This document is the English translation of the official Japanese version of the Press Release (“Official
Japanese Version”). This English translation was prepared for your reference, to help you understandwhat is stated in the Official Japanese Version. In the event of any discrepancy between the Official
Japanese Version and the English translation, the Official Japanese Version will prevail.
March 10, 2023
To Whom It May Concern,
Company name:
Representative:
Stock listing
Code number:Contact:

Nippon Steel Corporation
Eiji Hashimoto,
Representative Director and President
Prime Market of Tokyo Stock Exchange / Nagoya Stock
Exchange / Fukuoka Stock Exchange / Sapporo Securities
Exchange
5401
Shinnosuke Arita, General Manager, Public Relations Center(Telephone: +81-3-6867-2135, 2146, 2977, 3419)

Notice Regarding Commencement of Tender Offer for
Shares of Nippon Steel Trading Corporation (Securities Code: 9810)
As announced in the “Notice Regarding Planned Commencement of Tender Offer for Shares of Nippon
Steel Trading Corporation (Securities Code: 9810)” dated December 21, 2022 (the “Tender Offeror Press
Release Dated December 21, 2022”), Nippon Steel Corporation (the “Tender Offeror”), at its board of
directors’ meeting held on December 21, 2022, resolved to acquire the shares of common stock (the“Target Company Shares”) of Nippon Steel Trading Corporation (Securities Code: 9810, Prime Marketof Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”); the “Target Company”) through a tender
offer (the “Tender Offer”) under the Financial Instruments and Exchange Act of Japan (Act No. 25 of1948, as amended; the “Act”).
It was planned that the Tender Offer would be promptly commenced if certain conditions precedent (fordetails, please refer to (Note 1) below; such conditions precedent shall be referred to as the “Conditions
Precedent”) were fulfilled (or if such conditions were waived by the Tender Offeror), such as thecompletion of necessary procedures and actions required by domestic and overseas (Japanese, Chinese,
Taiwanese, Turkish, Mexican, U.S., and Vietnamese) competition laws, based on the expectation that acertain period would be required to complete such procedures and actions; the Tender Offeror aimed tocommence the Tender Offer by around late February 2023. However, as announced in the “NoticeRegarding Progress Toward Implementation of Tender Offer for Shares of Nippon Steel Trading
Corporation (Securities Code: 9810)” dated February 27, 2023 (the “Tender Offeror Press Release Dated
February 27, 2022”), as of then, not all of the necessary procedures and actions under domestic andoverseas competition laws toward implementation of the Tender Offer had been completed, andtherefore, the Tender Offeror estimated that the Tender Offer would be commenced during March 2023.
Since the Tender Offeror confirmed that all of the Conditions Precedent were fulfilled, including theacquisition of clearances under domestic and overseas (Japanese, Chinese, Taiwanese, Turkish,
Mexican, U.S., and Vietnamese) competition laws, it hereby announces that on March 10, 2023, theTender Offeror decided to commence the Tender Offer on March 13, 2023.
(Note 1)The “Conditions Precedent” are: (1) the acquisition of clearances necessary for the
implementation of the Transaction (defined in “(1) Overview of the Tender Offer” of “1.
Purpose of the Purchase” below; hereinafter the same) under competition laws has been
completed (Note 2); (2) the Target Company’s board of directors has adopted a resolution toexpress its opinion in support of the Tender Offer, and to recommend that the Target

Company’s shareholders tender in the Tender Offer, and the resolution is valid at the time of
the commencement of the Tender Offer without any amendment, addition, or correction; (3)the Target Company’s special committee, which looked into the Transaction, has submitted
a positive report to the Target Company’s board of directors with regard to its support of theTender Offer, recommendation to the Target Company’s shareholders to tender in the Tender
Offer, and the implementation of the Transaction, and the contents of such report are valid at
the time of the commencement of the Tender Offer without any amendment, addition, or
correction; (4) the Shareholders Agreement (defined in “(1) Overview of the Tender Offer”
of “1. Purpose of the Purchase” below; hereinafter the same) has been effectively executedand remains effective; (5) the representations and warranties of Mitsui & Co., Ltd. (“Mitsui& Co.”) (Note 3) set forth in the Shareholders Agreement are true and accurate in all material
respects; (6) no part of the Transaction breaches any laws or regulations, etc., no petition,
litigation, or proceedings are pending before juridical and government agencies seeking thelimitation or prohibition of any part of the Transaction, there is no decision rendered byjuridical and government agencies to limit or prohibit any part of the Transaction, and there
is no specific likelihood thereof; (7) there are no material facts (Article 166, paragraph (2)of the Act) regarding the Target Company’s operations that the Target Company has notdisclosed (Article 166, paragraph (4) of the Act); (8) there has been no material change inthe business or property of the Target Company or the subsidiary thereof, or any othercircumstance that would significantly compromise its ability to achieve the purpose of theTender Offer, set forth in the proviso to Article 27-11, paragraph (1) of the Act; and (9) noother circumstance has occurred or has been discovered, which makes it objectively
impossible or extremely difficult to implement the Transaction.
(Note 2)This means the approval or expiration of the waiting period for the notifications under thecompetition laws of Japan, China, Taiwan, Turkey, Mexico, U.S., and Vietnam.

(Note 3)For details of Mitsui & Co.’s representations and warranties pursuant to the Shareholders
Agreement, please refer to “(6) Items Regarding Material Agreements Related to the Tender
Offer” of “1. Purpose of the Purchase” below.

1.

Purpose of the Purchase(1)

Overview of the Tender Offer

The Tender Offeror, as of today, is the largest shareholder of the Target Company, directly owning
11,141,529 shares (ownership ratio (Note 1): 34.54%) of the Target Company Shares listed on the Prime
Market of the Tokyo Stock Exchange. The Tender Offeror has made the Target Company an equitymethod affiliate by owning 11,316,229 shares (ownership ratio: 35.08%) of the Target Company Shares(Note 2), including the amount indirectly owned through the Tender Offeror’s wholly-owned
subsidiaries (Nippon Steel Metal Products Co., Ltd. (number of shares held: 129,800 shares, ownership
ratio: 0.40%), Nippon Steel Logistics Co., Ltd. (number of shares held: 8,400 shares, ownership ratio:
0.03%), and Nippon Steel SG Wire Co., Ltd. (number of shares held: 4,400 shares, ownership ratio:
0.01%)), and the Tender Offeror’s consolidated subsidiaries (Oji Steel Co., Ltd. (number of shares held:
20,000 shares, ownership ratio: 0.06%), Sanyo Special Steel Co., Ltd. (number of shares held: 7,700
shares, ownership ratio: 0.02%), and Nippon Steel Cement Co., Ltd. (number of shares held: 4,400
shares, ownership ratio: 0.01%)).
(Note 1)The “ownership ratio” refers to the ratio to the number of shares (32,257,267 shares) obtainedby subtracting the number of treasury shares owned by the Target Company as of December
31, 2022 (50,533 shares) as notified by the Target Company to the Tender Offeror from thetotal number of issued shares as of December 31, 2022 as described in the Target Company’s
46th third quarterly report submitted by the Target Company on February 14, 2023 (the“Target Company’s Third Quarterly Report”) (32,307,800 shares) (rounded to the nearest
hundredth, which also applies with regard to subsequent descriptions of ownership ratio).

-2-(Note 2)

The Tender Offeror has confirmed that Nippon Steel Metal Products Co., Ltd., Nippon Steel
Logistics Co., Ltd., Nippon Steel SG Wire Co., Ltd., Oji Steel Co., Ltd., Sanyo Special SteelCo., Ltd., and Nippon Steel Cement Co., Ltd. intend to tender the Target Company Shares it
owns (174,700 shares) in the Tender Offer.

As announced in the Tender Offeror Press Release Dated December 21, 2022, at the board of directors’
meeting held on December 21, 2022, the Tender Offeror resolved to implement the Tender Offer if theConditions Precedent, including the completion of acquisition of all clearances under domestic andoverseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., and Vietnamese) competition laws,
are fulfilled (or waived by the Tender Offeror), as part of a transaction intended to acquire all of theTarget Company Shares (excluding, however, the Target Company Shares owned by the Tender Offeror
and Mitsui & Co., as well as the treasury shares owned by the Target Company) and to make the Target
Company a consolidated subsidiary of the Tender Offeror, as well as to make the Tender Offeror and
Mitsui & Co. the only shareholders of the Target Company, and the voting rights holding ratios of theTender Offeror and Mitsui & Co. in the Target Company 80.00% and 20.00%, respectively (the “Voting
Rights Ratio”), after the Target Company is delisted (the “Transaction”).
The Tender Offeror aimed to commence the Tender Offer by around late February 2023. However, as
announced in the Tender Offeror Press Release Dated February 27, 2022, as of then, not all of thenecessary procedures and actions under domestic and overseas competition laws toward implementationof the Tender Offer had been completed, and therefore, the Tender Offeror estimated that the Tender
Offer would be commenced during March 2023. On March 10, 2023, the Tender Offeror confirmedthat all of the Conditions Precedent were fulfilled as described below; therefore, on March 10, 2023, theTender Offeror decided to commence the Tender Offer on March 13, 2023.
(i)
Regarding the acquisition of clearances under domestic and overseas (Japanese,
Chinese, Taiwanese, Turkish, Mexican, U.S., and Vietnamese) competition laws, basedon the fact that on February 28, 2023, the Tender Offeror received a document approving
the acquisition of the Target Company Shares through the Tender Offer (the “Share
Acquisition”) issued by the Mexican Federal Economic Competition Commission as ofFebruary 27, 2023 (local time), the Tender Offeror confirmed that the acquisition ofclearances under competition laws required to implement the Transaction wascompleted and that it became possible to implement the Share Acquisition.
(ii)

The Tender Offeror was informed by the Target Company that the Target Company, atits board of directors’ meeting held on March 10, 2023, again resolved to express its
opinion in support of the Tender Offer and to recommend that the Target Company’s
shareholders tender their shares in the Tender Offer, and that the resolution is valid
without any amendment, addition, or correction; upon being informed as such, on March
10, 2023, the Tender Offeror confirmed that such resolution was adopted and that it isvalid without any amendment, addition, or correction.

(iii)

The Tender Offeror was informed by the Target Company that the Target Company’s
special committee confirmed that considering the circumstances on and after December
21, 2022 until March 10, 2023, there were no circumstances that would require a change
in its positive report regarding the support of the Tender Offer, the recommendation to
the Target Company’s shareholders to tender their shares in the Tender Offer, and theimplementation of the Transaction; that the special committee submitted to the Target
Company’s board of directors an additional report to the effect that it considers that
there is no need to change the contents of the above-mentioned report based on an
unanimous resolution on March 10, 2023 (the “Report Dated March 10, 2023”); andthat the contents of the Report Dated March 10, 2023 are valid without any amendment,
addition, or correction. Upon being informed as such, on March 10, 2023, the Tender
Offeror confirmed that the Report Dated March 10, 2023 was submitted to the Target-3-Company’s board of directors and that the contents of the report are valid without any
amendment, addition, or correction.
(iv)

As of March 10, 2023, the Shareholders Agreement is effectively executed and remains
effective.

(v)

Since the Tender Offeror did not receive any notice regarding any fact of, or any
recognized specific possibility of, a violation of Mitsui & Co.’s representations andwarranties specified in the Shareholders Agreement from Mitsui & Co. on and after
December 21, 2022 until March 10, 2023, as of March 10, 2023, the Tender Offeror has
concluded that the representations and warranties are true and accurate in all material
respects.

(vi)

The Tender Offeror was informed by the Target Company that, as of March 10, 2023,
no petition, litigation, or proceedings are pending before judicial and government
agencies seeking the limitation or prohibition of any part of the Transaction, that there
is no decision rendered by juridical and government agencies to limit or prohibit any
part of the Transaction, and that there is no specific likelihood thereof; upon being
informed as such, on the same day, the Tender Offeror has concluded that no such event
has occurred.

(vii)

The Tender Offeror was informed by the Target Company that as of March 10, 2023,
there is no “material fact about business” of the Target Company that is not “disclosed”
by the Target Company; upon being informed as such, on the same day, the Tender
Offeror has concluded that there are no “material facts regarding the operations” of theTarget Company that is not “disclosed” by the Target Company.

(viii)The Tender Offeror was informed by the Target Company that as of March 10, 2023, nomaterial change has occurred in the business or property of the Target Company or its
subsidiary or no other circumstances have occurred that would significantly
compromise its ability to achieve the purpose of the Tender Offer, set forth in the proviso
to Article 27-11, paragraph (1) of the Act; upon being informed as such, on the sameday, the Tender Offeror has concluded that no such event has occurred.

(ix)

The Tender Offeror was informed by the Target Company that as of March 10, 2023, noother circumstances have occurred or have been discovered, which makes it objectively
impossible or extremely difficult to implement the Transaction; upon being informed assuch, on the same day, the Tender Offeror has concluded that no such event has occurred.

Upon the Tender Offer, the Tender Offeror executed a shareholders agreement (the “Shareholders
Agreement”) as of December 21, 2022 with Mitsui & Co., which is the second largest shareholder of
the Target Company owning 6,428,800 shares (ownership ratio: 19.93%) of the Target Company Sharesand of which the Target Company is an equity-method affiliate, and agreed to not tender any of theshares held by Mitsui & Co. in the Tender Offer (the “Non-Tender Clause”), and to implement a seriesof procedures to make the Tender Offeror and Mitsui & Co. the only shareholders of the Target Company(the “Squeeze-Out Procedures”) as well as necessary measures, if any, to realize the Voting Rights Ratio
after the implementation of the Squeeze-Out Procedures. For the outline of the Shareholders
Agreement, please refer to “(6) Items Regarding Material Agreements Related to the Tender Offer”
below.
In the Tender Offer, the Tender Offeror set the minimum planned purchase quantity at 3,934,571 shares(ownership ratio: 12.20%), and if the total number of shares tendered in the Tender Offer (the “Tendered
Shares”) does not reach the minimum planned purchase quantity, the Tender Offeror will not purchaseany of the Tendered Shares. On the other hand, as the Tender Offeror aims to acquire all of the Target
Company Shares (excluding, however, the Target Company Shares owned by the Tender Offeror and-4-

Mitsui & Co. and treasury shares owned by the Target Company), make the Tender Offeror and Mitsui& Co. the only shareholders of the Target Company, and delist the Target Company Shares, the Tender
Offeror did not set a maximum planned purchase quantity. Thus, if the total number of the Tendered
Shares exceeds the minimum planned purchase quantity (3,934,571 shares), the Tender Offeror willpurchase all of the Tendered Shares. The minimum planned purchase quantity (3,934,571 shares)(ownership ratio: 12.20%) was set as the number obtained by (i) subtracting the number of treasury
shares owned by the Target Company as of December 31, 2022 (50,533 shares) as notified by the Target
Company to the Tender Offeror, from the total number of issued shares of the Target Company as ofDecember 31, 2022 as described in the Target Company’s Third Quarterly Report (32,307,800 shares);this amounts to 32,257,267 shares, then (ii) rounding up the number that is less than one unit (100 shares)of the number of shares equivalent to two-thirds of the number of shares of (i); this amounts to
21,504,900 shares, and then (iii) subtracting the number of the Target Company Shares owned by theTender Offeror as of today (11,141,529 shares) and the number of the Target Company Shares owned
by Mitsui & Co. (6,428,800 shares) from 21,504,900 shares, which equals 3,934,571 shares. The
Transaction aims to delist the Target Company Shares and make the Tender Offeror and Mitsui & Co.
the only shareholders of the Target Company, and when implementing the procedures for the shareconsolidation (the “Share Consolidation”) as described in “(4) Post-Tender Offer Reorganization Policy(Matters Regarding a So-called “Two-Step Acquisition”)” below pursuant to Article 180 of theCompanies Act (Act No. 86 of 2005, as amended; the “Companies Act”), a special resolution of theshareholders’ meeting as set forth in Article 309, paragraph (2) of the Companies Act is required.
Therefore, in order to ensure the execution of the procedures for the Share Consolidation, the minimum
planned purchase quantity was set as to allow the Tender Offeror and Mitsui & Co. to own two-thirds
or more of the number of voting rights of all shareholders of the Target Company after the Tender Offer.
If the Tender Offeror fails to acquire all of the Target Company Shares (excluding, however, the Target
Company Shares owned by the Tender Offeror and Mitsui & Co., as well as the treasury shares ownedby the Target Company) during the Tender Offer, the Tender Offeror will implement the Squeeze-Out
Procedures after the completion of the Tender Offer, as described in “(4) Post-Tender Offer
Reorganization Policy (Matters Regarding a So-called “Two-Step Acquisition”)” below to make theTender Offeror and Mitsui & Co. the only shareholders of the Target Company.
According to the “Declaration of Opinion in Support of the Planned Commencement of the Tender Offer
for the Shares of the Company by Nippon Steel Corporation (a Related Company of the Company) andRecommendation for the Tender Offer” announced by the Target Company on December 21, 2022 (the“Target Company Press Release Dated December 21, 2022”), at the Target Company’s board of directors
meeting held on December 21, 2022, the Target Company resolved to express its opinion as of that dateto support the Tender Offer and to recommend that the shareholders of the Target Company tender theirshares in the Tender Offer if the Tender Offer is commenced. Furthermore, in the above-mentioned
board of directors meeting, it was resolved that the Target Company is to follow the following procedure
in expressing its opinion: as stated in “(iii) Details of the Decision” of” “(ii) Process of and Reasons forthe Decision Making by the Target Company” of “(II) Background, Purpose and Decision-Making
Process Leading to the Decision to Implement the Tender Offer,” when the Tender Offer is to commence,
the Target Company will request that the special committee, established by the Target Company,
examine whether there are any changes in the contents of the report that the special committee made to
the Target Company’s board of directors as of December 21, 2022, and if there is no change, state tothat effect; alternatively, if there is any change, report the changed contents to the board of directors;
and based on such opinion of the special committee, the Target Company is to re-express its opinion
regarding the Tender Offer at the time of commencement of the Tender Offer. In addition, according
to the “Declaration of Opinion in Support of the Tender Offer for the Shares of the Company by Nippon
Steel Corporation (a Related Company of the Company) and Recommendation for the Tender Offer”
announced by the Target Company on March 10, 2023 (together with the Target Company Press Release
Dated December 21, 2022, collectively, the “Target Company Press Releases”), at its board of directors’
meeting held on March 10, 2023, the Target Company again resolved to express its opinion in supportof the Tender Offer and to recommend that the Target Company’s shareholders tender their shares in theTender Offer. For the details of the resolutions at the Target Company’s board of directors’ meetings-5-held on December 21, 2022 and March 10, 2023, please refer to the Target Company Press Releases and“(VIII) Approval of All Directors of the Target Company Without Conflicts of Interest and Opinions by
All Audit and Supervisory Board Members of the Target Company that it had No Objection” in “(3)Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of the Tender
Offer Price as Well as Measures to Avoid Conflicts of Interest.”(2)

Background, Purpose and Decision-Making Process Leading to the Decision to Implement theTender Offer, and Post-Tender Offer Management Policy(I)

Background, Purpose and Decision-Making Process Leading to the Decision to Implement theTender Offer

The Tender Offeror was established as Yahata Iron & Steel Co., Ltd. and Fuji Iron & Steel Co., Ltd.,
respectively, on April 1, 1950, and was renamed to Nippon Steel Corporation (Shin-nippon Seitetsu
Kabushiki Kaisha) upon the merger of the two companies on March 31, 1970. After conducting anabsorption-type merger with Sumitomo Metal Industries, Ltd. (established on July 1, 1949) on October
1, 2012, where Sumitomo Metal Industries, Ltd. was the absorbed company, Nippon Steel Corporation(Shin-nippon Seitetsu Kabushiki Kaisha) was renamed to Nippon Steel & Sumitomo Metal Corporation;
then, on April 1, 2019, it was renamed to the current trade name, Nippon Steel Corporation (Nippon
Seitetsu Kabushiki Kaisha). Most recently, on April 1, 2020, the Tender Offeror conducted anabsorption-type merger with Nippon Steel Nisshin Co., Ltd., where Nippon Steel Nisshin Co., Ltd. wasthe absorbed company. The Tender Offeror was listed on the Tokyo Stock Exchange and Nagoya Stock
Exchange, Inc. on October 2, 1950, on the Securities Membership Corporation Fukuoka Stock Exchange
on October 5, 1950, and then on the Securities Membership Corporation Sapporo Securities Exchange
on January 21, 1952, respectively. As of today, shares of the Tender Offeror are listed on the Prime
Market of the Tokyo Stock Exchange, the Premier Market of Nagoya Stock Exchange, Inc., Securities
Membership Corporation Fukuoka Stock Exchange, and Securities Membership Corporation Sapporo
Securities Exchange, respectively.
As of December 31, 2022, the Tender Offeror has 368 consolidated subsidiaries and 100 equity-method
affiliates including the Target Company (the Tender Offeror, its consolidated subsidiaries, and its equitymethod affiliates shall be collectively referred to as the “Tender Offeror Group”). The Tender Offeror
Group adopts a four segment structure, namely, the steelmaking and steel fabrication business , whichis the main segment, the engineering and construction business, the chemicals and materials business,and the system solutions business. The Tender Offeror Group has formulated a medium- to long- term
management plan (for fiscal year 2021 to 2025) as of March 5, 2021 (the “Tender Offeror Management
Plan”), with the aim of continually growing to become “the best steelmaker with world-leading
capabilities” that contributes to Japan’s industrial competitiveness from the present and into the future,
based on their values to “pursue world-leading technologies and manufacturing capabilities, andcontribute to society by providing excellent products and services.” In the Tender Offeror Management
Plan, the following four pillars are described: (i) “Rebuilding our domestic steel business andstrengthening our group’s management,” (ii) “Promoting a global strategy to deepen and expand ouroverseas business,” (iii) “Taking on the challenge of carbon-neutral (Note 1),” and (iv) “Promoting
digital transformation strategies.”(Note 1)

“Carbon-neutral” means to make the total “emission” of greenhouse gases including carbon
dioxide, practically zero after subtracting the “absorbed amount” by tree plantation,
forestry management, etc.

