held by Nisshinbo Somboon Automotive (a wholly-owned subsidiary of Nisshinbo HoldingsInc.) with respect to the Transferred Business will be transferred to a company newly-establishedin Thailand as a substantively wholly-owned subsidiary of the New Company.
After the Transaction, we will further focus our management resources on automotive andsuper-smart society businesses, especially the Electronics and Friction Materials businesses, andaccelerate our growth strategy to increase corporate value.
Note, however, that the execution of the Transaction is subject to completion of a review ofbusiness combination by the Japan Fair Trade Commission.
Overview of the (Planned) Establishment of the New Company
Company to be Established(1) Trade nameNisshinbo Brake Demerger Preparatory Company (non-final)(2) Business
Development, manufacture and sale of foundation brakes forautomobiles and transport machinery and equipment(3) Address of head office
TBD(4) Representative
Yasuji Ishii (planned)(5) Capital
TBD(6) Date of establishment
September 25, 2017 (planned)(7) Shares outstanding
400 (planned)(8) Accounting year-end
March 31(9) Major shareholders and Nisshinbo Brake Inc.: 100%
their ownership percentages

II.

III. Overview of the Demerger
1. Outline of the Demerger(1)Timeline of the Demerger(i) Resolutions by the Boards of Directors (of both companies)(ii) Execution of the Absorption-Type Demerger Agreement(iii) Extraordinary meeting of shareholders (of both companies)
for approval of the Absorption-Type Demerger Agreement(iv) Execution of the absorption-type demerger (effective date)

September 25, 2017 (planned)
September 25, 2017 (planned)
TBDFebruary 28, 2018 (planned)(2)Form of the Demerger
The Demerger is an absorption-type demerger with Nisshinbo Brake as the demerging
company and the New Company as the successor company.

(3)

Details of stock allotments with respect to the Demerger
The New Company will newly issue 600 shares (planned) of common stock upon the Demerger
for allotment to Nisshinbo Brake.

(4)

Handling of stock acquisition rights and bonds with stock acquisition rights in the Demerger
Nisshinbo Brake has no stock acquisition rights or bonds with stock acquisition rights
outstanding.

(5)

Capital increase or decrease upon the Demerger
Nisshinbo Brake will not increase or decrease its capital.

(6)

Rights and obligations received by the successor company
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[Translation]

The successor company will receive all of the assets (including NCB shares), liabilities, andother rights and obligations held by Nisshinbo Brake with respect to the Transferred Businessto be separately specified in the Absorption-Type Demerger Agreement on the effective date ofthe Demerger.
(7)

Prospects of performing obligations
It has been determined that there are no issues with the prospects of the New Company
performing the obligations that it will assume on the effective date of the Demerger.

Overview of the Companies that are Party to the Demerger (as at March 31, 2017 (for the NewCompany, as of the date of establishment) )Demerging Company:
Successor Company:
Nisshinbo Brake
Nisshinbo Brake Demerger
Preparatory Company(non-final)(1) Name
Nisshinbo Brake Inc.
Nisshinbo Brake Demerger
PreparatoryCompany(non-final)(2) Address
Ningyocho 2-31-11, Nihonbashi,TBD
Chuo-ku, Tokyo(3) Representative’s name Representative Director and Representative Director andand title
President Yasuji Ishii
President Yasuji Ishii (planned)(4) Business
Development,manufacture, Development, manufacture andfinishing, sale, export and import sale of foundation brakes forof brake pads, brakes and brake automobiles
andtransportcomponents for automobiles and machinery and equipment
transportmachineryandequipment(5) Capital
8,000 million yen
TBD(6) Date of establishment
April 1, 2009
September 25, 2017 (planned)(7) Shares outstanding
8,000400 (planned)(8) Accounting year-end
March 31
March 31(9) Major
shareholders Nisshinbo Holdings, Inc.
100% Nisshinbo Brake Inc.
100%and their ownership
percentages(10) Financial status and business performance in the most recent fiscal year (YE March 2017)
Demerging Company
Successor Company (the New[Individual ]Company) [Individual]
Net assets
17,110 million yen
Total assets
27,569 million yen
Net assets per share
2,138,854 yen
Net sales
25,058 million yen
Operating income
1,486 million yen
Ordinary income
1,598 million yen
Net income
566 million yen
Net income per share
70,802 yen-2.

3. Overview of the Division Subject to Demerger(1)
Business of the division subject to demerger
Manufacture and sale of drum brakes for passenger vehicles, commercial vehicles andindustrial machinery, disk brakes for commercial vehicles, and wheel cylinders for passenger
vehicles, and shoe assembly.

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[Translation]

Performance and assets of the division subject to demerger
Transferred Business (a)Company Consolidated
Total (b)Segment sales revenue
14,915 million yen
527,274 million yen
Segment profit
484 million yen
9,211 million yenSegment assets
12,122 million yen
617,096 million yen(2)

Percentage
(a/b)
2.8%
5.3%
2.0%

Note: Figures with respect to the Transferred Business are as at March 31, 2016, and figures with respect to thecompany’s consolidated total are as at March 31, 2017.

Status After the Demerger
Nisshinbo Brake’s name, address, representative name and title, business, capital, and accounting
year-end will not be affected by the Demerger.
4.

IV. Overview of the Share Sale
1. Overview of the Selling Company
As stated in the “Demerging Company” column of “2. Overview of the Companies that are Party
to the Demerger (as at March 31, 2017)” in “III. Overview of the Demerger.”
2. Overview of the Purchaser (as at March 31, 2017)(1)
NameHosei Brake Industry Co., Ltd.
(2)
Address
10 Michigami, Kazuecho, Toyota-shi, Aichi(3)
Representative’s name and President Shizuo Shimanuki
title
(4)
BusinessDevelopment, design, manufacture and sale of automobileparts(5)
Capital
1.2 billion yen(6)Date of establishment
May 1968(7)
Sales revenue
51.7 billion yen (FY 2016)(8)
Major shareholders and theirAisin Seiki Co., Ltd.
53.1%ownership percentages
Toyota Motor Corporation
46.9%
(9)
Relationships between the Capital relationshipNonepurchaser and the Company
Personal relationship
None
Business relationship
None
None
Related party status
3. Number of Shares to be Sold, Sale Price, and Share Ownership Before and After Sale
(1)
Shares held before change
1,000 share of common stock (planned)(Voting rights: 1,000 (planned))(Percentage of voting rights held: 100%)(2)
Shares to be sold1,000 share of common stock (planned)(Voting rights: 1,000 (planned))(3)
Shares held after sale0 shares of common stock(Voting rights: 0)(Percentage of voting rights held: 0%)
Note: The sale price will not be disclosed in consideration of the fact that it is subject to a non-disclosure obligation
under the Share Purchase Agreement with the counterparty to the Share Sale. However, that price was determinedthrough negotiations with the counterparty to the Share Sale, and we consider it to be a fair price.

Timeline of the Share Sale
Board of Directors meeting to approve theShare Purchase Agreement(ii) Execution of the Share PurchaseAgreement
4.
(i)August 30, 2017
August 30, 2017 (planned)4[Translation](iii) Execution of the share saleV.

February 28, 2018 (planned)

Future Prospects
We expect to record a special loss this fiscal year (YE March 2018) as a result of conducting theTransaction. We are currently examining the effects that the Transaction will have on theNisshinbo Group’s performance, including such special loss amount, and will disclose the resultsof that examination promptly once determined.
EndPlease direct all queries with respect to this matter to:
Nisshinbo Holdings Inc. Investor Relations & Public Relations Group
Phone: 03-5695-8854

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