The Target Company was established on August 2, 1977 as Nittetsu Shoji Co., Ltd., as a wholly-owned
subsidiary of the Tender Offeror (the trade name at that time was “Nippon Steel Corporation (Shinnippon Seitetsu Kabushiki Kaisha)”). On October 1, 2013, the Target Company conducted anabsorption-type merger with Sumikin Bussan Kaisha, Ltd. (“Sumikin Bussan”), an equity-method
affiliate of the Tender Offeror, with Sumikin Bussan being the absorbed company (“Absorption-typeMerger (Sumikin Bussan)”), and changed its trade name to Nippon Steel & Sumikin Bussan-6-Corporation. Most recently, the Target Company changed its trade name to Nippon Steel Trading
Corporation on April 1, 2019. The Target Company was listed on the Second Section of the Tokyo
Stock Exchange on December 21, 1990, and on the Second Section of Osaka Securities Exchange Co.,
Ltd. in October 1991, respectively (delisted from the Osaka Securities Exchange Co., Ltd. on February
9, 2004). On April 12, 2010, the Target Company was designated to the First Section of the Tokyo
Stock Exchange, and is listed on the Prime Market of the Tokyo Stock Exchange since April 4, 2022.
According to the Target Company Press Releases, as of December 31, 2022, the Target Company has
83 subsidiaries and 44 affiliates (the Target Company and its subsidiaries and affiliates shall becollectively referred to as the “Target Company Group”), and as the Tender Offeror’s lineal trading
company, the Target Company has intended to expand its businesses in the steel business and peripheralbusiness, by sharing an organic strategy with the Tender Offeror Group. The Target Company Groupbelongs to the Tender Offeror Group, which is an “any other affiliate” of the Target Company, and with
the Target Company as its core, mainly conducts businesses including steel, industrial supply andinfrastructure, textiles, foodstuff, and sales and import and export of other products, in Japan and othercountries.
With regard to the steel business, which is the Target Company Group’s core business, an integrated
service is provided, from raw material procurement to product delivery to customers, by using its
domestic and overseas sales network. The Target Company Group transacts with products made by
the Tender Offeror Group, and provides the steel products to customers by using the sales network built
since establishment, and the processing and distribution network such as the coil center. Furthermore,
to ensure customer-oriented sales, the Target Company Group further strengthens its solution function
to grasp customers’ diversifying and advancing requirements in a timely manner and resolve them. The
Target Company Group also shares strategies with steel manufacturers, and thereby invests its
management resources into growth areas where an increase in demand is expected, and pursues thecreation of a suggestion-type sales, creating a new added value in the steel distribution. With regard
to the Target Company Group’s textiles business, by focusing on OEM production (production of otherbrands) for apparel manufacturers, it is strengthening its function as a manufacturer-oriented trading
company, undertaking material development throughout product planning, production, and logistics in
an integrated manner.
On April 2, 2018, the Target Company acquired part of Mitsui & Co.’s steel business for the purpose offurther growth and development of the steel business and conducted a new share issuance through athird party allocation to Mitsui & Co. (number of issued new shares: 1,350,000 shares (shareholding
ratio (Note 2): 4.18%)) with the aim to strengthen the capital relationships between the companies.
Mitsui & Co. acquired the Target Company’s new shares (1,350,000 shares (shareholding ratio: 4.18%))
by the third party allocation stated above, after it acquired 69,600 shares from purchase through theTokyo Stock Exchange Trading NeTwork System-1 (ToSTNet-1) on January 25, 2018 (shareholding
ratio: 0.22%), 65,000 shares from SNT Corporation on the same date (shareholding ratio: 0.21%),
1,175,910 shares from Air Water Inc. and six other companies on January 26, 2018 (shareholding ratio:
3.80%), and 385,160 shares from Kyoei Steel Ltd. on January 31, 2018 (shareholding ratio: 1.24%), by
negotiation outside of the stock market. Therefore, in addition to the 3,383,100 shares (shareholding
ratio: 10.93%) that it originally held due to an acquisition of Target Company Shares and the Target
Company’s class shares by a capital increase by the Target Company (the trade name at that time was
Nittetsu Shoji Co., Ltd.) through a third-party allocation in October 2002, a conversion of Target
Company’s class shares into ordinary shares in October 2007, and other partial sales of Target Company
Shares on the market, Mitsui & Co. ended up holding a total of 6,428,770 Target Company Shares(shareholding ratio: 19.90%), and on April 2, 2018, the Target Company became an equity-method
affiliate of Mitsui & Co. Subsequently, on April 27, 2018, Mitsui & Co. made a demand for the saleof share less than one unit and acquired 30 shares (shareholding ratio: 0.00%), which resulted in thenumber of Target Company Shares held by Mitsui & Co to become 6,428,800 shares (shareholding ratio:
19.90%), and as of today, Mitsui & Co. holds 6,428,800 shares (ownership ratio: 19.93%). As such,by acquiring a part of Mitsui & Co.’s steel business, the Target Company will (i) upgrade and expand
the steel business by mutually utilizing the knowledge, comprehensive capabilities, and value chain that-7-

the two companies built, providing better services to clients, combining and mutually supplementing thesales force, customer bases, and the products and services that the two companies each excel at, andsales network and manufacture sites, as well as (ii) enhance its business competitiveness by exercising
its comprehensive capabilities and synergetic effects. Furthermore, in order to capture demands of not
only the Japanese-affiliated companies but also regional companies in the overseas market, the Target
Company and Mitsui & Co. will also aim to fully utilize the business foundation and businesscompetitiveness of both company groups, and to be the best partner that could plan and propose totalsolutions that match the global needs of various customers around the world.
(Note 2)The “shareholding ratio” refers to the ratio of the total number of shares issued by the Target
Company as of each date, rounded to the nearest hundredth (please note that the number oftreasury shares has not been subtracted from the total number of issued shares, as it is difficult
to figure out the number of treasury shares as of each timing), which also applies with regard
to subsequent descriptions of shareholding ratio.

Furthermore, the Target Company has agreed on a partnership in the textiles businesses, between the
textiles business of the Target Company and Mitsui Bussan I-Fashion Ltd. (“Mitsui Bussan I-Fashion”),
a consolidated subsidiary of Mitsui & Co., centered on their integration. On August 25, 2021, Mitsui& Co. and Mitsui Bussan I-Fashion entered into (1) a shareholders agreement regarding the textiles
business partnership, (2) an integrated master agreement regarding the integration of the Target
Company’s textiles division and Mitsui Bussan I-Fashion, and (3) an absorption-type demerger
agreement (simple absorption-type demerger) making the Target Company’s textiles business be
succeeded by Mitsui Bussan I-Fashion, and on January 1, 2022, a new integrated company MN InterFashion Ltd. (“MN Inter-Fashion”) was established (investment ratio: Target Company 50%, Mitsui &Co. 50%). The Target Company will mutually and supplementally utilize the management resourcesof the Target Company and Mitsui & Co. and construct a stronger business foundation, for the purposeof promoting the collaboration between the Target Company and Mitsui & Co. with MN Inter-Fashion
as its core, and thereby realizing each of “strengthening of the OEM business foundation, the corebusiness,” “creation of business opportunity for new growth areas,” and “deepening of value provision
to customers,” and also, the Target Company will aim to realize continuous growth and enhancement ofcorporate value by creating new business opportunities. MN Inter-Fashion set their management
philosophy in October 2022 as “Purpose, Vision, Values,” and they will aim to grow with a new business
policy.
In addition, the Target Company formulated a new medium- to long-term management plan as of May
10, 2021 (the “Target Company Management Plan”), with the aim of overcoming structural changes
anticipated in the business environment in the future and becoming a “strong growth company that
contributes to the society” through the supply of socially valuable products and services. According
to the Target Company Management Plan, the Target Company aims to realize a consolidated ordinary
profit of 42 billion yen and net profit attributable to the parent company shareholders of 26 billion yen
in fiscal year 2023, and a consolidated ordinary profit of 45+α billion yen and net profit attributable tothe parent company shareholders of 28+α billion yen in fiscal year 2025 (the actual performance in fiscal
year 2021 was a consolidated ordinary profit of 47.8 billion yen, and net profit attributable to the parent
company shareholders of 35.4 billion yen). Further, according to the Target Company Management
Plan, as the business environment surrounding the Target Company, in the steel market, domestic
demand for steel material is expected to decrease due to factors such as population decline, while
competition within international markets is expected to intensify even further hereafter. In addition, in
the textile market, the domestic apparel market, which is the Target Company’s main target, is also
expected to continue shrinking due to population decline, etc. Meanwhile, a new demand in response
to social needs including SDGs (Sustainable Development Goals), and global demand for steel products
particularly in Asia and North America is expected to expand. As a core trading company of the Tender
Offeror, who aims to become “the best steelmaker with world-leading capabilities,” the Target Company
has up until now expanded its business operations mainly by developing the trading business, i.e.,
procuring and selling products, domestically and globally, mainly in the steel business, as well as
industrial supply & infrastructure, textiles, and foodstuff industries. However, given the structural-8-

deterioration in the business environment as stated above, the Target Company believes that it is difficult
to continue the existing business model based on the current scale of fixed costs. To accurately respondto such situation, the Target Company aims to implement measures to strengthen the business foundation
to drastically improve the value-added productivity of the group employees, and to reorganize, integrate,or withdraw, etc. from the Target Company Group’s manufacturing and sales bases, thereby reducing
the scale of fixed costs and constructing a robust corporate structure. Moreover, to achieve sustainablegrowth by advancing new growth strategies, the Target Company will aim to capture new demand arisingfrom social needs such as SDGs, and also capture global demand expansion, such as becoming an“integral member” (Note 3) in the growing overseas market by expanding and upgrading the processing
bases and sales networks at each region. In addition, the Target Company will make group-wide efforts
to improve distribution efficiency and to create new businesses through M&A, alliances, and digitaltransformation strategies.
Furthermore, the Target Company will strongly enhance ESG(Environment, Society, Governance) management and make efforts for social contribution, and also
contribute to a carbon-free and recycling-based society by proposing eco-solutions. The Target
Company will also give consideration to diversity and inclusion to develop human resources to lead thenext generation and further improve safety as well as health and productivity management, and willconduct management based on trust and liability and also for favorable shareholder returns.
(Note 3)

“Becoming an integral member” means to respond to demands in overseas markets byproducts, etc. manufactured in each country or region.

With regard to the capital relationship between the Tender Offeror and the Target Company, the Target
Company was established on August 2, 1977 as a wholly-owned subsidiary of the Tender Offeror (thetrade name at that time was “Nippon Steel Corporation (Shin-nippon Seitetsu Kabushiki Kaisha)”), andthe Tender Offeror held all shares of the Target Company (the trade name at that time was Nittetsu Shoji
Co., Ltd.). Subsequently, on November 1, 1977, the Target Company conducted an absorption-typemerger, with Osaka Kozai Co., Ltd. and Irimaru Sangyo Co., Ltd. being the absorbed companies;
resulting in the number of Target Company Shares held by the Tender Offeror becoming 1,594,000
shares (shareholding ratio: 34.65%). The Tender Offeror acquired 246,000 shares in March 1978 and
230,000 shares in March 1987, each from other shareholders; resulting in the number of Target Company
Shares held by the Tender Offeror becoming 2,070,000 shares (shareholding ratio: 45.00%). On March
31,1988, the Target Company conducted a capital increase through a third-party allocation, and theTender Offeror acquired 540,000 Target Company Shares; resulting in the number of Target Company
Shares held by the Tender Offeror becoming 2,610,000 shares (shareholding ratio: 45.00%). On
August 1, 1989, the Target Company conducted a share split, and the Tender Offeror acquired
23,490,000 Target Company Shares; resulting in the number of Target Company Shares held by theTender Offeror becoming 26,100,000 shares (shareholding ratio: 45.00%). In December 1990, theTarget Company conducted a capital increase through a public offering of 10,000,000 shares, and theTender Offeror’s shareholding ratio became 38.38%. In May 1991, the Target Company conducted acapital increase through a shareholders allocation of 0.1 shares without contribution (6,800,000 shares),and the Tender Offeror acquired 2,610,000 shares; resulting in the number of Target Company Shares
held by the Tender Offeror becoming 28,710,000 shares (shareholding ratio: 38.38%). On January 14,
1994, the Target Company conducted a capital increase through a third-party allocation (19,470,000
shares), and the Tender Offeror acquired 14,870,000 Target Company Shares; resulting in the Target
Company Shares held by the Tender Offeror becoming 43,580,000 shares (shareholding ratio: 46.23%).
In October 2002, the Target Company conducted a capital increase through a third-party allocation to
Mitsui & Co. (23,568,000 shares), and the Tender Offeror’s shareholding ratio became 36.98%. In
October 2007, the total of Target Company’s issued shares increased by 16,963,000 shares due to aconversion of class shares held by Mitsui & Co. into ordinary shares; resulting in the Tender Offeror’sshareholding ratio becoming 32.33%. On October 1, 2013, the Target Company succeeded to sharesof Sumikin Bussan, for which the Tender Offeror holds 62,810,454 shares through the Absorption-typeMerger (Sumikin Bussan) (the merger ratio was an allocation of 1.08 shares of the Target Company (thetrade name at that time was Nittetsu Shoji Co., Ltd.) per one share of Sumikin Bussan, and the numberof shares after an adjustment by the merger ratio was 67,835,290 shares); resulting in the Target
Company Shares held by the Tender Offeror after the merger became effective being increased to-9-

111,415,290 shares (shareholding ratio: 35.99%). On October 1, 2016, the Target Company conducteda share consolidation in which every ten Target Company Shares were consolidated into one share;
resulting in the Target Company Shares held by the Tender Offeror becoming 11,141,529 shares(shareholding ratio: 35.99%). As of today, the Tender Offeror holds 11,141,529 Target Company
Shares (ownership ratio: 34.54%).
The Tender Offeror recognizes that steel demand in Japan is expected to decrease due to the declining
population, the expansion of overseas local production by Japanese customers, and other reasons, while
global steel demand is expected to continue to grow steadily, particularly in Asia, notably including
India. In Japan, where demand is shrinking, the Tender Offeror has maintained its domestic production
capacity by raising its export ratio. However, the Tender Offeror considers that it is now necessary toassume that the current business model will be difficult to sustain because competition in the overseas
market is expected to intensify, mainly as demand in China, which represents 60% of the world’s steel
production, seems to have already peaked, while the Tender Offeror is entering a period when its mainsteelworks will require large-scale investments for renewal of their aging facilities.
In order to appropriately respond to these circumstances, in the domestic steelmaking and steel
fabrication business, the Tender Offeror aims to thoroughly promote the strengthening of operations,notably by concentrated production through selection of products and facilities, thereby building astrong framework enabling our manufacturing sites in Japan to manufacture products of the highest
grade, in the form of mother mills (Note 4) (Note 5) which play a key role in the Tender Offeror’s global
steelmaking business strategy. Meanwhile, in the growing overseas market, the Tender Offeror will
expand its integrated production framework in the center of demand, such as India and ASEAN, andensure that local demand is captured in growing markets. By implementing these strategies, the Tender
Offeror strives for achieving 100 million tons of global crude steel capacity per annum for the Tender
Offeror Group by combining the efforts of its mother mills in Japan and local mills located overseas.
(Note 4)

“Mill” is a manufacturing site represented by steelworks for steelmaking and steel fabrication
business.

(Note 5)

“Mother mill” is a manufacturing site in Japan, owned by the Tender Offeror. This will bea value source for the Tender Offeror to create global value, by being a leading site for
product development and operational and equipment technology, which is the Tender
Offeror’s strength, together with domestic large-scale research and development sites, while
also having a close relationship with customers in each region around Japan.

In addition, the Tender Offeror will also continue to actively respond to climate change. The Tender
Offeror will contribute to the realization of carbon neutrality in Japan by utilizing the Tender Offeror’s
technological and product capabilities through development of and supply capacity increase of the highperformance products, such as ultra-high-tensile steel sheets (Note 6) for vehicle weight reduction, andhigh-performance electrical steel sheets (Note 7) for drive motors used in electric vehicles. Moreover,
the Tender Offeror is promoting digital transformation and aiming to become a digitally advanced
company in the steel industry, and the Tender Offeror will work on production and business process
innovations and promote measures that contribute to the fundamental enhancement of decision-making
and problem-solving capabilities through full use of digital transformation technologies and data.
Specifically, the Tender Offeror promotes smarter manufacturing through the advanced use of AI(Artificial Intelligence), IoT (Internet of Things), and other digital technologies, enhancement of aflexible and optimal supply system through the establishment of an integrated production planningplatform from order to production to delivery, and establishment of an integrated data platform thatenables real-time understanding of various management information and KPIs (Note 8) for prompt
improvement action.
(Note 6)

“High-tensile” means “High Tensile Strength Steel,” and “ultra-high-tensile steel sheets”
refers to steel sheets that ensure improved vehicle collision safety, while improving fueleconomy and reducing CO2 emissions through their lighter weight, where both strength and- 10 -

workability are achieved by controlling the crystal structure in the steel composition during
the manufacturing process, and which has a tensile strength of 1.0 GPa (Note 9) or higher.
(Note 7)

“High-performance electrical steel sheets” refers to an eco product used in electric vehicles,
motors of various electric appliances, power generators used in power plants, and iron coresin transformers of transmission lines. By controlling the orientation of iron crystals, it uses
favorable magnetic properties and minimizes energy loss (iron loss).

(Note 8)

“KPI” is an abbreviation of “Key Performance Indicator,” and is an indicator to evaluate theperformance towards goal achievement.

(Note 9)“GPa” is a unit for measuring the tensile strength of a substance.

The overseas steel demand is currently slowing down, due to deceleration in the U.S. and Europe causedby rising energy prices and monetary tightening, economic downturn in developing countries caused bycurrency depreciation, and decline in steel market conditions in ASEAN. Also, in Japan, the recovery
of steel demand is being delayed due to a restraint in semiconductor supply causing a delay in recovery
of automobile production, and rising resource prices, and increasing depreciation of the yen. Based on
the fact that the period for which the amount of global crude steel production is less than the same monthof the previous year has been lasting for about a year since August 2021, it is expected that the harshbusiness environment will continue for the meantime. Therefore, the Tender Offeror will continue tomake the existing domestic framework more streamlined and efficient, while also making efforts for
maximizing its profit through flexible adjustment of production volume in response to changes in its
business environment, and ensuring margins by appropriately reflecting the raw fuel cost increase in thesales price, and also invest management resources to ensure capturing of the global steel demand, andmake efforts in technology development and product supply corresponding to a carbon neutral society,and thereby realizing medium- to long-term growth.
So far, the Tender Offeror Group has set several trading companies, including the Target Company, as
an intermediary for steel transactions, except for some direct transactions with customers, and the Tender
Offeror has maintained and strengthened its sales capabilities throughout the steel supply chain byutilizing their various functions such as their domestic and overseas information network, transaction
practices, credit line, and investment in and management of distribution and processing. However, in
recent years, the environment surrounding the markets has been changing, such as domestic demanddecrease in the future, customers’ expansion of overseas production, quality improvements and quantity
expansions of competitive companies including those in China, a world-wide trend of local production
and consumption, and diversification of business strategies in distribution. In addition, the Tender
Offeror Group acknowledges that from 2021 onward, the global steel market has changed dramaticallyin the short-term, due to a confusion in supply chains in relation to the recovery of demand from the
COVID-19 economy, and rising resource and energy prices and currency fluctuation influenced by the
economic policies of each country in response to geopolitical risks and inflation risks, etc.
The Tender Offeror Group believes that to enhance its ability to promptly and appropriately respond tosuch structural changes in the market, it must increase direct contact with domestic and overseas
customers and enhance its ability to conduct integrated operations regarding steel transactions, andfurther strengthen its competitiveness throughout the supply chain in order to ensure integrated
profitability of the Tender Offeror Group by optimizing and streamlining from steel manufacturing to
distribution and processing thereof, and creating new added value.
Under such understanding, the Tender Offeror has so far established a cooperative relationship with theTarget Company, a major trading company for the Tender Offeror, for the sales of steel products andpersonnel interchanges. In order to exercise the measures above, the relationship between the Tender
Offeror and the Target Company must be stronger; however, the Tender Offeror believes that there arecertain restrictions on mutually sharing their customers’ information and technology information, etc.,
and supplementing and mutually utilizing management resources, because the Target Company is a

- 11 -

listed company and is merely the Tender Offeror’s equity-method affiliate and their capital relationshipis limited. Specifically, it is necessary to determine on a case by case basis whether they may mutuallyshare customers’ information and technology information between the Tender Offeror and the Target
Company; and although it is possible to consider optimizing the steel manufacturing facilities held by
the Tender Offeror and the processing facilities held by the Target Company independently, there is alimitation on considering integrated optimization; furthermore, the sales information, etc. is not shared
between the Tender Offeror’s subsidiaries, which conduct the same steel distribution and processing
business with the Target Company, and the Target Company. Furthermore, the Tender Offeror believes
that an implementation of measures with a medium- to long-term perspective, including the measures
above, will contribute to enhancing the corporate value of the Target Company and the Tender Offeror
Group as a whole; however, from a short-term perspective, it may cause the Target Company’s
performance or financial situation to worsen, and may not necessarily be advantageous for the generalshareholders of the Target Company, thus the Tender Offeror also believes that gaining understandingof the general shareholders to exercise the measures above may be difficult if the Target Company Sharesremain listed. Therefore, to resolve such problem, the Tender Offeror determined that it is desirable to
make the Target Company a consolidated subsidiary of the Tender Offeror and delist the Target Company
in late-March 2022.
The Tender Offeror believes that the following measures may be realized by making the Target Company
a consolidated subsidiary of the Tender Offeror, and delisting the Target Company Shares:(i)

Streamlining and strengthening of the trading company’s functions across the group
The Tender Offeror believes that it would be possible to strengthen cost competitivenessthroughout the supply chain by strengthening and expanding direct marketing to customers by
the Tender Offeror Group and enhancing the efficiency of sales administration works, and by
moving forward with increasing the operation rate of the processing sites and establishing themost appropriate processing framework.

(ii)

Strengthening of direct sales capabilities by integrally utilizing sales know-hows andinfrastructure
The Tender Offeror believes that it would be possible to strengthen its ability to deal withdiversifying customers and its overseas sales capabilities under the sales strategy shared with
the Target Company, which will be a consolidated subsidiary of the Tender Offeror, by focusing
on investing the sales force of the Tender Offeror and the Target Company in new demand areas
such as carbon neutral and growing overseas markets, and making full use of sales data andprocessing know-how held by the Tender Offeror’s and the Target Company’s domestic andoverseas sales sites and processing sites such as the coil center.

(iii)

Further sophistication of the supply chain (establishment of a new business model)
The Tender Offeror, which will conduct steel manufacturing, will make effort to create new
added value, by making use of the advantage that the sales data may be shared, and therebyaligning the scattered data for production, inventory, logistics, delivery deadline, etc. with theTarget Company, which will conduct distribution and processing with the latest digitaltechnology.
Specifically, optimization of the integrated production and logistics(appropriation of inventory amount, shortening of lead time throughout the supply chain, andenhancement of manufacturing efficiency such as process yield) is being considered.
Furthermore, a strengthening of cooperation in the new expansion field such as GX (Note 10)
could also be considered in the future.

(Note 10)“GX” is an abbreviation for “Green Transformation,” and is a concept of transforming thesocial economy toward a shift from fossil fuels, a cause of greenhouse gases emission, to arenewable energy.

- 12 -

Based on these understandings, in late-March 2022, the Tender Offeror commenced considerations on
making the Target Company a consolidated subsidiary, including the possibility of delisting the Target
Company Shares, and on April 11, 2022, the Tender Offeror informed the Target Company that it hadcommenced internal consideration to make the Target Company a subsidiary and to delist the Target
Company Shares. The Target Company responded on the same day that it would conduct internalconsiderations if there was any official proposal thereafter. Furthermore, on May 19, 2022, the Tender
Offeror informed Mitsui & Co. that it had commenced internal consideration to delist the Target
Company Shares, and that it wished to conduct deliberations with Mitsui & Co. on whether Mitsui &Co. would continue its financial contribution to the Target Company even when the Target Company
Shares are delisted. As a result of deliberations between the Tender Offeror and Mitsui & Co.
conducted on and after the same day, the Tender Offeror and Mitsui & Co. determined in earlySeptember 2022 that the continuance of the capital relationships between Mitsui & Co. and the Target
Company even after the delisting of the Target Company will contribute to the enhancement of the Target
Company’s corporate value, because the positive effects on purchase and sales and logistics of steel
materials are expected to appear by the cooperation measures implemented by the Target Company and
Mitsui & Co., and there are further measures that are expected to be put into practice in the future.
Subsequently, in early-September 2022, the Tender Offeror confirmed Mitsui & Co.’s intention to
execute the Shareholders Agreement including the Non-Tender Clause between the Tender Offeror and
Mitsui & Co., and to move on to more specific deliberations to maintain Mitsui & Co.’s current voting
rights ratio of 20% (rounded to the nearest whole number) and make the voting rights ratio of the Tender
Offeror and Mitsui & Co. for the Target Company after the delisting of the Target Company Shares
80.00% and 20.00%, respectively. Therefore, to move on with more specific deliberations andconsiderations regarding the Transaction, the Tender Offeror submitted a written proposal for the
implementation of the Transaction (the “Written Proposal”) to the Target Company on September 21,
2022. In response, on September 28, 2022, the Target Company replied that it would carry out
consideration by implementing measures to secure fairness, including establishing an appropriate
internal consideration system.
Subsequently, simultaneously with the Tender Offeror’s performance of the due diligence to investigate
the feasibility of the Transaction from early October 2022 to late November 2022 (the “Due Diligence”),
the Tender Offeror received questions regarding the Transaction from the special committee on October
14, 2022; thus, on October 27, 2022 (but partially on December 9, 2022), the Tender Offeror explained
the Transaction in more detail to the Target Company and the special committee, and provided additional
responses to additional questions dated November 10, 2022 received from the special committee of theTarget Company on November 18, 2022, and to additional questions dated December 1, 2022 on
December 7, 2022, respectively. As such, the Tender Offeror had discussions and deliberations infurther detail regarding the significance and purpose of the Transaction, and the post-Transaction
management system and business policy, and the terms and conditions of the Transaction, repeatedly
with the Target Company. The Tender Offeror comprehensively considered each factor, such as thebusiness plan received from the Target Company, the Target Company’s share value calculation results
which takes into account various factors such as the external environment surrounding the Target
Company and the situation of the Due Diligence, the Target Company’s current share price level (5,120
yen, 5,132 yen, 5,242 yen, and 5,193 yen, which are the closing prices of the Target Company Shareson the Prime Market of the Tokyo Exchange on October 31, 2022, and the simple average closing prices(rounded to the nearest whole number; the same applies for the subsequent calculations of the simple
average closing prices) for the latest one-month period, latest three-month period, and the latest six
month period, respectively), the future outlook of the tender for the Tender Offer, and the deliberations
with Mitsui & Co. regarding the level of the Tender Offer Price; on November 4, 2022, as a result of thesignificant consideration, the Tender Offeror officially made a proposal to the Target Company to set
the purchase price per Target Company Shares in the Tender Offer (“Tender Offer Price”) at 8,400 yen(calculated by adding a premium of 66.02%, 65.63%, 62.15%, and 63.68%, respectively (rounded to thenearest hundredth; the same applies with regard to subsequent calculations of premiums), to the closing
price of the Target Company Shares on the Prime Market of the Tokyo Exchange on October 31, 2022,
and the simple average closing prices for the latest one-month period, latest three-month period, and the- 13 -

latest six month period, which are 5,120 yen, 5,132 yen, 5,242 yen, and 5,193 yen, respectively).
However, on November 17, 2022, the Target Company requested the Tender Offeror to reconsider the
proposal, as the proposal did not fully reflect the Target Company’s corporate value. Subsequently,
based on the request for reconsideration of the proposal by the Target Company, the Tender Offeror
made a proposal to set the Tender Offer Price at 8,800 yen on November 24, 2022, and based on therequest by the Target Company, provided an overview of the Shareholders Agreement (Note 11), which
was being deliberated over between the Tender Offeror and Mitsui & Co. at that point. In response, on
December 1, 2022, the Tender Offeror received a request from the Target Company to consider setting
the Tender Offer Price at 12,500 yen, taking into consideration the level of exercise prices for the calloption by the Tender Offeror and put-option by Mitsui & Co., which will be set forth in the Shareholders
Agreement. Based on such request, on December 7, 2022, the Tender Offeror proposed to set theTender Offer Price at 9,300 yen. However, on December 8, 2022, the Target Company requested theTender Offeror to set the Tender Offer Price at 9,800 yen, taking into consideration the level of prices
for the Target Company’s consolidated net assets (excluding non-controlling shareholders’ equity),
which will be a basis for the calculation of the exercise prices for the call-option by the Tender Offeror
and put-option by Mitsui & Co., which will be set forth in the Shareholders Agreement. However, as
for the Tender Offeror, the Tender Offer Price set at 9,300 yen is sufficient for a consideration acquiredby the Target Company’s general shareholders via the Transaction, and is also the maximum price that
could be suggested by the Tender Offeror. Therefore, on December 9, 2022, the Tender Offeror madea proposal to the Target Company once again to set the Tender Offer Price at 9,300 yen. In response,
on December 15, 2022, the Target Company responded that it was not aware, as of that point in time, of
any circumstances that would hinder the Target Company from supporting the Tender Offer anddetermining to recommend that shareholders of the Target Company tender their shares in the Tender
Offer if the Tender Offeror were to launch the Tender Offer at the Tender Offer Price of 9,300 yen, whileconsiderations by the special committee were still continuing. Thereafter, on December 21, 2022, theTarget Company notified the Tender Offeror that the Target Company, at its board of directors’ meeting
held on the same day, resolved, as its opinion as of the same day, that it would express a supportive
opinion for the Tender Offer and recommend that shareholders of the Target Company tender their sharesin the Tender Offer if the Tender Offer was launched, submitted by the special committee.
(Note 11)For an overview of the Shareholders Agreement, please refer to “(6) Items Regarding
Material Agreements Related to the Tender Offer” below.

Based on the considerations, deliberations, and negotiations above, the Tender Offeror and the Target
Company reached an agreement that the Tender Offer Price would be 9,300 yen, and therefore, at theboard of directors’ meeting held on December 21, 2022, the Tender Offeror resolved to implement theTender Offer if the Conditions Precedent are fulfilled (or waived by the Tender Offer), as part of theTransaction.
The Tender Offeror repeated multiple rounds of deliberations and negotiations with Mitsui & Co. frommid May 2022 to early December 2022 regarding the Shareholders Agreement, and executed theShareholders Agreement on December 21, 2022. For the details of the Shareholders Agreement, pleaserefer to “(6) Items Regarding Material Agreements Related to the Tender Offer” below.
On January 18, 2023, the Tender Offeror informed the Target Company that it intends to commence theTender Offer on February 28, 2023 on the premise that the acquisition of clearances under domestic andoverseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., and Vietnamese) competition laws iscompleted and that other Conditions Precedent are fulfilled or waived by the Tender Offeror.
Furthermore, on February 27, 2023 the Tender Offeror informed the Target Company that not all of thenecessary procedures and actions under domestic and overseas competition laws toward implementationof the Tender Offer had been completed, and therefore, the Tender Offeror estimated that the Tender
Offer would be commenced during March 2023. Thereafter, based on the fact that on February 28,
2023, the Tender Offeror received a document approving the Share Acquisition issued by the Mexican
Federal Economic Competition Commission as of February 27, 2023 (local time), the acquisition of all
clearances under domestic and overseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., and- 14 -

Vietnamese) competition laws that were required to implement the Transaction was completed;
therefore, on the same day, the Tender Offeror informed the Target Company that the acquisition ofclearances under domestic and overseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., andVietnamese) competition laws was completed. As stated in “(1) Overview of the Tender Offer” above,
the Tender Offeror confirmed that the acquisition of all clearances under domestic and overseas(Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., and Vietnamese) competition laws wascompleted and that all of the Conditions Precedent were fulfilled, and it decided to commence the Tender
Offer on March 13, 2023.
(II)

Decision-Making Process and Reasons Leading to the Target Company’s Support of the Tender
Offer

(i)

Background to the Establishment of the Structure for Consideration

According to the Target Company Press Releases, on April 11 2022, the Target Company was informedthat the Tender Offeror internally started considering making the Target Company its subsidiary anddelisting the Target Company Shares; in response, the Target Company replied on the same day that it
would conduct internal considerations if there was any official recommendation thereafter.
Subsequently, on September 21, 2022, the Target Company received the Written Proposal from theTender Offeror; in response, on September 28, 2022, the Target Company replied that it would carry out
consideration by implementing measures to secure fairness, including establishing an appropriate
internal consideration system. Thus, in late September, the Target Company appointed Nomura
Securities Co., Ltd. (“Nomura Securities”) as its financial advisor and Mori Hamada & Matsumoto as
its legal advisor, both independent of the Tender Offeror, Mitsui & Co., and the Target Company. The
Target Company received advice from such advisors, and as the issue of structural conflict of interestand the issue of information asymmetry in relation to general shareholders in the process of the Target
Company considering the Transaction cannot be completely eliminated due to the following, in order toaddress these issues and ensure the fairness of the Transaction, the Target Company immediately
proceeded with the establishment of a structure to conduct negotiations and make decisions
independently of the Tender Offeror and Mitsui & Co: that in connection with considerations concerning
the Transaction, and discussions and negotiations on the same with the Tender Offeror, although theTender Offer is not a tender offer conducted by a controlling shareholder, considering the fact that theownership ratio of the Tender Offeror in the Target Company Shares is 34.54% (the ownership ratio
including those shares indirectly owned through wholly-owned subsidiaries and consolidated
subsidiaries of the Tender Offeror is 35.08%); that the Tender Offeror is a major shareholder and thelargest shareholder having the Target Company as an equity-method affiliate; that the ownership ratioof Mitsui & Co. with whom the Tender Offeror executed the Shareholders Agreement in the Target
Company Shares is 19.93%; that Mitsui & Co. is a major shareholder having the Target Company as anequity-method affiliate; and that the total ownership ratio of the Tender Offeror and Mitsui & Co. in theTarget Company Shares is 54.47% (the total ownership ratio of the Tender Offeror and Mitsui & Co.
including those shares indirectly owned through wholly-owned subsidiaries and consolidated
subsidiaries of the Tender Offeror is 55.01%) and exceeds the majority.
Specifically, as stated in “(V) Establishment of an Independent Special Committee by the Target
Company and Acquisition of a Report by the Target Company from the Special Committee” of“(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of the Tender
Offer Price as Well as Measures to Avoid Conflicts of Interest” below, the Target Company proceededwith preparations to establish a special committee consisting of its independent outside directors fromlate September 2022. Subsequently, pursuant to the resolution of its board of directors meeting held
on September 28, 2022, the Target Company established a special committee consisting of threemembers: Mr. Keishiro Kinoshita (independent outside director of the Target Company), Ms. Ryuko
Inoue (independent outside director of the Target Company, lawyer at Atsumi & Sakai, employer
member of the Central Labour Relations Commission, outside director of Cosmo Energy Holdings Co.,
Ltd.), and Mr. Ryu Matsumoto (independent outside director of the Target Company) (for the
background of the establishment of the special committee, the background of considerations, and the- 15 -

content of decisions, please see “(V) Establishment of an Independent Special Committee by the Target
Company and Acquisition of a Report by the Target Company from the Special Committee” of“(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of the Tender
Offer Price as Well as Measures to Avoid Conflicts of Interest” below). Thereafter, the Target
Company’s board of directors requested that the special committee (i) make recommendations to it after
considering whether it is to support the Tender Offer and whether it is to recommend that the Target
Company’s shareholders tender their shares in the Tender Offer, and (ii) provide opinions to it after
considering whether its decision on the Transaction is not disadvantageous to the Target Company’s
minority shareholders (collectively, the “Advisory Matters”). Furthermore, when establishing thespecial committee, the Target Company’s board of directors resolved that (i) its decision-making on theTransaction will be made with respect to the special committee’s decisions to the maximum extent,
including whether to support the Tender Offer, (ii) if the special committee decides that the transaction
terms for the Transaction are not appropriate, it will not approve the Transaction on these transaction
terms (including not to support the Tender Offer). The Target Company’s board of directors also
resolved (i) that the special committee will be substantially involved in the negotiation process between
the Target Company and the Tender Offeror (including making instructions or requests regarding thenegotiation policy with the Tender Offeror as necessary, and negotiating with the Tender Offeror itself);(ii) that the special committee will appoint its own financial advisor(s) and legal advisor(s) at the Target
Company’s expense, and will nominate or approve the Target Company’s financial advisor(s) and legal
advisor(s) (including ex post fact approval) (if the special committee confirms that there is no problem
with the independence and expertise of the Target Company’s advisors, it may seek professional advice
from the Target Company’s advisors); (iii) that the special committee will receive information necessary
to consider and make a decision on the Transaction from the Target Company’s officers and employees,
including information regarding the content and premise of the business plans; and (iv) that the Target
Company will grant authority on other matters that the special committee finds necessary when
considering and making a decision on the Transaction (for the method of resolution at the board of
directors meeting, please see “(V) Establishment of an Independent Special Committee by the Target
Company and Acquisition of a Report by the Target Company from the Special Committee” of“(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of the Tender
Offer Price as Well as Measures to Avoid Conflicts of Interest” below). Under the authority above, on
October 6, 2022, the special committee decided to appoint Nakamura, Tsunoda & Matsumoto as its own
legal advisor and PLUTUS CONSULTING Co., Ltd. (“PLUTUS”) as its own financial advisor andthird-party valuation agency, as stated in “(V) Establishment of an Independent Special Committee by
the Target Company and Acquisition of a Report by the Target Company from the Special Committee”
of “(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of theTender Offer Price as Well as Measures to Avoid Conflicts of Interest” below.
In addition, as stated in “(V) Establishment of an Independent Special Committee by the Target
Company and Acquisition of a Report by the Target Company from the Special Committee” of“(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of the Tender
Offer Price as Well as Measures to Avoid Conflicts of Interest” below, the Target Company obtained theapproval of the special committee for the appointment of Nomura Securities as the Target Company’s
financial advisor and third-party valuation agency and Mori Hamada & Matsumoto as the Target
Company’s legal advisor.
Furthermore, as stated in “(V) Establishment of an Independent Special Committee by the Target
Company and Acquisition of a Report by the Target Company from the Special Committee” of“(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of the Tender
Offer Price as Well as Measures to Avoid Conflicts of Interest” below, the Target Company internallybuilt a structure to consider, negotiate, and make a decision on the Transaction (including the scope of
the Target Company’s officers and employees who would be involved in the consideration, negotiations,and decision-making for the Transaction, and their duties) independently from the Tender Offeror and
Mitsui & Co., and obtained the approval of the special committee that there was no problem with thestructure for consideration from the perspective of independence and fairness.

- 16 -

(ii)Background of the Consideration and Negotiation

According to the Target Company, the Target Company received a report of the valuation result of theTarget Company Shares, and advice on the negotiation policy with the Tender Offeror and other advice
from a financial perspective from Nomura Securities, and received guidance and other legal advice on
responses to ensure fairness of the procedures in the Transaction from Mori Hamada & Matsumoto.
Taking them into account, the Target Company has carefully considered whether to implement theTransaction and whether the transaction terms are appropriate, while respecting the special committee’s
opinions to the maximum extent.
Since September 21, 2022, on which the Target Company received the Written Proposal from the Tender
Offeror, the Target Company had discussions and deliberations in further detail regarding thesignificance and purpose of the Transaction, and repeatedly had discussions and negotiations on the
post-Transaction management system and business policy, and terms and conditions of the Transaction,
between the Tender Offeror while hearing opinions from the special committee and receiving approval
as well as instructions and requests therefrom. Specifically, on October 14, 2022, the Target Company
sent the Tender Offeror a written question regarding the Written Proposal and the Transaction; on
October 27, 2022 (partially on December 9, 2022), it received from the Tender Offeror a response to thewritten question as well as a detailed oral explanation, and confirmed the intent of the response. On
November 10, 2022 and December 1, 2022, the Target Company again sent the Tender Offeror an
additional written question; on November 18, 2022 and December 7, 2022, it received a response fromthe Tender Offeror, respectively.
Moreover, on November 4, 2022, the Target Company received the initial proposal, including setting
the Tender Offer Price at 8,400 yen per share from the Tender Offeror. However, on November 17,
2022, the Target Company requested the Tender Offeror to reconsider the proposal, as the proposal did
not fully reflect the Target Company’s corporate value. Subsequently, on November 24, 2022, theTarget Company received from the Tender Offeror a proposal to set the Tender Offer Price at 8,800 yen
and an explanation about an overview of the Shareholders Agreement (Note), which was being
deliberated over between the Tender Offeror and Mitsui & Co. at that point. In response, on
December 1, 2022, the Target Company requested the Tender Offeror to consider setting the Tender
Offer Price at 12,500 yen, taking into consideration the level of exercise prices for the call-option by theTender Offeror and put-option by Mitsui & Co., which will be set forth in the Shareholders Agreement.
Subsequently, on December 7, 2022, the Target Company received a proposal from the Tender Offeror
to set the Tender Offer Price at 9,300 yen. However, on December 8, 2022, the Target Company
requested the Tender Offeror to set the Tender Offer Price at 9,800 yen, taking into consideration thelevel of prices for the Target Company’s consolidated net assets (excluding non-controlling shareholders’equity), which will be a basis for the calculation of the exercise prices for the call-option by the Tender
Offeror and put-option by Mitsui & Co., which will be set forth in the Shareholders Agreement.
However, on December 9, 2022, the Tender Offeror made a proposal to the Target Company to set theTender Offer Price at 9,300 yen, because as for the Tender Offeror, the Tender Offer Price set at 9,300
yen is sufficient for a consideration acquired by the Target Company’s general shareholders via theTransaction, and is also the maximum price that could be suggested by the Tender Offeror. In response,
on December 15, 2022, the Target Company responded that it was not aware, as of that point in time, of
any circumstances that would hinder the Target Company from supporting the Tender Offer anddetermining to recommend that shareholders of the Target Company tender their shares in the Tender
Offer if the Tender Offeror were to launch the Tender Offer at the Tender Offer Price of 9,300 yen, whileconsiderations by the special committee were still continuing. Thereafter, on December 21, 2022, theTarget Company notified the Tender Offeror that the Target Company, at its board of directors’ meeting
held on the same day, resolved, as its opinion as of the same day, that it would express a supportive
opinion for the Tender Offer and recommend that shareholders of the Target Company tender their sharesin the Tender Offer if the Tender Offer was launched, .
(Note) For an overview of the Shareholders Agreement, please see “(6) Items Regarding Material
Agreements Related to the Tender Offer” below.

- 17 -

In the course of the consideration and negotiation stated above, the special committee has from time totime received reports from the Target Company and the Target Company’s advisor, and confirmed andstated opinions, etc. for that. Specifically, first, the rationality of the details, important conditions
precedent, and course of preparation of the Target Company’s business plan, which will be the basis forcalculation of the Tender Offeror Share values by the Tender Offeror as well as Nomura Securities and
PLUTUS has been confirmed and approved by the special committee. Furthermore, Nomura
Securities has, as the Target Company’s financial advisor, responded to negotiations with the Tender
Offeror based on the negotiation policy considered in advance by the Target Company and which takes
into account the opinions of the special committee. In addition, each time Nomura Securities receives
a proposal of the Tender Offer Price from the Tender Offeror, it immediately reports the proposal to thespecial committee, and responds thereto upon consideration within the Target Company based on advice
given by the special committee.
Thereafter, on December 21, 2022, the Target Company received a report from the special committee tothe effect that (i) it considers it appropriate for the Target Company’s board of directors to express its
opinion in support of the Tender Offer and recommend that the Target Company’s shareholders tenderin the Tender Offer, and (ii) it considers that the decisions by the Target Company’s board of directors
for the Transaction (the decision to support the Tender Offer and recommend that the Target Company’s
shareholders tender in the Tender Offer, and the decision to implement the Squeeze-out Procedure by
the Share Consolidation) is not disadvantageous for the Target Company’s minority shareholders (the“Report Dated December 21, 2022”) (for an overview of the Report Dated December 21, 2022, pleasesee “(V) Establishment of an Independent Special Committee by the Target Company and Acquisitionof a Report by the Target Company from the Special Committee” of “(3) Measures to Ensure Fairnessof the Tender Offer, Such as Measures to Ensure Fairness of the Tender Offer Price as Well as Measures
to Avoid Conflicts of Interest” below). Together with the Report Dated December 21, 2022, the Target
Company also received from the special committee a share valuation report on the valuation result of
the Target Company Shares and a fairness opinion to the effect that the Tender Offer Price, 9,300 yen,
is considered to be fair from a financial perspective for the Target Company’s minority shareholders
submitted by PLUTUS to the special committee on December 21, 2022 (the “Share Valuation Report(PLUTUS)” and the “Fairness Opinion (PLUTUS),” respectively) (for an overview of the Share
Valuation Report (PLUTUS) and the Fairness Opinion (PLUTUS), please see “(VII) Acquisition of a
Share Valuation Report and a Fairness Opinion by the Special Committee from an Independent Thirdparty Valuation Agency” of “(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to
Ensure Fairness of the Tender Offer Price as Well as Measures to Avoid Conflicts of Interest” below).
(iii)

Details of the Decision

Under the circumstances described above, the Target Company, at its board of directors meeting held on
December 21, 2022, carefully discussed and considered whether the Transaction including the Tender
Offer will contribute to the enhancement of the Target Company’s corporate value and whether thetransaction terms for the Transaction including the Tender Offer Price are appropriate, based on the legal
advice obtained from Mori Hamada & Matsumoto, and the advice from a financial perspective and thecontent of a share valuation report on the valuation result of the Target Company Shares and a fairness
opinion to the effect that the Tender Offer Price, 9,300 yen, is considered to be appropriate from afinancial perspective for the Target Company’s shareholders (excluding the Tender Offeror and Mitsui& Co.) obtained from Nomura Securities on December 20, 2022 (the “Share Valuation Report (Nomura
Securities)” and the “Fairness Opinion (Nomura Securities),” respectively), and the content of the Share
Valuation Report (PLUTUS) and the Fairness Opinion (PLUTUS) submitted through the special
committee, while respecting the special committee’s decisions indicated in the Report Dated December
21, 2022 to the maximum extent.
As a result, the Target Company reached the conclusion that the Transaction, including making theTarget Company a wholly-owned subsidiary of the Tender Offeror, as well as making the Tender Offeror- 18 -

and Mitsui & Co. the only shareholders of the Target Company, will contribute to the enhancement of
the Target Company’s corporate value, for the following reasons.
Regarding the business environment surrounding the Target Company, in the steel market, domestic
demand for steel material is expected to decrease due to factors such as population decline and anincrease in local production by overseas customers, and competition within international markets is
expected to intensify even further hereafter. In addition, in the textile market, the domestic apparelmarket, which is the Target Company’s main target, is also expected to continue shrinking due topopulation decline, etc. Meanwhile, a new demand in response to social needs including SDGs, andglobal demand of steel products particularly in Asia and North America is expected to expand.
As a core trading company of the Tender Offeror, who aims to become “the best steelmaker with worldleading capabilities,” the Target Company has up until now expanded their business operations mainly
by developing the trading business, which purchases products and then sells them, domestically andglobally, mainly in the steel business, as well as industrial supply & infrastructure, textiles, and foodstuff
industries. However, given the structural deterioration in the business environment as stated above,
the Target Company believes that it is difficult to continue the existing business model based on thecurrent scale of fixed costs.
To accurately respond to such situation, the Target Company aims to implement measures to strengthen
the business foundation to drastically improve the value-added productivity of the group employees, andto reorganize, integrate, or withdraw, etc. from the Target Company Group’s manufacturing and sales
bases, thereby reducing the scale of fixed costs and constructing a robust corporate structure. Moreover,to achieve sustainable growth by advancing new growth strategies, the Target Company will aim tocapture new demand arising from social needs such as SDGs, and also capture global demand expansion,
such as becoming an “integral member” in the growing overseas market by expanding and upgrading
the processing bases and sales networks in each region. In addition, the Target Company will makegroup-wide efforts to improve distribution efficiency and to create new businesses through M&A,
alliances, and digital transformation strategies.
The Target Company’s opinions regarding the synergistic effects, etc. of the Transaction are as follows.
The greatest benefits of the Transaction for the Target Company are that it will be an opportunity for theTarget Company to increase its presence in growing overseas growth markets more than ever byintegrating with the Tender Offeror, which aims to establish a global crude steel production capacity of
100 million tons, and that it will be an opportunity for the Target Company to play a role as a true core
trading company for the Tender Offeror in new demand fields such as carbon neutrality without being
restricted in its handling of confidential information.
The Tender Offeror intends to expand direct marketing to customers within its group to maximize thegroup’s corporate value, and the Target Company considers that the necessary commercial sales businessfor direct marketing will be realized by integrating its trading company functions within the group andfocusing its sales force on growing fields and regions to further expand sales and build and expand
supply chains through the integrated use of marketing data held by the Tender Offeror’s and the Target
Company’s domestic and overseas sales offices and processing bases.
Meanwhile, in response to the commercial sales business that is expected to increase, the Target
Company’s competitiveness in the entire supply chain is considered to be enhanced by improving theoperation rate and optimizing systems at its processing bases, and the integrated optimization andefficiency between the Tender Offeror (Group) and the Target Company will be realized.
Furthermore, it is considered that the integration of the Target Company Group’s production, inventory,
logistics, delivery, and other marketing data with the Tender Offeror by utilizing the digitaltransformation measures that the Target Company is currently promoting, specifically, “Automatic
financial resource control system (N-SCM)” and “integrated CC system (EXCS)” is expected to further- 19 -

increase the sophistication of the supply chain and achieve integrated optimization of production andlogistics.
On the other hand, as below, the Target Company considers that there is no particularly significant matter
regarding the dis-synergy of the Transaction.
The Target Company has so far promoted diversification of procurement as a response to an expansionof the global presence and reduction of the Tender Offeror’s production capability. There wereconcerns that this policy and approach may be restricted in accordance with the integration of various
functions with the Tender Offeror; however, according to the Tender Offeror, this will not affect the
management strategy shared with the Tender Offeror, and the transaction that contributes to the
maximization of the Group’s corporate value will not be restricted on a precondition that measures, etc.
required by competition law will be appropriately exercised, such as disrupting the provision of
information. Therefore, the Target Company considers that such concerns have been resolved.
Furthermore, while there is a concern that customers who grant commercial rights to the Target
Company because the Target Company is a listed company with a certain degree of independence fromthe Tender Offeror, may consider changing their trading company upon the integration of the various
functions of the Target Company and the Tender Offeror, many customers are fully aware that the Target
Company is an equity-method affiliate/manufacturer-affiliated trading company in which the Tender
Offeror held a 34.54% stake as of December 21, 2022, and therefore, it is considered that the number ofcustomers who would consider changing their trading company due to wariness of the Tender Offeror’s
growing influence is limited.
Moreover, while there is a concern that the Target Company’s delisting and becoming a subsidiary of
the Tender Offeror as a result of the Transaction may lead to reduced motivation or resignation of some
employees, or have a negative impact on recruitment and retention of personnel, the Target Company
confirmed a policy that full explanations regarding the Transaction will be provided to its employees,
including the establishment of an internal communication plan, that two-way communication will bestrengthened, and that the Target Company and the Tender Offeror will hold adequate discussions asnecessary.
Also, while there is a concern that the delisting of the Target Company through the Transaction may
result in losing the benefit of transparency in its sustainability initiatives being ensured, which made iteasier for the Target Company to explain and appeal them to its business partners, the Target Company
intends to continue such initiatives and enhance disclosure, which would mitigate such concern to someextent.
In addition, the Tender Offer Price, 9,300 yen, is an appropriate price that ensures interests that should
be received by general shareholders of the Target Company, and that the Tender Offer provides thoseshareholders reasonable opportunities to sell the Target Company Shares at a price including anappropriate premium, for the following reasons:(A)the price is agreed upon between the Target Company and the Tender Offeror after sincere
negotiations with the substantial involvement of the special committee after the measures toensure the fairness of the transaction terms for the Transaction, including the Tender Offer Price,
as stated in “(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure
Fairness of the Tender Offer Price as Well as Measures to Avoid Conflicts of Interest” below
were fully taken;(B)the price is higher than the upper limit of the calculation results under the average market pricemethod and the comparable company method, and within the range of the calculation results
under the DCF Method, from the calculation results of the value of the Target Company Shares- 20 -

by Nomura Securities in the Share Valuation Report (Nomura Securities) as stated in“(II) Acquisition of a Share Valuation Report and a Fairness Opinion by the Target Company
from an Independent Financial Advisor and Third-party Valuation Agency” of “(3) Measures to
Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of the Tender Offer
Price as Well as Measures to Avoid Conflicts of Interest” below; and as stated in“(II) Acquisition of a Share Valuation Report and a Fairness Opinion by the Target Company
from an Independent Financial Advisor and Third-party Valuation Agency” of “(3) Measures to
Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of the Tender Offer
Price as Well as Measures to Avoid Conflicts of Interest” below, the Fairness Opinion (Nomura
Securities) to the effect that the Tender Offer Price, 9,300 yen, is considered to be appropriate
from a financial perspective for the Target Company’s shareholders (excluding the Tender
Offeror and Mitsui & Co.) has been issued by Nomura Securities;(C)

the price is higher than the upper limit of the calculation results under the average market pricemethod and within the range of the calculation results under the DCF Method and higher thanthe median (7,621 yen), from the calculation results of the value of the Target Company Sharesby PLUTUS in the Share Valuation Report (PLUTUS) as stated in “(VII) Acquisition of a Share
Valuation Report and a Fairness Opinion by the Special Committee from an Independent Thirdparty Valuation Agency” of “(3) Measures to Ensure Fairness of the Tender Offer, Such as
Measures to Ensure Fairness of the Tender Offer Price as Well as Measures to Avoid Conflictsof Interest” below; and as stated in “(VII) Acquisition of a Share Valuation Report and a Fairness
Opinion by the Special Committee from an Independent Third-party Valuation Agency” of“(3) Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of
the Tender Offer Price as Well as Measures to Avoid Conflicts of Interest” below, the Fairness
Opinion (PLUTUS) to the effect that the Tender Offer Price, 9,300 yen, is considered to be fairfrom a financial perspective for the Target Company’s minority shareholders has been issued by
PLUTUS;(D)

the price includes the following premiums: 85.26% on the closing price of the Target Company
Shares of 5,020 yen on the Tokyo Stock Exchange as of December 20, 2022, which is thebusiness day immediately before the announcement date of the implementation of the Tender
Offer; 82.35% on the simple average of the closing price for the one month before the same date,
which was 5,100 yen; 80.83% on the simple average of the closing price for the three months
before the same date, which was 5,143 yen; and 79.81% on the simple average of the closing
price for the six months before the same date, which was 5,172 yen, and the level of premiums
is considered to be reasonable because it is equivalent to the level of premiums in past 56 tender
offer cases in which the delisting of an equity-method affiliate or consolidated subsidiary wascontemplated that were announced in and after 2019 and were successfullycompleted(premiums of: 45.2% on the closing price as of the business day immediately before
the announcement date (for the cases where media reports were published in advance, theclosing price as of the business day immediately before the day on which the media reports were
published); 47.5% on the simple average of the closing price for the one month before thebusiness day immediately before the announcement date; 48.3% on the simple average of theclosing price for the three months before the same date; and 47.0% on the simple average of theclosing price for the six months before the same date);(E)

the price is almost equal to the amount obtained by deducting 170 yen per share, which is theamount of the interim dividend for the fiscal year ending March 2023, from 9,502 yen, which isthe book value of the Target Company’s consolidated net assets per share as of September 30,
2022, although it is not reasonable to focus on the amount of net assets in considering the sharevalue of the Target Company because the Target Company will continue its business as a going
concern even after the Transaction;(F)

the price was also determined appropriate in the Report Dated December 21, 2022 obtained
from the special committee, as stated in “(V) Establishment of an Independent Special- 21 -

Committee by the Target Company and Acquisition of a Report by the Target Company fromthe Special Committee” of “(3) Measures to Ensure Fairness of the Tender Offer, Such as
Measures to Ensure Fairness of the Tender Offer Price as Well as Measures to Avoid Conflictsof Interest” below.
In light of the above, the Target Company resolved at its board of directors meeting held on December
21, 2022, to express its opinion as of the same day to support the Tender Offer and to recommend that
the Target Company’s shareholders tender their shares in the Tender Offer if the Tender Offer iscommenced.
In addition, the Target Company resolved at the board of directors meeting above that when the Tender
Offer commences, the Target Company will request that the special committee established by the Target
Company examine whether there are any changes in the contents of the report that the special committee
made to the Target Company’s board of directors as of December 21, 2022, and if there is no change,
state to that effect, and if there is any change, report the changed contents, to the Target Company’sboard of directors; and based on such contents of the report of the special committee, the Target
Company will re-express its opinion regarding the Tender Offer at the time of commencement of theTender Offer.
After the Target Company was informed by the Tender Offeror on January 18, 2023 that the Tender
Offeror intends to commence the Tender Offer on February 28, 2023 on the premise that the acquisitionof clearances under domestic and overseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., andVietnamese) competition laws is completed and that other Conditions Precedent are fulfilled or waived
by the Tender Offeror, on February 10, 2023, the Target Company requested the special committee thatthe special committee examine whether there are any changes in the contents of the report that the special
committee made to the Target Company’s board of directors as of December 21, 2022, and if there is nochange, state to that effect, and if there is any change, report the changed contents to the Target
Company’s board of directors. Furthermore, on February 27, 2023 the Target Company was informedby the Tender Offeror that not all of the necessary procedures and actions under domestic and overseas
competition laws toward implementation of the Tender Offer had been completed, and therefore, theTender Offeror estimated that the Tender Offer would be commenced during March 2023. Thereafter,
the Target Company was informed by the Tender Offeror on February 28, 2023 that the acquisition ofclearances under domestic and overseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., andVietnamese) competition laws was completed. The special committee verified the facts concerningwhether any material change in the situation that could have an impact on the Transaction occurred on
and after December 21, 2022, and as a result of considering the above-mentioned advisory matters, it
confirmed that considering the circumstances on and after December 21, 2022 until March 10, 2023, nomaterial change in the situation that could have an impact on the Transaction had occurred and that there
were no circumstances that would require a change in the contents of the report that the special
committee made to the Target Company’s board of directors on December 21, 2022; on March 10, 2023,
the special committee submitted to the Target Company’s board of directors the Report Dated March
10, 2023 to the effect that it considers that there is no need to change the contents of the above-mentioned
report based on an unanimous resolution .
Moreover, the Target Company again carefully considered the terms of the Tender Offer based on theTarget Company’s business performance and the environment surrounding the Transaction, while
respecting the contents of the Report Dated March 10, 2023 submitted by the special committee to the
maximum extent; as a result, the Target Company concluded that, as of March 10, 2023, there are no
factors to change its opinion regarding the Tender Offer as of December 21, 2022.
From the above, at the board of directors’ meeting held on March 10, 2023, the Target Company again
resolved to express its opinion in support of the Tender Offer and to recommend that the Target
Company’s shareholders tender their shares in the Tender Offer.

- 22 -

For the method of resolutions at the board of directors meetings held on December 21, 2022 and March
10, 2023 above, please see “(VIII) Approval of All Directors of the Target Company Without Conflictsof Interest in the Transaction, and No Objection from All Audit and Supervisory Board Members of theTarget Company Without Conflicts of Interest in the Transaction” of “(3) Measures to Ensure Fairnessof the Tender Offer, Such as Measures to Ensure Fairness of the Tender Offer Price as Well as Measures
to Avoid Conflicts of Interest” below.
(III)

Post-Tender Offer Management Policy

The Tender Offeror plans to establish an optimal management system to realize the measures stated in“(I) Background, Purpose and Decision-Making Process Leading to the Decision to Implement theTender Offer” above in order to further strengthen and accelerate the collaboration with the Target
Company Group and enhance the corporate value of the Tender Offeror Group and the Target Company
by delisting the Target Company Shares through the Transaction.
As of today, the Target Company’s officers consist of nine directors and four Audit and Supervisory
Board Members, where Mr. Hirofumi Funakoshi, an Audit and Supervisory Board Member has the
position as a Managing Executive Officer of the Tender Offeror; besides him, four directors are fromthe Tender Offeror, and one director is from Mitsui & Co. Regarding the management system after theTransaction, the Tender Offeror and Mitsui & Co. have agreed in the Shareholders Agreement that
Mitsui & Co. will appoint the number of directors of the Target Company in accordance with its voting
rights ratio. For an overview of the Shareholders Agreement, please see “(6) Items Regarding Material
Agreements Related to the Tender Offer” below.
In addition, the Tender Offeror expects that the Target Company will continue to conduct its businessactivities after the Transaction, and is thus not planning to dissolve or liquidate the Target Company.
(3)

Measures to Ensure Fairness of the Tender Offer, Such as Measures to Ensure Fairness of theTender Offer Price as Well as Measures to Avoid Conflicts of Interest

As of December 21, 2022 the date on which the Tender Offeror decided to implement the Tender Offer,and as of today, the Target Company is not a subsidiary of the Tender Offeror, and the Tender Offer does
not constitute a tender offer by a controlling shareholder. However, considering the fact that theownership ratio of the Tender Offeror in the Target Company Shares is 34.54% (the ownership ratio
including those shares indirectly owned through the Tender Offeror’s wholly-owned subsidiaries andconsolidated subsidiaries is 35.08%); that the Tender Offeror is a major shareholder as well as the largest
shareholder having the Target Company as an equity-method affiliate; that the ownership ratio of Mitsui& Co. with whom the Tender Offeror has executed the Shareholders Agreement in the Target Company
Shares is 19.93%; that Mitsui & Co. is a major shareholder having the Target Company as an equitymethod affiliate; and that the total ownership ratio of the Tender Offeror and Mitsui & Co. in the Target
Company Shares is 54.47% (the total ownership ratio by the Tender Offeror and Mitsui & Co. including
those shares indirectly owned through the Tender Offeror’s wholly-owned subsidiaries and consolidated
subsidiaries is 55.01%) and exceeds the majority, the Tender Offeror and the Target Company
implemented the measures described in (I) through (X) below in order to ensure the fairness of theTransaction including the Tender Offer, with a view to ensuring the fairness of the Tender Offer Price,eliminating arbitrariness in the decision-making process leading to a decision to implement the Tender
Offer, and avoiding conflicts of interest.
As of today, the Tender Offeror directly owns 11,141,529 Target Company Shares (ownership ratio:
34.54%), and owns 11,316,229 Target Company Shares (ownership ratio: 35.08%) including thoseshares indirectly owned through Nippon Steel Metal Products Co., Ltd. (number of shares owned:
129,800 shares, ownership ratio: 0.40%), Nippon Steel Logistics Co., Ltd. (number of shares owned:
8,400 shares, ownership ratio: 0.03%), and Nippon Steel SG Wire Co., Ltd. (number of shares owned:
4,400 shares, ownership ratio: 0.01%), which are the Tender Offeror’s wholly-owned subsidiaries, aswell as Oji Steel Co., Ltd. (number of shares owned: 20,000 shares, ownership ratio: 0.06%), Sanyo- 23 -

Special Steel Co., Ltd. (number of shares owned: 7,700 shares, ownership ratio: 0.02%), and Nippon
Steel Cement Co., Ltd. (number of shares owned: 4,400 shares, ownership ratio: 0.01%), which are theTender Offeror’s consolidated subsidiaries; Mitsui & Co., which has executed the Shareholders
Agreement with the Tender Offeror and has agreed not to tender any of the Target Company Shares
owned by it in the Tender Offer, owns 6,428,800 Target Company Shares (ownership ratio: 19.93%).
The Tender Offeror and Mitsui & Co. own 17,745,029 Target Company Shares in total including thoseshares indirectly owned (ownership ratio: 55.01%). Therefore, setting the minimum number of shares
to be purchased at a number that would satisfy the “majority of the minority” in the Tender Offer will
destabilize the successful completion of the Tender Offer and may not be in the interests of generalshareholders who seek to tender shares in the Tender Offer. Accordingly, the Tender Offeror has not
set the minimum number of shares to be purchased at a number that would satisfy the “majority of theminority” in the Tender Offer. However, the Tender Offeror believes that the interests of the Target
Company’s general shareholders have been sufficiently considered, as the Tender Offeror and the Target
Company have both taken the measures listed below.
The measures below implemented by the Target Company are based on the explanations received fromthe Target Company.
(I)

Acquisition of a Share Valuation Report by the Tender Offeror from an Independent Third-party
Valuation Agency

In order to ensure the fairness of the Tender Offer Price, the Tender Offeror requested that Mizuho
Securities Co., Ltd. (“Mizuho Securities”), which is a financial advisor and third-party valuation agency
independent of the Tender Offeror, Mitsui & Co., and the Target Company, calculate the value of theTarget Company Shares; and when deciding the Tender Offer Price, the Tender Offeror referred to theshare valuation report (the “Share Valuation Report (Tender Offeror)”) obtained on December 20, 2022.
Mizuho Securities is not a related party of the Tender Offeror, Mitsui & Co., or the Target Company,and has no material interest in the Transaction. For details, please see “(I) Basis for the Valuation” and“(II) Background of the Valuation” of “(5) Basis for Valuation of the Purchase Price” of “2. Overview
of the Purchase” below. The Tender Offeror made a judgment and decision on the Tender Offer Priceafter comprehensively taking into account the various elements stated in “(Background Leading to theDetermination of the Tender Offer Price)” of “(II) Background of the Valuation” of “(5) Basis for
Valuation of the Purchase Price” of “2. Overview of the Purchase” below, and after discussing andnegotiating with the Target Company; therefore, it did not obtain an opinion on the fairness of the Tender
Offer Price (fairness opinion) from Mizuho Securities.
(II)

Acquisition of a Share Valuation Report and a Fairness Opinion by the Target Company froman Independent Financial Advisor and Third-party Valuation Agency(i)Name of the Valuation Agency and its Relationship with the Target Company and the Tender
OfferorAccording to the Target Company Press Releases, in order to express its opinion on the Tender Offer,
the Target Company requested that Nomura Securities, which is a financial advisor and third-party
valuation agency independent of the Tender Offeror, Mitsui & Co., and the Target Company, calculate
the value of the Target Company Shares and express an opinion on the appropriateness of the Tender
Offer Price (fairness opinion); moreover, as of December 20, 2022, it received the Share Valuation
Report (Nomura Securities) and the Fairness Opinion (Nomura Securities).
Nomura Securities is not a related party of the Tender Offeror, Mitsui & Co., or the Target Company,and has no material interest in the Tender Offer. Furthermore, the remuneration to be paid to Nomura
Securities for the Transaction includes a contingent fee subject to successful completion of theTransaction, etc. The Target Company concluded that the fact that their remuneration includes acontingent fee to be paid subject to successful completion of the Tender Offer does not rule out their
independence, considering general practices in the same type of transactions and the pros and cons of- 24 -

the remuneration system in which the Target Company will incur a considerable monetary burden even
if the Transaction fails. Based on this, the Target Company appointed Nomura Securities as its
financial advisor and third-party valuation agency based on the above-mentioned remuneration system.
(ii)

Overview of the Valuation for the Target Company Shares

Nomura Securities considered the valuation methods to be applied to the valuation of the Target
Company Shares from among multiple valuation methods; moreover, based on the idea that the valueof the Target Company Shares should be evaluated from various perspectives on the premise that theTarget Company is a going concern, Nomura Securities calculated the value of the Target Company
Shares using the average market price method to take into account the trends in the market price of theTarget Company Shares, the comparable company method since there are multiple listed companies thatare comparable with the Target Company and it is possible to infer the value of the Target Company
Shares by comparing these companies, and the DCF Method to reflect the status of future businessactivities in the calculation. The Target Company obtained the Share Valuation Report (Nomura
Securities) from Nomura Securities as of December 20, 2022.
The ranges of values per share of the Target Company Shares calculated using each of the above methods
in the Share Valuation Report (Nomura Securities) are as follows:
Average market price method: 5,020 yen to 5,172 yen
Comparable company method: 3,619 yen to 4,828 yen
DCF Method:
5,198 yen to 18,938 yen
In the average market price method, the range of the value per share of the Target Company Shares wascalculated to be 5,020 yen to 5,172 yen based on the closing price of the Target Company Shares on thePrime Market of the Tokyo Stock Exchange on the base date of December 20, 2022, which was 5,020
yen, the simple average of the closing prices for the five business days before the base date, which was
5,042 yen, the simple average of the closing prices for the one month before the base date, which was
5,100 yen, the simple average of the closing prices for the three months before the base date, which was
5,143 yen, and the simple average of the closing prices for the six months before the base date, which
was 5,172 yen.
Under the comparable company method, the value of the Target Company Shares was evaluated by
selecting listed companies that engage in businesses comparatively similar to those of the Target
Company and comparing their market prices and financial indicators indicating profitability. Using
this methodology, the range of the value per share of the Target Company Shares was calculated to be
3,619 yen to 4,828 yen.
In the DCF Method, the range of the value per share of the Target Company Shares was calculated to be
5,198 yen to 18,938 yen by analyzing the corporate value and share value of the Target Company, which
was calculated by discounting to the present value at a certain discount rate the free cash flow expected
to be generated by the Target Company in and after the third quarter of the fiscal year ending March2023 on the assumption of various factors, including the earnings forecasts and investment plans in thebusiness plans for the five fiscal years from the fiscal year ending March 2023 to the fiscal year ending
March 2027 prepared by the Target Company as well as publicly available information.
The business plans prepared by the Target Company, which were used by Nomura Securities for the
calculation using the DCF Method, do not expect significant increases or decreases in profits. In
addition, the synergies expected to be realized from the execution of the Transaction are not taken into
account in the business plans because those amounts are difficult to estimate specifically at the time ofthe valuation.
(Note) In calculating the value of the Target Company Shares, Nomura Securities assumed thatthe public information and all information provided by the Target Company were

- 25 -

accurate and complete, and it has not independently verified the accuracy andcompleteness of such information. Nomura Securities has neither independently
evaluated, appraised, nor assessed the assets and liabilities (including derivatives, offbalance sheet assets and liabilities, and other contingent liabilities) of the Target
Company and its affiliates, including analysis and evaluation of individual assets andliabilities, nor has it requested that any third-party organization appraise or assess thoseassets and liabilities. Nomura Securities assumed that the business plans of the Target
Company had been reasonably reviewed or prepared by the Target Company’s
management based on the best and good faith forecasts and judgments available at thetime of the valuation. The valuation by Nomura Securities reflects the information
obtained by Nomura Securities and the economic conditions on and before December
20, 2022. The sole purpose of the valuation by Nomura Securities is to serve as areference for the Target Company’s board of directors to consider the value of the Target
Company Shares.
(iii)

Overview of the Fairness Opinion (Nomura Securities)

The Target Company obtained the Fairness Opinion (Nomura Securities) from Nomura Securities as ofDecember 20, 2022 to the effect that the Tender Offer Price, 9,300 yen, is considered to be appropriate
from a financial perspective for the Target Company’s shareholders (excluding the Tender Offeror and
Mitsui & Co.).
(Note) Nomura Securities assumed that the publicly available information as well as financial,legal, regulatory, tax, accounting information and any other information provided to
Nomura Securities that were considered by Nomura Securities when preparing the
Fairness Opinion (Nomura Securities) (in this (Note), the “Written Opinion”) was
accurate and complete, and it has not independently verified the accuracy andcompleteness of such information, and has no obligation to verify them. Nomura
Securities has not independently evaluated, appraised, or assessed the assets andliabilities (including derivatives, off-balance sheet assets and liabilities, and othercontingent liabilities) of the Target Company and its affiliates, including analysis andevaluation of individual assets and liabilities, and such information has not been
provided by the Target Company or any third party. Nomura Securities has not madeany request to any third-party organization for evaluation, appraisal, or assessment.
Nomura Securities assumed that the financial forecasts and other future information of
the Target Company had been reasonably prepared by the Target Company’s
management based on the best and good faith forecasts and judgments currently
available, and that the Target Company’s financial situation would fluctuate inaccordance with these forecasts. When preparing the Written Opinion, Nomura
Securities relied on these financial forecasts and other future information without
conducting any independent investigation. Nomura Securities does not guarantee thatthese financial forecasts, etc. would be realized. Nomura Securities assumed that theTender Offer (in this (Note), the “Matter”) would be implemented lawfully andeffectively in accordance with the conditions indicated in the Target Company Press
Releases; that the tax effects of the Matter would be consistent with the assumptions
presented to Nomura Securities; that all consents or permissions by governments,
supervisory agencies, or other institutions necessary to implement the Matter would beobtained without any diminishment of profits expected to be generated by the Matter;and that the Matter would be completed in accordance with the conditions indicated in
the Target Company Press Releases without any waiver, modification, or change of thematerial conditions or agreed matters indicated in the Target Company Press Releases,
and Nomura Securities has not conducted, or has no obligation to conduct, any
independent investigation for them. Nomura Securities has not been requested by theTarget Company to review any transaction other than the Matter or the relativeevaluation thereof, and has not conducted such review. Nomura Securities has no- 26 -

obligation to solicit third parties to express an opinion on the Matter to the Target
Company or the Target Company’s board of directors, and it has not made such
solicitation.
Nomura Securities serves as a financial advisor of the Target Company for the Matter,and is involved in part of the negotiations on the Matter. As consideration for theservice, Nomura Securities will receive fees from the Target Company, including a fee
to be paid subject to successful completion of the Matter. Furthermore, Nomura
Securities will be reimbursed for certain expenses incurred by Nomura Securities andits affiliates from the Target Company. Submission of the Written Opinion is subject
to the exemption and indemnification clauses stipulated in the agreement between theTarget Company and Nomura Securities. Nomura Securities and its affiliates may
provide, or may provide in the future, investment banking service, other financial
instruments business-related service, and loan service to the Target Company, theTender Offeror, or their affiliates, and may receive remunerations. Nomura Securities
and its affiliates may trade or own financial instruments, including securities andfinancial derivatives of the Target Company, the Tender Offeror, or their affiliates, on
its own account or on the customers’ account in the ordinary course of business.
Nomura Securities’ opinion stated in the Written Opinion (in this (Note), the “Opinion”)
aims to provide reference information for the Target Company’s board of directors toconsider the purchase price per share of the Target Company’s common stock in theTender Offer (in this (Note), the “Tender Offer Price”) indicated in the Target Company
Press Releases. The Opinion is stated solely regarding the appropriateness of theTender Offer Price from a financial perspective based on the conditions and assumptions
indicated in the Written Opinion, and Nomura Securities has not been requested to state
an opinion on the factual premises or assumptions constituting the basis for the decisionon the Tender Offer Price or to state an opinion on approval or disapproval of the Target
Company’s management decision to implement the Tender Offer; furthermore, it has
not stated such opinions in the Written Opinion. In addition, the Opinion does notmake any recommendation on the Target Company’s shareholders exercising theirvoting rights or other rights as shareholders regarding the Matter, on share transaction
or other associated matters, and the Written Opinion does not state any opinion on thepast, present, or future price level of the Target Company Shares. Nomura Securities
did not provide independent legal, regulatory, tax, and accounting advice in connection
with the Tender Offer, but relied on decisions by the Target Company or external experts
regarding these matters.
Nomura Securities assumed that unless otherwise especially allowed in the agreement
between the Target Company and Nomura Securities, the content of the Written Opinion
would not be disclosed to third parties or used for any other purpose, and the Target
Company may not disclose, refer to, communicate, or use the Written Opinion, in wholeor part, without Nomura Securities’ prior written consent.
The Opinion assumed the financial, economic, market, and business environment, orother conditions as of the date of the Written Opinion and relied on information obtainedby Nomura Securities as of that date. The Opinion may be influenced by futurefluctuations or changes in the situation, but Nomura Securities has no obligation tomodify, change, or supplement its opinion.
The Target Company’s board of directors believes that considering the situation from the board of
directors’ meeting held on December 21, 2022 until March 10, 2023, there is no significant change inthe factual premises that has an impact on the Share Valuation Report (Nomura Securities) and the
Fairness Opinion (Nomura Securities); and taking into account the advice received from Nomura- 27 -

Securities, it believes that the Share Valuation Report (Nomura Securities) and the Fairness Opinion(Nomura Securities) are still valid.
(III)

Advice from an Outside Law Firm to the Target Company

According to the Target Company Press Releases, as stated in “(V) Establishment of an Independent
Special Committee by the Target Company and Acquisition of a Report by the Target Company fromthe Special Committee” below, the Target Company appointed Mori Hamada & Matsumoto which is an
outside legal advisor, and has received legal advice including advice on the measures to be taken to
ensure the fairness of the procedures in the Transaction, on various procedures for the Transaction, andon the method and the process of the Target Company’s decision-making regarding the Transaction.
Mori Hamada & Matsumoto is not a related party of the Tender Offeror, Mitsui & Co., or the Target
Company, and has no material interest in the Transaction including the Tender Offer. Furthermore, theremuneration to Mori Hamada & Matsumoto consists of only an hourly-based fee to be paid regardlessof the success or failure of the transaction, and does not include any contingent fee subject to successful
completion of the Transaction.
(IV)

Building of Independent Structure for Consideration in the Target Company

According to the Target Company Press Releases, the Target Company internally built a structure toconsider, negotiate, and make a decision on the Transaction in a position independent of the Tender
Offeror, Mitsui & Co., and the Target Company. Specifically, in mid-April 2022, the Target Company
received an initial offer from the Tender Offeror regarding making the Target Company a consolidated
subsidiary of the Tender Offeror, including the possibility of delisting the Target Company Shares.
Subsequently, the Target Company established a project team to discuss and negotiate with the Tender
Offeror, and the members, all of whom do not concurrently serve as an officer or employee of the Tender
Offeror and Mitsui & Co., and have not held any position in the Tender Offeror and Mitsui & Co. within
the latest one year, consist of only one director (Mr. Kazuhiro Koshikawa), 5 officers, and 7 employees;
this handling has been maintained.
Specifically, in connection with the consideration of the Transaction, the Target Company internallyestablished a working group in charge of considering the significance of implementing the Transaction,
the method of implementation, the transaction terms for the Transaction including the Tender Offer, etc.,
and negotiating with the Tender Offeror (capital policy working group), and a working group in chargeof considering future synergies and growth strategies, such as business expansion utilizing the Tender
Offeror Group’s resource assets (future vision working group); thereby, the Target Company has carriedout its consideration.
The Target Company obtained approval of the special committee to the effect that there is no issue withthe structure to consider the Transaction that was built within the Target Company (including the scopeof the Target Company’s officers and employees who would be involved in the consideration,negotiations, and decision-making for the Transaction, and their duties) from the perspective of
independence and fairness.
(V)

Establishment of an Independent Special Committee by the Target Company and Acquisition ofa Report by the Target Company from the Special Committee(i)Background to the Establishment

According to the Target Company Press Releases, as stated in “(II) Decision-Making Process andReasons Leading to the Target Company’s Support of the Tender Offer” of “(2) Background, Purpose
and Decision-Making Process Leading to the Decision to Implement the Tender Offer, and Post-Tender
Offer Management Policy” above, the Target Company established a special committee pursuant to theresolution at the board of directors’ meeting held on September 28, 2022. Prior to the establishment- 28 -

of the special committee, from late September 2022, the Target Company, while receiving advice from
Mori Hamada & Matsumoto, individually explained to its independent outside directors that it hadreceived an initial proposal for the Transaction from the Tender Offeror and that it would be necessary
to build a structure to consider, negotiate, and make a decision on the Transaction with a view toenhancing the Target Company’s corporate value and securing interests of the Target Company’s generalshareholders, in a position independent of the Tender Offeror and Mitsui & Co. Based on this, theTarget Company, while receiving advice from Mori Hamada & Matsumoto, selected the following threecandidates for members of the special committee after confirming that they are independent of theTender Offeror and Mitsui & Co. (the Target Company confirmed that there is no material interest
between Mr. Keishiro Kinoshita, Ms. Ryuko Inoue, and Mr. Ryu Matsumoto on the one side, and theTender Offeror, Mitsui & Co., or the Target Company on the other side), and that they do not have any
material interest in whether the Transaction will be successfully completed that is different from generalshareholders: Mr. Keishiro Kinoshita (independent outside director of the Target Company) who has along-term career at a financial institution, knowledge and experience acquired through his career at alisted company, and international experience; Ms. Ryuko Inoue (independent outside director of theTarget Company, lawyer at Atsumi & Sakai, employer member of the Central Labour Relations
Commission, outside director of Cosmo Energy Holdings Co., Ltd.) who has a long-term career at the
Ministry of Agriculture, Forestry and Fisheries and knowledge and experience acquired as a lawyer; andMr. Ryu Matsumoto (independent outside director of the Target Company) who has long-term andaffluent experience in the logistics industry and knowledge and experience in overall management (themembers of the special committee have not been changed since the establishment thereof).
On that basis, as stated in “(II) Decision-Making Process and Reasons Leading to the Target Company’s
Support of the Tender Offer” of “(2) Background, Purpose and Decision-Making Process Leading to theDecision to Implement the Tender Offer, and Post-Tender Offer Management Policy” above, the Target
Company established the special committee pursuant to the resolution at the board of directors’ meeting
held on September 28, 2022, and consulted the special committee on the Advisory Matters. Whenestablishing the special committee, the Target Company’s board of directors resolved that decisionmaking on the Transaction by the Target Company’s board of directors will respect the special
committee’s decisions to the maximum extent, including whether to support the Tender Offer; that if thespecial committee decides that the terms and conditions of the Transaction are not appropriate, it will
not approve the Transaction on those terms and conditions (including not to support the Tender Offer);and that the special committee will be substantially involved in the negotiation process between theTarget Company and the Tender Offeror (including making instructions or requests regarding thenegotiation policy with the Tender Offeror as necessary, and negotiating with the Tender Offeror itself).
The Target Company’s board of directors also resolved that the special committee will appoint its own
financial advisor(s) and legal advisor(s) at the Target Company’s expense and will nominate or approve
the Target Company’s financial advisor(s) and legal advisor(s) (including ex post facto approval) (if thespecial committee confirms that there is no issue with the independence and expertise of the Target
Company’s advisors, it may seek professional advice from the Target Company’s advisors); that the
special committee will receive information necessary to consider and make a decision on the Transaction
from the Target Company’s officers and employees, including information regarding the content andpremise of preparation of the business plans; and that the Target Company will grant authority for othermatters that the special committee finds necessary when considering and making a decision on theTransaction.
A fixed amount of remuneration will be paid to each member of the special committee as consideration
for their duties regardless of the content of their report, and the remuneration does not include any
contingent fee subject to successful completion of the Transaction.
(ii)

Details of the Consideration

The special committee held meetings 13 times in total for approximately 13 hours in total during theperiod from October 6 to December 21, 2022, and its members performed their duties for the Advisory- 29 -

Matters by making reports, sharing information, deliberating, and making decisions via e-mail, web
meeting, etc. as necessary during each interval of the meetings.
Specifically, on October 6, 2022, the special committee first decided to appoint Nakamura, Tsunoda &Matsumoto as its own legal advisor independent of the Tender Offeror, Mitsui & Co., and the Target
Company, and PLUTUS as its own financial advisor and third-party valuation agency independent of
the Tender Offeror, Mitsui & Co., and the Target Company, after considering their independence,expertise, experience, etc. The special committee confirmed the expertise and experience ofNakamura, Tsunoda & Matsumoto and PLUTUS, and that there was no issue with their independenceof the Tender Offeror and Mitsui & Co. as well as the Target Company.
Furthermore, the special committee confirmed the expertise and experience of Nomura Securities as theTarget Company’s financial advisor and third-party valuation agency and that there was no issue with
their independence of the Tender Offeror, Mitsui & Co., and the Target Company, and it approved theappointment thereof; the special committee confirmed the expertise and experience of Mori Hamada &Matsumoto as the Target Company’s legal advisor and that it had no material interest in the Tender
Offeror, Mitsui & Co., or the Transaction including the Tender Offer, and it approved the appointment
thereof.
In addition, the special committee confirmed that there was no issue regarding the structure to consider
the Transaction that the Target Company internally built (including the scope of the Target Company’s
officers and employees who would be involved in the consideration, negotiations, and decision-making
for the Transaction, and their duties) from the perspective of independence and fairness, and approvedit.
Moreover, the special committee considered the measures to be taken in order to ensure the procedural
fairness of the Transaction based on the legal advice received from Nakamura, Tsunoda & Matsumotoand the opinion obtained from Mori Hamada & Matsumoto.
The special committee sent a document containing inquiries regarding the significance and purpose of
the Transaction, the management structure and business policy after the Transaction, various conditionsof the Transaction, and the like; furthermore, it received direct explanations regarding these matters fromthe Tender Offeror. Thereafter, they exchanged questions and answers.
The special committee received explanations regarding the background of the Transaction, synergy anddis-synergy of the Transaction, effect of the Transaction on the employees, and countermeasures, etc.,from the executive members of the Target Company, and exchanged questions and answers.
In addition, the special committee received explanations from the Target Company regarding thecontents of the Target Company’s business plans, the material preconditions therefor, and the
preparation process thereof, which constitute the basis for the valuation of the Target Company Sharesby the Tender Offeror, Nomura Securities, and PLUTUS; after exchanging questions and answers, it
confirmed the reasonableness thereof and approved them. Moreover, as stated in “(II) Acquisition ofa Share Valuation Report and a Fairness Opinion by the Target Company from an Independent Financial
Advisor and Third-party Valuation Agency” above and “(VII) Acquisition of a Share Valuation Reportand a Fairness Opinion by the Special Committee from an Independent Third-party Valuation Agency”
below, Nomura Securities and PLUTUS calculated the value of the Target Company Shares based on
the contents of the business plans. The special committee received explanations regarding the
calculation methods used in their valuation of the Target Company Shares, the reasons why thesecalculation methods were adopted, the details of the calculations using each calculation method, and thematerial preconditions; furthermore, after exchanging questions and answers, and deliberating over andconsidering them, it confirmed the reasonableness of these matters.
Furthermore, as stated in “(II) Acquisition of a Share Valuation Report and a Fairness Opinion by theTarget Company from an Independent Financial Advisor and Third-party Valuation Agency” above and- 30 -

“(VII) Acquisition of a Share Valuation Report and a Fairness Opinion by the Special Committee froman Independent Third-party Valuation Agency” below, the Target Company has received a submissionof the Fairness Opinion (Nomura Securities) from Nomura Securities and the special committee hasreceived a submission of the Fairness Opinion (PLUTUS) from PLUTUS; the special committee has
also received explanations regarding the issuance procedures, etc. of the Fairness Opinion (Nomura
Securities) and the Fairness Opinion (PLUTUS) from Nomura Securities and PLUTUS, respectively,
and exchanged questions and answers.
Since the Target Company received the first proposal for the Tender Offer Price from the Tender Offeror
on November 4, 2022, the special committee has received timely reports on the details and the courseof negotiation, etc. from Nomura Securities as the Target Company’s financial advisor and the Target
Company, each time a proposal for the Tender Offer Price was submitted by the Tender Offeror to theTarget Company. The special committee conducts deliberation over and consideration of the details
thereof also based on the advice received from PLUTUS and opinions heard from Nomura Securities.
The special committee also receives a prior explanation from Nomura Securities on the draft for a policyof negotiation with the Tender Offeror and the draft for a reply letter to the Tender Offeror, and states
opinions as necessary and exchanges questions and answers; thereafter, it approves those drafts andgives instructions and requests to Nomura Securities and the secretariat.
The special committee confirms, regarding the drafts for the Tender Offeror Press Release Dated
December 21, 2022 and the Target Company Press Release Dated December 21, 2022, that a fruitful
information disclosure is planned to be conducted upon receiving several explanations from Mori
Hamada & Matsumoto as the Target Company’s legal advisor and Nomura Securities as the Target
Company’s financial advisor, and exchanging questions and answers, while also receiving advice, etc.
from Nakamura, Tsunoda & Matsumoto as the special committee’s legal advisor.
(iii)

Details of the Decision

Under the circumstances described above, the special committee carefully discussed and considered theAdvisory Matters based on the legal advice received from Nakamura, Tsunoda & Matsumoto; the advice
from a financial perspective received from PLUTUS; and the content of the Share Valuation Report(PLUTUS) and the Fairness Opinion (PLUTUS) submitted as of December 21, 2022. Consequently,
based on the unanimous consent of the members, the special committee submitted to the Target
Company’s board of directors the Report Dated December 21, 2022 as of the same date, as summarized
below.
(a)(b)

Contents of the Reporti.

It is considered to be appropriate for the Target Company’s board of directors
to support the Tender Offer and to express an opinion to the effect that itrecommends that the Target Company’s shareholders tender shares in theTender Offer.

ii.

The decisions made by the Target Company’s board of directors on theTransaction (the decision to support the Tender Offer, the decision torecommend that the Target Company’s shareholders tender shares in the Tender
Offer, and the decisions to implement the Squeeze-Out Procedures through the
Share Consolidation) are considered not to be disadvantageous to the Target
Company’s minority shareholders.

Reasons for the Proposals Made in the Reporti.

Based on the following points, the special committee believes that theTransaction will contribute to the enhancement of the Target Company’s
corporate value and that the purposes of the Transaction are reasonable.

- 31 -

-

The Tender Offeror has explained that: (i) it is considered that after theTransaction, it will be possible to share the Tender Offeror’s business strategy
with the Target Company at a high level, and by maximally leveraging theknow-how and infrastructure possessed by both companies to promptly andappropriately enact initiatives to realize the strategy, the results will be achieved
quickly and maximized, thereby contributing to the enhancement of thecorporate value of the Tender Offeror Group; (ii) it is considered that after theTransaction, the Target Company and the Tender Offeror will work together toimprove the competitiveness of the entire supply chain, which is also expected
to enhance the corporate value of the Target Company Group; and (iii)
specifically, it is considered that the Transaction will enable the Target
Company and the Tender Offeror to streamline and reinforce trading company
functions in the Tender Offeror Group, to augment their direct sales capabilities
through the integrated use of their sales know-how and infrastructure, and tofurther increase the sophistication of the supply chain (construction of a new
business model).

-In response, the management of the Target Company explained that: (i) the
greatest benefits of the Transaction for the Target Company are that it will bean opportunity for the Target Company to increase its presence in growing
overseas growth markets more than ever by integrating with the Tender Offeror,
which aims to establish a global crude steel production capacity of 100 million
tons, and that it will be an opportunity for the Target Company to play a role asa true core trading company for the Tender Offeror in new demand fields suchas carbon neutrality without being restricted in its handling of confidential
information; (ii) the Tender Offeror intends to expand direct marketing toconsumers within its group to maximize the group’s corporate value, and theTarget Company considers that the necessary commercial sales business for
direct marketing will be realized by integrating its trading company functions
within the group, by focusing its sales force on growing fields and regions tofurther expand sales and build and expand supply chains through the integrated
use of marketing data held by the domestic and overseas sales offices andprocessing bases of the Target Company and the Tender Offeror; (iii) in
response to the commercial sales business which is expected to increase, it isconsidered that the Target Company’s competitiveness in the entire supply
chain will be enhanced by improving the operation rate and optimizing systems
at its processing bases, and the integrated optimization and efficiency between
the Tender Offeror (Group) and the Target Company will be realized; and (iv)
it is considered that the integration of the Target Company Group’s production,
inventory, logistics, delivery, and other marketing data with the Tender Offeror
by utilizing digital transformation measures currently being promoted by theTarget Company, specifically a system created by the Target Company is
expected to further increase the sophistication of the supply chain and achieve
integrated optimization of production and logistics.

-

In addition, the Target Company’s management explained that: (i) they believethat no material dis-synergy will arise from the integration of various functions
with the Tender Offeror; (ii) while there is a concern that consumers who grantcommercial rights to the Target Company because the Target Company is alisted company with a certain degree of independence from the Tender Offeror,
may consider changing their trading company upon the integration of thevarious functions of the Target Company and the Tender Offeror, many
consumers are fully aware that the Target Company is an equity-method
affiliate/manufacturer-affiliated trading company in which the Tender Offeror- 32 -

held a 34.54% stake as of December 21, 2022, and therefore, it is consideredthat the number of consumers who would consider changing their trading
company due to wariness of the Tender Offeror’s growing influence isconsidered to be limited; (iii) while there is a concern that the Target Company’sdelisting and becoming a subsidiary of the Tender Offeror as a result of theTransaction may lead to reduced motivation or resignation of some employees,
or have a negative impact on recruitment and retention of personnel, the Target
Company confirmed a policy that full explanations regarding the Transaction
will be provided to its employees, including the establishment of an internal
communication plan, that two-way communication will be strengthened, andthat the Target Company and the Tender Offeror will hold adequate discussions
as necessary; and (iv) while there is a concern that the delisting of the Target
Company through the Transaction may result in losing the benefit oftransparency in its sustainability initiatives being ensured, which made it easierfor the Target Company to explain and appeal them to its business partners, theTarget Company intends to continue such initiatives and enhance disclosure,which would mitigate such concern to some extent.
-

Based on the above, after careful discussion and consideration, the special
committee believes that: the Tender Offeror’s explanation of the significanceand purposes of the Transaction has a certain degree of specificity; the special
committee is comfortable with the results of the consideration by the Target
Company’s management based on that explanation; the Transaction presents
multiple advantages and no significant disadvantages; and appropriate measures
are planned to be taken with respect to matters of concern for disadvantages that
the Transaction may cause, such as employee matters and sustainability
initiatives. As such, the special committee believes that the Transaction willcontribute to the enhancement of the Target Company’s corporate value and thatthe purposes of the Transaction are reasonable.

ii.

Based on the following points, the special committee believes that fair
procedures have been taken in the Transaction from the perspective of securing
the interests of the general shareholders.

-

The Target Company has established a special committee that is independent
from the Tender Offeror, Mitsui & Co., and the Target Company, and it may beconsidered that the special committee has performed its function effectively.

-

The special committee has appointed and received professional advice from its
own legal advisor, Nakamura Tsunoda & Matsumoto, and its own financial
advisor and third-party valuation agency, PLUTUS, after confirming theirexpertise and experience as well as their independence from the Tender Offeror,
Mitsui & Co., and the Target Company.

-

The Target Company has received professional advice from Mori Hamada &Matsumoto, its legal advisor approved by the special committee, and Nomura
Securities, its financial advisor and third-party valuation agency approved by
the special committee, after the special committee confirmed their expertise andexperience as well as the absence of material interests between them and theTender Offeror, Mitsui & Co., the Target Company, and the Transaction.

-

The special committee has obtained from PLUTUS, the special committee’s
third-party valuation agency, the Share Valuation Report (PLUTUS) and the
Fairness Opinion (PLUTUS).

- 33 -

-

The Target Company has obtained from Nomura Securities, the Target
Company’s third-party valuation agency, the Share Valuation Report (Nomura
Securities) and the Fairness Opinion (Nomura Securities).

-

Among the officers of the Target Company, President and Representative
Director Shinichi Nakamura and Director and Executive Vice President
Hidetake Ishihara, who have transferred from the Tender Offeror to the Target
Company within the past year, Director and Managing Executive Officer
Hiroshi Tashiro, who has transferred from Mitsui & Co. to the Target Company
within the past year, and an outside Audit and Supervisory Board Member
Hirofumi Funakoshi, who concurrently serves as a Managing Executive Officerof the Tender Offeror, will not participate in the deliberations and resolutions of
the Target Company’s board of directors pertaining to the Transaction, and will
not participate in the consideration of the Transaction at the Target Company
and the discussions and negotiations regarding the Transaction with the Tender
Offeror. Furthermore, the Target Company has established working groups
such as the Future Vision Working Group and the Capital Policy Working Group
comprising only officers and employees of the Target Company who do notconcurrently serve as officers or employees of the Tender Offeror Group (otherthan the Target Company Group) or Mitsui & Co.’s group and have not served
as officers or employees of the Tender Offeror Group (other than the Target
Company Group) or Mitsui & Co.’s group within the past year, and it has beenfound that the Target Company has established a structure to consider, negotiate,
and make decisions regarding the Transaction from a standpoint independent of
the Tender Offeror and Mitsui & Co.

-

The purchase period for the Tender Offer is set as 20 business days in theTransaction. The Tender Offeror announced on December 21, 2022 its plan tocommence the Tender Offer, and aims to commence the Tender Offer in late
February 2023 after certain conditions precedent, including the completion ofprocedures required under competition law, have been met, which is expected
to require approximately two months before the commencement of the Tender
Offer. Therefore, the Tender Offeror has ensured a period of two months ormore after the announcement of the Tender Offer during which otherprospective acquirers are able to make competing proposals. Also, since theTarget Company has not entered into any agreement or other arrangement with
the Tender Offeror and Mitsui & Co. that would restrict competing bidders fromcontacting the Target Company, there is an opportunity for other prospective
acquirers to make proposals to acquire the Target Company.

-

Although a “majority of the minority” condition will not be set in the Tender
Offer, if there is such a condition, it may enable holders of a relatively small
number of shares to block the successful completion of the Tender Offer, giventhat the Tender Offeror and Mitsui & Co. together hold the majority of the Target
Company Shares. As such, such a condition would increase uncertainty as towhether the Tender Offer will successfully be completed and would notcontribute to the interests of minority shareholders who wish to tender theirshares in the Tender Offer. Thus, since sufficient measures to ensure thefairness of the Transaction have been taken in addition to the above, it isconsidered that the lack of a “majority of the minority” condition in the Tender
Offer will not impair the fairness of the procedures in the Tender Offer.

-

It is found that an opportunity for general shareholders to make an appropriate
decision regarding the Tender Offer based on sufficient information will beensured for the following reasons: the Tender Offeror will not adopt a scheme- 34 -

for the Squeeze-Out Procedures where those shareholders who do not tendertheir shares in the Tender Offer will not be entitled to rights to demand sharepurchase or rights to demand price determination; the Tender Offeror will
request that, if the Tender Offer is commenced in late February 2023, the Target
Company hold a Special Shareholders’ Meeting in late May 2023, the proposals
for which include the Share Consolidation; the amount of money to be delivered
to those shareholders who do not tender their shares in the Tender Offer(excluding the Tender Offeror, Mitsui, and the Target Company) in the SqueezeOut Procedures will be the same amount as the Tender Offer Price multipliedby the number of the Target Company Shares held by each such shareholder,
and the Tender Offeror plans to disclose to that effect.
-

It is found that practical measures desirable to eliminate coerciveness have beentaken in the Transaction, and that the Transaction is not coercive.

iii.

Based on the following points, the special committee believes that theappropriateness of the Tender Offer Price and other terms of the Transaction are
ensured.

-The method of acquisition through the Transaction, namely conducting theTender Offer as the first step and conducting a squeeze-out by a shareconsolidation as the second step, is a method commonly adopted in transactions
for the purpose of making a company an unlisted subsidiary, as in the case of
the Transaction. In addition, regarding the type of consideration for theacquisition, the special committee believes that the method of delivering cash
as consideration for the acquisition is appropriate given that the businesses of
the Tender Offeror and the Target Company are different and it will prevent theshareholders of the Target Company from assuming the risk of a fall in the shareprice of the Tender Offeror.

-

The business plan of the Target Company that was used as the basis forcalculation in the Share Valuation Report (Nomura Securities) and the Share
Valuation Report (PLUTUS) using the DCF Method was formulated based on
the Target Company’s management plan, which was formulated and announced
on May 10, 2021, and the special committee identified no particular
unreasonable aspects in the procedures for the formulation of the business planor the content of the business plan.

-

The special committee identified no particular unreasonable aspects in themethods of calculation or the content of the Share Valuation Report (PLUTUS)(including the distinction between business-related assets and non-businessrelated assets used in the DCF Method and the reasons for making such
distinction) and therefore determined the report to be reliable, and the special
committee confirmed that the Tender Offer Price (i) exceeds the upper limit
calculated by PLUTUS using the market price method, (ii) is within the range
calculated by PLUTUS using the DCF Method, and also (iii) exceeds themedian value (7,621yen) calculated by PLUTUS using the DCF Method.

-

The special committee identified no particular unreasonable aspects in themethods of calculation or the content of the Share Valuation Report (Nomura
Securities) (including the distinction between business-related assets and nonbusiness-related assets used in the DCF Method and the reasons for making
such distinction) and therefore determined the report to be reliable, and thespecial committee confirmed that the Tender Offer Price (i) exceeds the upper- 35 -

limit calculated by Nomura Securities using the average market price method
and comparable company method and (ii) is within the range of the results
calculated by Nomura Securities using the DCF Method.
-

The special committee confirmed that the Tender Offer Price offers a premiumthat exceeds the average premiums offered in similar cases (i.e., 56 cases oftender offers conducted with the intention to delisting an equity-method affiliate
or consolidated subsidiary that were announced on and after January 1, 2019
and that successfully completed) in terms of the closing price of the shares of
the Target Company on the day before the date of announcement of the Tender
Offer, and the simple average closing prices over the one-month, three-month,and six-month periods immediately prior to that date.

-

The special committee was substantially involved in the process of discussion
and negotiation between the Target Company and the Tender Offeror regarding
the Tender Offer Price and other terms of the Transaction, and ensured thatsincere negotiations were conducted under circumstances in which reasonable
efforts were made to conduct the Transaction on terms favorable to the generalshareholders to the fullest extent possible, i.e., circumstances equivalent to anarm’s length transaction.

-

The special committee obtained the Fairness Opinion (PLUTUS) from
PLUTUS and the Target Company obtained the Fairness Opinion (Nomura
Securities) from Nomura Securities, and PLUTUS expressed an opinion that it
believes that the Tender Offer Price is considered fair for the minority
shareholders of the Target Company from a financial standpoint, and Nomura
Securities expressed an opinion to the effect that the Tender Offer Price isconsidered appropriate for the shareholders of the Target Company excluding
the Tender Offeror and Mitsui & Co. from a financial standpoint. The special
committee found no particular unreasonable aspects in the procedures for
issuing the Fairness Opinion (PLUTUS) and the Fairness Opinion (Nomura
Securities) or the content of those opinions, and the special committee believes
that those fairness opinions also support the appropriateness of the Tender Offer
Price.

-

While the special committee believes that it is not reasonable to place
importance on the net asset amount of the Target Company when examining its
share value because the Target Company plans to continue operating as a going
concern after the Transaction, the Tender Offer Price is nearly equivalent to thebook value of the Target Company’s consolidated net assets per share as of
September 30, 2022 less the amount of the interim dividend per share for the
fiscal year ending March 2023 and it exceeds the liquidation value as of
September 30, 2022 preliminarily calculated by the management of the Target
Company taking into account matters such as that certain discount will benecessary upon the disposal of assets and various expenses will arise inconnection with its liquidation in the event of dissolution or liquidation of theTarget Company.
Therefore, the special committee believes that theappropriateness of the Tender Offer Price is ensured even if the Target
Company’s net asset amount is taken into account.

-

Mainly based on the reasons described above, the special committee believes
that the appropriateness of the Tender Offer Price is ensured. Also, the special
committee believes that the appropriateness of consideration to be delivered tothe shareholders of the Target Company in the Squeeze-Out Procedures, which
will be the same amount as the Tender Offer Price, is ensured, since fair

- 36 -

procedures have been taken in the Transaction from the perspective of securing
the interests of the general shareholders as stated in ii. above.
-

Although it is expected that the Shareholders Agreement will provide for a calloption by the Tender Offeror and a put-option by Mitsui & Co. with an exercise
price that differs from the Tender Offer Price, the special committee believes
that those option transactions are separate transactions from the Tender Offer
and the fact that the exercise price for those options differs from the Tender
Offer Price does not violate the statutory rule of equality of the Tender Offer
Price. In addition, the special committee believes that those options do notdisadvantage the minority shareholders of the Company when considered incomparison with the terms of those options.

iv.

The special committee believes that: (i) the Transaction will contribute to theenhancement of the corporate value of the Target Company and the purposes of
the Transaction are reasonable as stated in i. above; (ii) the Transaction isconducted through fair procedures from the standpoint of securing the interestsof general shareholders as stated in ii. above; and (iii) the appropriateness of theTender Offer Price and other terms of the Transaction are ensured as stated iniii. above. As such, the special committee believes the Target Company’sboard of directors’ decision to express an opinion to support the Tender Offer
and to recommend that the shareholder of the Target Company tender theirshares in the Tender Offer would not be disadvantageous to the Target
Company’s minority shareholders and would be appropriate. The special
committee also believes that Target Company’s board of directors’ decision to
implement the Squeeze-Out Procedures by way of the Share Consolidation inorder to make the Tender Offeror and Mitsui & Co. the only shareholders of theTarget Company after the successful completion of the Tender Offer would not
be disadvantageous to the Target Company’s minority shareholders.

After the Target Company was informed by the Tender Offeror on January 18, 2023 that the Tender
Offeror intends to commence the Tender Offer on February 28, 2023 on the premise that the acquisitionof clearances under domestic and overseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., andVietnamese) competition laws is completed and that other Conditions Precedent are fulfilled or waived
by the Tender Offeror, on February 10, 2023, the Target Company requested the special committee thatthe special committee examine whether there are any changes in the contents of the report that the special
committee made to the Target Company’s board of directors as of December 21, 2022, and if there is nochange, state to that effect, and if there is any change, report the changed contents, to the Target
Company’s board of directors. Furthermore, on February 27, 2023 the Target Company was informedby the Tender Offeror that not all of the necessary procedures and actions under domestic and overseas
competition laws toward implementation of the Tender Offer had been completed, and therefore, theTender Offeror estimated that the Tender Offer would be commenced during March 2023. Thereafter,
the Target Company was informed by the Tender Offeror on February 28, 2023 that the acquisition ofclearances under domestic and overseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., andVietnamese) competition laws was completed. The special committee verified the facts concerningwhether any material change in the situation that could have an impact on the Transaction occurred on
and after December 21, 2022, and as a result of considering the above-mentioned advisory matters, it
confirmed that considering the circumstances on and after December 21, 2022 until March 10, 2023,
there were no circumstances that would require a change in the contents of the report that the special
committee made to the Target Company’s board of directors on December 21, 2022; on March 10, 2023,
the special committee submitted to the Target Company’s board of directors the Report Dated March
10, 2023 to the effect that it considers that there is no need to change the contents of the above-mentioned
report based on the unanimous resolution.

- 37 -

(VI)Advice from an Independent Law Firm to the Special Committee

According to the Target Company Press Releases, as stated in “(V) Establishment of an Independent
Special Committee by the Target Company and Acquisition of a Report by the Target Company fromthe Special Committee” above, the special committee appointed Nakamura, Tsunoda & Matsumoto as
its legal advisor independent of the Tender Offeror, Mitsui & Co., and the Target Company and received
legal advice including advice on the measures to be taken to ensure the procedural fairness of theTransaction and on the special committee’s deliberation method and process for the Transaction.
Nakamura, Tsunoda & Matsumoto is not a related party of the Tender Offeror, Mitsui & Co., or theTarget Company, and has no material interest in the Transaction including the Tender Offer. For the
independence of Nakamura, Tsunoda & Matsumoto, please see “(ii) Details of the Consideration” of“(V) Establishment of an Independent Special Committee by the Target Company and Acquisition of aReport by the Target Company from the Special Committee” above.
(VII)

Acquisition of a Share Valuation Report and a Fairness Opinion by the Special Committee froman Independent Third-party Valuation Agency(i)Name of the Valuation Agency and its Relationship with the Target Company and the Tender
OfferorAccording to the Target Company Press Releases, in order to consider the Advisory Matters, the special
committee requested that PLUTUS, which is a financial advisor and third-party valuation agency
independent of the Tender Offeror, Mitsui & Co., and the Target Company, calculate the value of theTarget Company Shares, make an associated financial analysis, and express an opinion on the fairnessof the Tender Offer Price (fairness opinion); moreover, as of December 21, 2022, the special committee
received the Share Valuation Report (PLUTUS) and the Fairness Opinion (PLUTUS).
As stated in “(II) Decision-Making Process and Reasons Leading to the Target Company’s Support of
the Tender Offer” of “(2) Background, Purpose and Decision-Making Process Leading to the Decision
to Implement the Tender Offer, and Post-Tender Offer Management Policy” above, when receiving theReport Dated December 21, 2022 submitted by the special committee on December 21, 2022, the Target
Company’s board of directors also received the Share Valuation Report (PLUTUS) and the Fairness
Opinion (PLUTUS) together. Furthermore, based on the content thereof, it adopted a resolution as
stated in “(VIII) Approval of All Directors of the Target Company Without Conflicts of Interest in theTransaction, and No Objection from All Audit and Supervisory Board Members of the Target Company
Without Conflicts of Interest in the Transaction” below.
PLUTUS is not a related party of the Tender Offeror, Mitsui & Co., or the Target Company, and it has
no material interest in the Transaction including the Tender Offer. The remuneration to be paid to
PLUTUS for the Transaction will only consist of a fixed amount of remuneration that will be paid to it
regardless of whether the Transaction will be successfully completed; furthermore, any contingent fee
subject to successful completion of the Transaction including the Tender Offer will not be included.
(ii)

Overview of the Valuation for the Target Company Shares

For the Tender Offer, PLUTUS considered the valuation methods to be applied to the valuation of theTarget Company Shares from among multiple valuation methods; moreover, based on the idea that thevalue of the Target Company Shares should be evaluated from various perspectives on the premise that
the Target Company is a going concern, PLUTUS calculated the value of the Target Company Sharesusing the average market price method to take into account the trends in the market price of the Target
Company Shares, and the DCF Method to reflect the status of future business activities in the calculation.
The ranges of values per share of the Target Company Shares calculated using each of the above methods
in the Share Valuation Report (PLUTUS) are as follows:- 38 -

Average market price method: 5,020 yen to 5,172 yen
DCF Method:
5,844 yen to 9,397 yen
In the average market price method, the range of the value per share of the Target Company Shares wascalculated to be 5,020 yen to 5,172 yen based on the closing price of the Target Company Shares on thePrime Market of the Tokyo Stock Exchange on the base date of December 20, 2022, which was 5,020
yen, the simple average of the closing prices for the one month before the base date, which was 5,100
yen, the simple average of the closing prices for the three months before the base date, which was 5,143
yen, and the simple average of the closing prices for the six months before the base date, which was
5,172 yen.
In the DCF Method, the range of the value per share of the Target Company Shares was calculated to be
5,844 yen to 9,397 yen by analyzing the corporate value and share value of the Target Company, which
was calculated by discounting to the present value at a certain discount rate the free cash flow expected
to be generated by the Target Company in and after the third quarter of the fiscal year ending March2023 on the assumption of various factors, including the earnings and investment plans in the businessprospects for the five fiscal years from the fiscal year ending March 2023 to the fiscal year ending March
2027 based on the business plans prepared by the Target Company as well as publicly available
information. For the calculation of the going-concern value, the share value was calculated using thecomparable multiple valuation method.
The business plans that were used for the calculation using the DCF Method do not expect significant
increases or decreases in profits. In addition, the synergies expected to be realized from the executionof the Transaction are not taken into account in the business plans because those amounts are difficult
to estimate specifically at the time of the valuation, excluding the effect of reducing the continued listing
cost. As stated in “(V) Establishment of an Independent Special Committee by the Target Company
and Acquisition of a Report by the Target Company from the Special Committee” above, the special
committee confirmed the reasonableness of the contents of the business plans, the material
preconditions, and the preparation process.
(iii)

Overview of Fairness Opinion (PLUTUS)

On December 21, 2022, the special committee received the Fairness Opinion (PLUTUS) from PLUTUS
to the effect that the Tender Offer Price, 9,300 yen, is considered fair from a financial perspective for
the Target Company’s minority shareholders. In light of the valuation results of the Target Company
Shares based on the business plans, PLUTUS expressed its opinion that the Tender Offer Price, 9,300
yen, is fair from a financial perspective for the Target Company’s minority shareholders.
The Fairness Opinion (PLUTUS) was issued after the current status of the Target Company Group’sbusiness, its business prospects, and other matters were disclosed by the Target Company to PLUTUS,
after PLUTUS considered the results of the valuation of the Target Company Shares implemented basedon the explanations regarding the disclosed matters, the questions and answers with the Target Company
regarding the overview, background, and purpose of the Tender Offer, and the Target Company Group’sbusiness environment, economy, market, and financial conditions within the scope PLUTUS foundnecessary, and after the review procedures by the review board independent of the engagement teamwithin PLUTUS were taken.
(Note) When preparing and submitting the Fairness Opinion (PLUTUS) and calculating theshare value that constituted the basis therefor, PLUTUS assumed that the informationand the basic materials provided by or discussed with the Target Company, and the
publicly available materials were accurate and complete, and that there was no fact thatmight materially impact the analysis and valuation of the Target Company Shares andwas not disclosed to PLUTUS, and it relied on them; it has not independently
investigated or verified them, and has no obligation to investigate or verify them.

- 39 -

PLUTUS assumed that the business prospects and other materials that PLUTUS usedas basic materials for the Fairness Opinion (PLUTUS) had been reasonably prepared by
the Target Company’s management based on the best forecasts and judgments available
at that time; PLUTUS does not guarantee that they would be realized, and it has not
expressed its opinion regarding the analysis or forecast based on which these materials
were prepared or the preconditions that constituted the grounds therefor.
PLUTUS has not independently evaluated or appraised the assets and liabilities(including off-balance sheet assets and liabilities, and other contingent liabilities) of theTarget Company and its affiliates, including analysis and evaluation of individual assets
and liabilities, and has not received any written evaluation or written appraisal regarding
them. PLUTUS has not evaluated the creditworthiness of the Target Company and its
affiliates under the applicable laws and regulations concerning insolvency, suspensionof payment, or other similar matters.
PLUTUS is neither an agency specialized in law, accounting, or tax, nor independently
analyzes or considers whether there are any legal, accounting, or tax issues concerning
the Tender Offer, nor has any obligation to analyze or consider them.
According to PLUTUS, the Fairness Opinion (PLUTUS) was prepared for the purposeof being used by the Target Company in considering the fairness of the Tender Offer
Price. Therefore, the Fairness Opinion (PLUTUS) does not mention the position of
the Transaction under the business strategies compared to alternative transactions that
the Target Company would be able to implement or the benefits that would be broughtby implementing the Transaction, and it does not state any opinion on whether theTender Offeror should implement the Transaction.
The Fairness Opinion (PLUTUS) states an opinion as of its preparation date regardingwhether the Tender Offer Price is fair from a financial perspective to the Target
Company’s minority shareholders based on the financial and capital markets, economic
conditions, and other circumstances as of its preparation date, and the information that
PLUTUS obtained until its preparation date, and the contents of the Fairness Opinion(PLUTUS) may be influenced by subsequent changes in the situation. However, evenin that case, PLUTUS has no obligation to modify, change, or supplement the contentsof the Fairness Opinion (PLUTUS). Furthermore, the Fairness Opinion (PLUTUS)
does not make any inference on or suggest any opinion on any matters other than thoseexpressly stated in it or any matters on and after its submission date.
The Fairness Opinion (PLUTUS) only expresses an opinion that the Tender Offer Priceis not disadvantageous to the Target Company’s minority shareholders from a financial
perspective and is fair, does not express an opinion or make any recommendation
regarding whether the Tender Offer should be implemented or whether the Target
Company’s shareholders should tender shares or take any action in the Tender Offer,and does not state any opinion to holders of securities issued by creditors or otherstakeholders of the Target Company.
The Fairness Opinion (PLUTUS) was provided by PLUTUS for use as a basic material
for the Target Company’s board of directors and the special committee to make adecision on the Tender Offer Price, and other persons cannot rely on it.
The Target Company’s board of directors believes that considering the situation from the board of
directors’ meeting held on December 21, 2022 until March 10, 2023, there is no significant change inthe factual premises that has an impact on the Share Valuation Report (PLUTUS) and the Fairness- 40 -

Opinion (PLUTUS), and based on the advice received from PLUTUS, it also believes that the Share
Valuation Report (PLUTUS) and the Fairness Opinion (PLUTUS) are still valid.
(VIII) Approval of All Directors of the Target Company Without Conflicts of Interest in theTransaction, and No Objection from All Audit and Supervisory Board Members of the Target
Company Without Conflicts of Interest in the Transaction
According to the Target Company Press Releases, as stated in “(II) Decision-Making Process andReasons Leading to the Target Company’s Support of the Tender Offer” of “(2) Background, Purpose
and Decision-Making Process Leading to the Decision to Implement the Tender Offer, and Post-Tender
Offer Management Policy” above, the Target Company’s board of directors carefully discussed andconsidered whether the Transaction including the Tender Offer will contribute to the enhancement of
the Target Company’s corporate value and whether the transaction terms for the Transaction including
the Tender Offer Price are appropriate based on the legal advice obtained from Mori Hamada &Matsumoto; the advice from a financial perspective obtained from Nomura Securities; the content of the
Share Valuation Report (Nomura Securities) and the Fairness Opinion (Nomura Securities); and thecontent of the Share Valuation Report (PLUTUS) and the Fairness Opinion (PLUTUS) received throughthe special committee, while respecting the special committee’s decisions indicated in the Report Dated
December 21, 2022 to the maximum extent.
As a result, as stated in “(II) Decision-Making Process and Reasons Leading to the Target Company’s
Support of the Tender Offer” of “(2) Background, Purpose and Decision-Making Process Leading to theDecision to Implement the Tender Offer, and Post-Tender Offer Management Policy” above, the Target
Company concluded that: (i) the Transaction including the Tender Offer will provide the Target
Company with an opportunity to increase its presence in growing overseas growth markets more thanever by integrating with the Tender Offeror, which aims to establish a global crude steel production
capacity of 100 million tons; this will also provide an opportunity for the Target Company to play a role
as a true core trading company for the Tender Offeror in new demands fields such as carbon neutrality
without being restricted in its handling of confidential information, among other advantages; and willcontribute to enhance the Target Company’s corporate value, and (ii) the transaction terms for theTransaction including the Tender Offer Price are appropriate to ensure interests that should be received
by general shareholders of the Target Company, and that the Tender Offer provides those shareholders
reasonable opportunities to sell the Target Company Shares at a price including an appropriate premium;moreover, at the board of directors’ meeting of the Target Company held on December 21, 2022, thedirectors who participated in deliberation and resolution unanimously resolved to express an opinion to
support the Tender Offer and to recommend that the Target Company’s shareholders tender shares in theTender Offer if the Tender Offer is commenced, as the Target Company’s opinion as of the same day.
Furthermore, at the board of directors’ meeting mentioned above, three Audit and Supervisory Board
Members other than Mr. Hirofumi Funakoshi among the four Audit and Supervisory Board Members of
the Target Company attended. Moreover, all of the attending Audit and Supervisory Board Members
stated their opinion that they had no objection to the above-mentioned resolution.
After the Target Company was informed by the Tender Offeror on February 28, 2023 that the acquisitionof clearances under domestic and overseas (Japanese, Chinese, Taiwanese, Turkish, Mexican, U.S., andVietnamese) competition laws was completed, at the board of directors’ meeting held on March 10,2023, the Target Company again carefully considered the terms of the Tender Offer based on the Target
Company’s business performance and the environment surrounding the Transaction, while respecting
the contents of the Report Dated March 10, 2023 submitted by the special committee to the maximum
extent; as a result, the Target Company concluded that as of March 10, 2023, there are no factors tochange its opinion regarding the Tender Offer as of December 21, 2022, and the Target Company again
resolved to express its opinion in support of the Tender Offer and to recommend that the Target
Company’s shareholders tender their shares in the Tender Offer based on the unanimous agreement of
the six directors who participated in the deliberation and resolution. At the board of directors’ meeting
mentioned above, three Audit and Supervisory Board Members other than Mr. Hirofumi Funakoshi- 41 -

among the four Audit and Supervisory Board Members of the Target Company attended. Moreover,
all of the attending Audit and Supervisory Board Members stated their opinion that they had no objection
to the above-mentioned resolution.
At the board of directors’ meetings of the Target Company held on December 21, 2022 and March 10,2023 mentioned above, considering the fact that Mr. Shinichi Nakamura and Mr. Hidetake Ishihara have
served as a Representative Director and Executive Vice President, and a Managing Executive Officer of
the Tender Offeror, respectively, within the latest one year and that Mr. Hiroshi Tashiro has served as an
associate officer of Mitsui & Co. within the latest one year, with a view to avoiding any possibility ofconflicts of interest and ensuring the fairness of the Transaction, six directors other than the abovementioned three directors among the nine directors of the Target Company deliberated and unanimously
resolved as above. Mr. Shinichi Nakamura, Mr. Hidetake Ishihara, and Mr. Hiroshi Tashiro did notparticipate in the consideration of the Transaction on the Target Company’s side or the discussions or
negotiations regarding the Transaction with the Tender Offeror, with a view to eliminate any possible
influence of the issue of structural conflicts of interest in the Transaction.
The directors who participated in the deliberations and resolutions at the board of directors’ meetings of
the Target Company held on December 21, 2022 and March 10, 2023 mentioned above included two
directors who used to be employees of the Tender Offeror (Mr. Yasumitsu Saeki and Mr. Kazuhiro
Koshikawa). However, they do not concurrently serve as an officer or employee of the Tender Offeror,
and a certain period has passed since they moved to the Target Company; moreover, as officers of theTarget Company, they are not in such a position or have such a relationship that they receive any
instructions from the Tender Offeror. Therefore, the Target Company has concluded that as of eachday, there are no circumstances which cause or may cause a conflict of interest between these directors
and the Target Company or the Target Company’s minority shareholders. Mr. Yasumitsu Saeki did notparticipate in the discussions or negotiations regarding the Transaction with the Tender Offeror. In thisrespect, as stated in “(ii) Details of the Consideration” of “(V) Establishment of an Independent Special
Committee by the Target Company and Acquisition of a Report by the Target Company from the Special
Committee” above, the special committee’s confirmation and approval have been obtained. Also, Mr.
Hirofumi Funakoshi, who is an Audit and Supervisory Board Member of the Target Company
concurrently serves as a Managing Executive Officer of the Tender Offeror, did not participate in the
deliberations and refrained from expressing his opinion when adopting a resolution at the board of
directors’ meetings held on December 21, 2022 and March 10, 2023 mentioned above, with a view toeliminate any possible influence of the issue of structural conflicts of interest in the Transaction.
(IX)

Measures to Ensure Purchase Opportunities for Other Purchasers

The Tender Offeror believes that the opportunity for persons other than the Tender Offeror to purchase
the Target Company Shares is ensured because the period from the announcement date of the Tender
Offeror Press Release Dated December 21, 2022 to commencement of the Tender Offer is approximately
two and a half months. Furthermore, the Tender Offeror and the Target Company have not executed
any agreement that restricts competing bidders from contacting the Target Company, such as anagreement containing a deal protection clause that prohibits the Target Company from contacting any
competing bidders. The Tender Offeror has given consideration to ensure the fairness of the Tender
Offer by not hindering opportunities for competitive purchases.
As stated above, the Tender Offeror believes that the opportunity for the Target Company’s generalshareholders to determine whether to tender shares in the Tender Offer and the opportunity for persons
other than the Tender Offeror to purchase the Target Company Shares is ensured because the period
from the announcement date of the Tender Offeror Press Release Dated December 21, 2022 tocommencement of the Tender Offer is approximately two and a half months. Thus, the Tender Offeror
has set the purchase period for the Tender Offer (the “Tender Offer Period”) as 20 business days (Note),
which is the shortest period as stated in laws or regulations.

- 42 -

(Note) 20 business days in the U.S., which is the minimum required number of days for a tender
offer period under the U.S. Securities Act, are ensured as the Tender Offer Period.
(X)

Measures to Ensure Opportunities for the Target Company’s Shareholders to Properly
Determine Whether to Tender Shares in the Tender Offer

As stated in “(4) Post-Tender Offer Reorganization Policy (Matters Regarding a So-called Two-Step
Acquisition)” below, the Tender Offeror (i) plans to request that the Target Company hold a special
shareholders’ meeting (the “Special Shareholders’ Meeting”) the proposals for which include the Share
Consolidation and a partial amendment to the articles of incorporation to abolish the unit share clausesubject to the Share Consolidation becoming effective, and will not adopt a method that does not ensure
rights to demand share purchase or rights to demand price determination of the Target Company’s
shareholders, and (ii) when conducting the Share Consolidation, the amount of money to be delivered
to the Target Company’s shareholders as consideration will be calculated so that it is equal to the Tender
Offer Price multiplied by the number of the Target Company Shares owned by each such shareholder(excluding the Tender Offeror, Mitsui & Co., and the Target Company). Therefore, the Tender Offeror
has ensured the opportunities for the Target Company’s shareholders to properly determine whether totender shares in the Tender Offer and thereby has given consideration so as not to cause any oppression.
(4)

Post-Tender Offer Reorganization Policy (Matters Regarding a So-called Two-Step Acquisition)

As stated in “(1) Overview of the Tender Offer” above, if the Tender Offeror fails to acquire all of theTarget Company Shares (excluding the Target Company Shares owned by the Tender Offeror and Mitsui& Co. and the treasury shares owned by the Target Company) through the Tender Offer, it plans to
implement the Squeeze-Out Procedures by the methods described below after the successful completionof the Tender Offer.
Specifically, the Tender Offeror plans to request that the Target Company hold the Special Shareholders’Meeting in early June 2023 the proposals for which include the Share Consolidation and a partial
amendment to the articles of incorporation to abolish the unit share clause subject to the Share
Consolidation becoming effective. The Tender Offeror and Mitsui & Co. plan to agree to each of those
proposals at the Special Shareholders’ Meeting. If the proposal for the Share Consolidation is approvedat the Special Shareholders’ Meeting, the Target Company’s shareholders will own the Target Company
Shares in the number reflecting the ratio of the Share Consolidation that is approved at the Special
Shareholders’ Meeting, on the day on which the Share Consolidation takes effect. If fractions less than
one share arise as a result of the Share Consolidation, then pursuant to the procedures provided in Article
235 of the Companies Act and other relevant laws and regulations, the amount of money obtained byselling the Target Company Shares corresponding to the total of such fractions (any fraction of less than
one share in the total number will be rounded off; hereinafter the same applies) to the Target Company
or the Tender Offeror will be delivered to each shareholder of the Target Company having such fractional
Target Company Shares. The Tender Offeror plans to request that the Target Company: (a) calculate
the sales price of the Target Company Shares corresponding to the total of such fractions so that theamount of money to be delivered, as a result of the sale, to each shareholder of the Target Company(excluding the Tender Offeror, Mitsui & Co., and the Target Company; hereinafter the same applies)
who did not tender shares in the Tender Offer equals the Tender Offer Price multiplied by the numberof the Target Company Shares owned by each such shareholder; and (b) file a petition with a court topermit such voluntary sale. The consolidation ratio of the Target Company Shares has not been
determined as of today; however, it will be determined in such a way that the number of the Target
Company Shares owned by the Target Company’s shareholders who did not tender shares in the Tender
Offer will be a fraction of less than one share and the Tender Offeror and Mitsui & Co. will own all theTarget Company Shares (excluding the treasury shares owned by the Target Company).
As the provisions of the Companies Act that aim to protect the rights of minority shareholders to which
the above-mentioned procedures relate, if fractions less than one share arise as a result of the Share
Consolidation, the Target Company’s shareholders will be entitled, in accordance with Articles 182-4- 43 -

and 182-5 of the Companies Act and other relevant laws and regulations, to (a) demand that the Target
Company purchase, at a fair price, all of the fractions of less than one share from among shares that theyown, and (b) file a petition with a court to determine the sales price for their Target Company Shares.
As stated above, in the Share Consolidation, the number of the Target Company Shares owned by theTarget Company’s shareholders who did not tender shares in the Tender Offer will be a fraction of lessthan one share so that the Tender Offeror and Mitsui & Co. will own all the Target Company Shares(excluding the treasury shares owned by the Target Company). Thus, the Target Company’s
shareholders who dissent with the Share Consolidation will be able to file a petition to determine thesales price. If the petition mentioned above is filed, the purchase price for the Target Company Shares
will be finally determined by the court.
With respect to the procedures mentioned above, the method and time of implementation thereof maychange depending on various factors such as the state of amendments, enforcement, the authorities’interpretations, etc. of the relevant laws and regulations. However, even in that case, if the Tender
Offer is successfully completed, a method of ultimately delivering money to each shareholder of theTarget Company who did not tender shares in the Tender Offer is scheduled to be adopted. It is alsoplanned that the amount of money to be delivered to each shareholder under such method will becalculated so that it is equal to the Tender Offer Price multiplied by the number of the Target Company
Shares owned by each such shareholder. The Tender Offeror will discuss the specific procedures, timeof implementation of those procedures, and other matters concerning the above with the Target
Company, and the Target Company will promptly announce those matters as soon as they are
determined.
If it is expected that the Squeeze-Out Procedures are completed by June 30, 2023, subject to completionof the Squeeze-Out Procedures, the Tender Offeror plans to request that the Target Company partiallyamend the articles of incorporation to abolish the provisions on a record date for voting rights for theannual shareholders meeting for the fiscal year ending March 2023 (the “Annual Shareholders
Meeting”) to make the shareholders who are entitled to exercise their rights at the Annual Shareholders
Meeting the shareholders after completion of the Squeeze-Out Procedures (meaning the Tender Offeror
and Mitsui & Co.). Therefore, even those shareholders who are stated or recorded in the shareholders
register of the Target Company as of March 31, 2023 might not exercise their rights at the Annual
Shareholders Meeting.
We note that the Tender Offer does not solicit the Target Company’s shareholders to agree to the
proposals at the Special Shareholders’ Meeting. Each shareholder of the Target Company should
confirm with a tax accountant or other specialist, at its own responsibility, how tendering into the Tender
Offer or participating in the procedures described above are treated under relevant tax laws.
(5)

Possibility of Delisting and Reasons Therefor

As of today, the Target Company Shares are listed on the Prime Market of the Tokyo Stock Exchange.
However, since the Tender Offeror has not set a maximum limit on the number of shares to be purchasedin the Tender Offer, depending on the results of the Tender Offer, the Target Company Shares may bedelisted through prescribed procedures in accordance with the delisting criteria set by the Tokyo Stock
Exchange. Additionally, even if the delisting criteria are not met upon the successful completion of
the Tender Offer, if the Squeeze-Out Procedures are implemented as stated in “(4) Post-Tender Offer
Reorganization Policy (Matters Regarding a So-called Two-Step Acquisition)” above after the
successful completion of the Tender Offer, then the Target Company Shares will be delisted through theprescribed procedures in accordance with the delisting criteria of the Tokyo Stock Exchange. After
delisting, the Target Company Shares will no longer be traded on the Prime Market of the Tokyo Stock
Exchange.

- 44 -

(6)Items Regarding Material Agreements Related to the Tender Offer

The Tender Offeror executed the Shareholders Agreement with Mitsui & Co. as of December 21, 2022.
In the Shareholders Agreement, it is agreed not to tender any the Target Company Shares owned by
Mitsui & Co. (6,428,800 shares: ownership ratio: 19.93%) in the Tender Offer.
Furthermore, for the purpose of implementing the Transaction, in the Shareholders Agreement, as statedin “(4) Post-Tender Offer Reorganization Policy (Matters Regarding a So-called Two-Step Acquisition)”above, it is agreed: (i) that if the Tender Offer is successfully completed and the Tender Offeror fails toacquire all of the Target Company Shares (excluding the Target Company Shares owned by the Tender
Offeror and Mitsui & Co. and the treasury shares owned by the Target Company) through the Tender
Offer, the Tender Offeror will cause the Target Company to implement the Squeeze-Out Procedures tomake the Tender Offeror and Mitsui & Co. the only shareholders of the Target Company through, among
others, holding the Special Shareholders’ Meeting, the proposals for which include the Share
Consolidation at a consolidation ratio which ensures that the number of shares held by the Target
Company’s shareholders other than the Tender Offeror and Mitsui & Co. will be a fractional number
less than one share for the purpose of making the Tender Offeror and Mitsui & Co. the only shareholdersof the Target Company; (ii) that the Tender Offeror and Mitsui & Co. will cause the Squeeze-Out
Procedures to be completed by conducting all actions necessary to implement the Squeeze-Out
Procedures, including exercising their voting rights in favor of the proposals at the Special Shareholders’Meeting; and (iii) measures, if any, necessary to achieve the Voting Rights Ratio as soon as practicallypossible, pursuant to applicable laws and regulations, after the effective date of the Share Consolidation,
will be taken.
In addition, in the Shareholders Agreement, the Tender Offeror and Mitsui & Co. agree in connection
with the operation of the Target Company after the Transaction: (i) that Mitsui & Co. will nominate
directors of the Target Company in the number corresponding to the voting rights ratio of Mitsui & Co.;(ii) on matters related to the Target Company’s dividend policy; (iii) on matters related to the transaction
terms and conditions between the Tender Offeror and the Target Company; (iv) on matters requiring
Mitsui & Co.’s approval related to the operation of the Target company (amendment to the articles ofincorporation, M&A transactions, making investments or acquiring shares in a third party, and acquiring
or transferring material assets, etc.); (v) that as a general rule, if the Target Company needs to raise
funds, it will raise funds in a manner that would not cause dilution of Mitsui & Co.’s voting rights; and(vi) that the Tender Offeror will provide the Target Company’s financial information and otherinformation to Mitsui & Co. Other than these, the Tender Offeror and Mitsui & Co. agreed to matters
including: (i) general prohibition on transfer of the Target Company Shares owned by the Tender Offeror
and Mitsui & Co.; (ii) call options by the Tender Offeror and put options by Mitsui & Co. after three
years from the effective date of the Share Consolidation elapse and if certain events occur (Note 1); (iii)indemnity obligations in case of non-performance of obligations or violation of representations andwarranties (Note 2); (iv) events of termination and cancellation of the agreement; (v) confidentiality
duties; (vi) general prohibition on transfer, other disposition or assignment of contractual status andrights and obligations; and (vii) good-faith discussion duties for matters not provided in the agreement
or disputes over the provisions of the agreement.
(Note 1) In the Shareholders Agreement, the Tender Offeror and Mitsui & Co. have mainly
agreed: that (i) the exercise price of the Tender Offeror’s call options and Mitsui &Co.’s put options that will become exercisable in three years from the effective dateof the Share Consolidation will be the amount obtained by multiplying the book valueof the Target Company’s consolidated net assets (excluding non-controllingshareholders’ equity) by the ownership ratio of Mitsui & Co.; that (ii) the exercise
price of Mitsui & Co.’s put options in the case where the Tender Offeror is subject toa certain event will be 110% of the amount; and that (iii) the exercise price of theTender Offeror’s call options in the case where Mitsui & Co. is subject to a certain
event will be 90% of the amount. A “certain event” mentioned above means aviolation of any obligation, any representation or warranty under the Shareholders- 45 -

Agreement, or commencement of the legal insolvency proceedings or voluntaryliquidation proceedings. It has been also agreed that when exercising the Tender
Offeror’s call options and Mitsui & Co.’s put options that will become exercisable inthree years from the effective date of the Share Consolidation, the party which
exercises the options shall pay 900 million yen to the counterparty as a termination
fee.
(Note 2) In the Shareholders Agreement, the Tender Offeror and Mitsui & Co. have mutually
made representations and warranties regarding: (i) the authority to execute theShareholders Agreement; (ii) the effectiveness and enforceability of the Shareholders
Agreement; (iii) non-existence of any conflict with laws or regulations; (iv) lawful andeffective acquisition or performance of permissions and authorizations, and nonexistence of any relationship with anti-social forces.
2.

Overview of the Purchase(1)

Overview of the Target Company

(i)
(ii)
(iii)
(iv)
(v)
(vi)

(vii)

(viii)

Name
Location
Name and Title ofRepresentative
Description ofBusiness Activities
CapitalDate of
Establishment

Nippon Steel Trading Corporation
2-7-1 Nihonbashi, Chuo-ku, Tokyo
Shinichi Nakamura, President and Representative Director
Marketing and import/export of steel, industrial supply andinfrastructure, foodstuffs, textiles and others
16,389 million yen (as of December 31, 2022)
August 2, 1977

Nippon Steel Corporation
34.54%
Mitsui & Co., Ltd.
19.93%(Custody Bank of Japan, Ltd. as Standing Proxy)
The Master Trust Bank of Japan, Ltd. (trust account)
7.57%
Custody Bank of Japan, Ltd. (trust account)
3.74%
Employee Stock Ownership
1.36%
Major Shareholders
DFA INTL SMALL CAP VALUE PORTFOLIO
1.04%
and Ownership(Citibank, N.A., Tokyo Branch as Standing Proxy)
Percentage (as ofCustody Bank of Japan, Ltd. (trust account, 4)
0.87%
September 30, 2022)
Custody Bank of Japan, Ltd (Sumitomo Mitsui Trust
0.67%*Excluding treasury
and Bank, Limited Retrust Account / Nippon Denko
sharesCo., Ltd. Retirement Benefit Trust Account)
UBS AG LONDON A/C IPB SEGREGATED
0.62%
CLIENT ACCOUNT(Citibank, N.A., Tokyo Branch as Standing Proxy)
JP MORGAN CHASE BANK 385781
0.58%(Mizuho Bank, Ltd., Settlement & Clearing Services
Department as Standing Proxy)
Relationship between the Tender Offeror and the Target Company
The Tender Offeror directly owns 11,141,529 Target Company
Shares (ownership ratio: 34.54%), and together with the Target
Company Shares indirectly owned by Nippon Steel Metal
Products Co., Ltd. (the number of shares owned: 129,800 shares,
ownership ratio: 0.40%), Nippon Steel Logistics Co., Ltd. (theCapital Relationshipnumber of shares owned: 8,400 shares, ownership ratio: 0.03%)
and Nippon Steel SG Wire Co., Ltd. (the number of shares owned:
4,400 shares, ownership ratio: 0.01%), which are the Tender
Offeror’s wholly-owned subsidiaries, and Oji Steel Co., Ltd. (thenumber of shares owned: 20,000 shares, ownership ratio: 0.06%),- 46 -

Sanyo Special Steel Co., Ltd. (the number of shares owned:
7,700 shares, ownership ratio: 0.02%) and Nippon Steel Cement
Co., Ltd. (the number of shares owned: 4,400 shares, ownership
ratio: 0.01%), which are the Tender Offeror’s consolidated
subsidiaries, the Tender Offeror owns 11,316,229 Target
Company Shares in total (ownership ratio: 35.08%), making theTarget Company its equity-method affiliate.
Four directors of the Target Company are from the Tender Offeror,
and one Audit and Supervisory Board Member of the Target
Company concurrently serves as a Managing Executive Officer of
Personnel
the Tender Offeror.
RelationshipIn addition, as of December 31, 2022, nine employees of the Tender
Offeror are seconded to the Target Company, and six employees of
the Target Company are seconded to the Tender Offeror.
The Tender Offeror sells steel products to, and purchases raw
Business Relationshipfuels, machinery, and other items from, the Target Company.
Status as Related
The Target Company is an equity-method affiliate of the Tender
Parties
Offeror and is thus a related party.
(Note) The “(vii) Major Shareholders and Ownership Percentage (as of September 30, 2022)” is
described based on the “Major Shareholders” in the 46th second quarterly report submitted by
the Target Company on November 14, 2022.
(2)

Class of Shares to Be Purchased

Common stock(3)

Schedule, Etc.

(I)

Schedule
Date of decision

March 10, 2023 (Friday)

March 13, 2023 (Monday)
An electronic public notice will be issued, and a notice to that
Date of public notice on effect will be published in the Nihon Keizai Shimbun.
commencement of the (URL of electronic public notice: https://disclosure2.edinetfsa.go.jp/)
tender offer
However, since the day is a newspaper holiday, the notice will
be published on March 14, 2023 (Tuesday).
Submission date of thetender offer registration March 13, 2023 (Monday)statement(II)

Initial Purchase Period Set at the Time of Submission
From March 13, 2023 (Monday) to April 10, 2023 (Monday) (20 business days)(III)

Possibility of Extension at Request of the Target Company
Pursuant to Article 27-10, paragraph (3) of the Act, if the Target Company submits a position
statement seeking an extension of the Tender Offer Period, the Tender Offer Period will be 30
business days until April 24, 2023 (Monday).

- 47 -

(IV)Contact to Confirm Extension of PeriodContact

Reception hours(4)

Nippon Steel Corporation
2-6-1 Marunouchi, Chiyoda-ku, Tokyo(03)6867-4111 (main)
Tomoaki Arimura, Head of Department, General
Administration Department, General Administration
Division
From 9:00 to 17:20 on weekdays

Purchase Price

9,300 yen per share of common stock(5)

Basis for Valuation of the Purchase Price(I)

Basis for the Valuation
In order to ensure the fairness of the Tender Offer Price, when deciding the Tender Offer Price,
the Tender Offeror requested that Mizuho Securities, which is a financial advisor and third-party
valuation agency independent of the Tender Offeror, Mitsui & Co., and the Target Company, tocalculate the value of the Target Company Shares, and referred to the Share Valuation Report(Tender Offeror). The Tender Offeror made a judgment and a decision on the Tender Offer
Price after comprehensively taking into account the various elements stated in “(BackgroundLeading to the Determination of the Tender Offer Price)” of “(II) Background of the Valuation”
below, and discussing and negotiating with the Target Company; therefore, it did not obtain an
opinion on the fairness of the Tender Offer Price (fairness opinion) from Mizuho Securities.
Mizuho Securities is not a related party of the Tender Offeror, Mitsui & Co., or the Target
Company, and has no material interest in the Transaction. In addition, according to Mizuho
Securities, Mizuho Bank, Ltd. (“Mizuho Bank”), which is a group company of Mizuho Securities,
engages in financing and other transactions with the Tender Offeror, but it does not have a materialinterest in the Transaction causing a conflict of interest with the Tender Offeror, Mitsui & Co., andthe Target Company. Moreover, Mizuho Securities has built and implemented an appropriate
conflict of interest management system, including providing an explanation about the status of aconflict of interest to, and obtaining the consent from, the Tender Offeror if there is a possibility ofa conflict of interest, in accordance with the applicable laws and regulations such as Article 36-2 ofthe Act and Article 70-4 of the Cabinet Office Order on Financial Instruments Business, etc. (Cabinet
Office Order No. 52 of 2007, as amended); and it calculated the value of the Target Company Shares
independently from Mizuho Bank’s position as a lender. The Tender Offeror considered that an
appropriate conflict of interest management system to calculate the value of the Target Company
Shares had been built and implemented, confirmed the specialization and experience, among othermatters, and then elected Mizuho Securities as a third-party valuation agency.
Mizuho Securities considered the Target Company’s financial condition, and the trends and otherfactors concerning the market price of the Target Company Shares, and then concluded that it isappropriate to calculate the value of the Target Company Shares multilaterally; it thus reviewed thevaluation methods to be applied from among multiple valuation methods. As a result, Mizuho
Securities calculated the value of the Target Company Shares by using the following methods: theaverage market price method; the comparable company method; and the DCF Method. The
ranges of values per share of the Target Company Shares calculated using each of the above
methods are as follows:
Average market price method: 5,020 yen to 5,172 yen
Comparable company method: 3,078 yen to 6,968 yen- 48 -

DCF Method:

6,429 yen to 11,556 yen

In the average market price method, where December 19, 2022 was the base date, the value pershare of the Target Company Shares was calculated to range from 5,020 yen to 5,172 yen, basedon the following prices of the Target Company Shares on the Prime Market of the Tokyo Stock
Exchange: the closing price of the Target Company Shares on the base date (5,020 yen); thesimple average of the closing price for one month before the base date (5,104 yen); the simple
average of the closing price for three months before the base date (5,149 yen); and the simple
average of the closing price for six months before the base date (5,172 yen).
Under the comparable company method, the value of the Target Company Shares was evaluatedby comparing the market prices and financial indicators indicating profitability of listedcompanies that engage in businesses comparatively similar to those of the Target Company, andthe range of the value per share of the Target Company Shares was calculated to be 3,078 yen
to 6,968 yen.
In the DCF Method, the value of the Target Company Shares was calculated by discounting to
the present value at a certain discount rate the free cash flow expected to be generated by theTarget Company in and after the third quarter of the fiscal year ending March 2023, on theassumption of earnings projections adjusted by the Tender Offeror taking into consideration
various factors, including the Target Company’s business plan for the fiscal year ending March2023 to the fiscal year ending March 2027 as well as the results of the Due Diligence on theTarget Company by the Tender Offeror conducted from early October 2022 to late November
2022, and publicly disclosed information, and the value per share of the Target Company Shares
was calculated to range from 6,429 yen to 11,556 yen. As it is difficult to specifically estimate
the effectiveness and expenses expected to be created and incurred as a result of theimplementation of the Transaction, this business plan does not assume the implementation of
the Transaction. Further, in the Target Company’s business plan which served as a basis forthe DCF Method, there are no fiscal years in which significant increases/decreases in profits are
expected.
The Tender Offeror ultimately determined that the Tender Offer Price would be 9,300 yen on
December 21, 2022, comprehensively taking into account: (i) the Share Valuation Report(Tender Offeror) received from Mizuho Securities; (ii) the results of the Due Diligence on theTarget Company by the Tender Offeror conducted from early-October 2022 to late-November
2022; (iii) whether the board of directors of the Target Company would support the Tender
Offer; and (iv) the prospects of the Target Company Shares being tendered to the Tender Offer.
Thereafter, since the Tender Offeror confirmed that all of the Conditions Precedent were
fulfilled, on March 10, 2023, it decided to commence the Tender Offer on March 13, 2023.
There is no change in the Tender Offer Price of 9,300 yen.
The Tender Offer Price of 9,300 yen includes the following premiums: 85.26% on the closing
price of the Target Company Shares of 5,020 yen on the Prime Market of the Tokyo Stock
Exchange as of December 20, 2022, which is the business day immediately before the scheduledannouncement date of the Tender Offer; 82.35% on the simple average of the closing price forthe one month before to the same date, which was 5,100 yen; 80.83% on the simple average ofthe closing price for the three months before the same date, which was 5,143 yen; and 79.81%
on the simple average of the closing price for the six months before the same date, which was
5,172 yen.
Furthermore, the Tender Offer Price of 9,300 yen includes a premium of 0.32% on the closing
price of the Target Company Shares of 9,270 yen on the Prime Market of the Tokyo Stock
Exchange as of March 9, 2023, which is the business day immediately before the announcement
date of commencement of the Tender Offer.

- 49 -

(II)Background of the Valuation(Background Leading to the Determination of the Tender Offer Price)
As stated in “(I) Background, Purpose and Decision-Making Process Leading to the Decision
to Implement the Tender Offer” of “(2) Background, Purpose and Decision-Making Process
Leading to the Decision to Implement the Tender Offer, and Post-Tender Offer Management
Policy” of “1. Purpose of the Purchase” above, simultaneously with the Tender Offeror’s
performance of the Due Diligence to investigate the feasibility of the Transaction from early
October 2022 to late November 2022, the Tender Offeror received questions regarding theTransaction from the special committee of the Target Company on October 14, 2022, thus on
October 27, 2022 (partially on December 9, 2022), the Tender Offeror explained the Transaction
in more detail to the Target Company and the special committee, and gave additional responses,
respectively, on November 18, 2022 in response to the additional inquiry dated November 10,
2022 received from the Target Company’s special committee, and on December 7, 2022 in
response to the additional inquiry dated December 1, 2022. As such, the Tender Offeror had
discussions and deliberations in further detail regarding the significance and purpose of theTransaction, and repeatedly had discussions and negotiations regarding the post-Transaction
management system and business policy, and terms and conditions of the Transaction, with theTarget Company. The Tender Offeror comprehensively considered each factor, such as thebusiness plan received from the Target Company, the Target Company’s share value calculation
results which take into account various factors such as the external environment surrounding theTarget Company and the situation of the Due Diligence, the Target Company’s current shareprice level (5,120 yen, 5,132 yen, 5,242 yen, and 5,193 yen, which are the closing prices of theTarget Company Shares on the Prime Market of the Tokyo Exchange on October 31, 2022, andthe simple average closing prices for the latest one-month period, latest three-month period, andthe latest six month period, respectively), future outlook of the tender for the Tender Offer, andthe discussions with Mitsui & Co. on the level of the tender offer price; on November 4, 2022,
as a result of the significant consideration, the Tender Offeror officially made a proposal to theTarget Company to set the Tender Offer Price at 8,400 yen (calculated by adding a premium of
66.02%, 65.63%, 62.15%, and 63.68%, respectively, to the closing price of the Target Company
Shares on the Prime Market of the Tokyo Exchange on October 31, 2022 and the simple averageclosing prices for the latest one-month period, latest three-month period, and the latest six month
period, which are 5,120 yen, 5,132 yen, 5,242 yen, and 5,193 yen, respectively). However, on
November 17, 2022, the Target Company requested the Tender Offeror to reconsider the
proposal, as the proposal did not fully reflect the Target Company’s corporate value.
Subsequently, based on the request for reconsideration of the proposal by the Target Company,
the Tender Offeror proposed to set the Tender Offer Price at 8,800 yen on November 24, 2022,
and based on the request by the Target Company, provided an overview of the Shareholders
Agreement (Note), which was being deliberated over between the Tender Offeror and Mitsui &Co. at that point. In response, on December 1, 2022, the Target Company requested the Tender
Offeror to consider setting the Tender Offer Price at 12,500 yen, taking into consideration thelevel of exercise prices for the call-option by the Tender Offeror and put-option by Mitsui &Co., which will be set forth in the Shareholders Agreement. Taking this into consideration, on
December 7, 2022, the Tender Offeror proposed to set the Tender Offer Price at 9,300 yen. In
response, on December 8, 2022, the Target Company requested the Tender Offeror to consider
setting the Tender Offer Price at 9,800 yen, taking into consideration the level of the amount of
the book value of the Target Company’s consolidated net assets (excluding non-controllingshareholders’ equity) which will be the basis for calculating the exercise prices for the calloption by the Tender Offeror and put-option by Mitsui & Co., which will be set forth in the
Shareholders Agreement. In response, on December 9, 2022, the Tender Offeror made a
proposal to the Target Company once again to set the Tender Offer Price at 9,300 yen as theTender Offeror considered that the tender offer price of 9,300 yen serves as a sufficientconsideration for general shareholders of the Target Company, and that it is the best price that- 50 -

the Tender Offeror could propose. In response, on December 15, 2022, the Target Company
responded that it was not aware, as of that point in time, of any circumstances that would hinder
the Target Company from supporting the Tender Offer and determining to recommend thatshareholders of the Target Company tender their shares in the Tender Offer if the Tender Offeror
were to launch the Tender Offer at the Tender Offer Price of 9,300 yen, while considerations by
the special committee were still continuing. Thereafter, on December 21, 2022, the Target
Company notified the Tender Offeror that the Target Company, its board of directors’ meeting
held on the same day, resolved, as its opinion as of the same day, that it would express a
supportive opinion for the Tender Offer and recommend that shareholders of the Target
Company tender their shares in the Tender Offer if the Tender Offer was launched.
(Note) For an overview of the Shareholders Agreement, please see “(6) Items Regarding
Material Agreements Related to the Tender Offer” of “1. Purpose of the Purchase”
above.
After those discussions and negotiations, the Tender Offeror resolved at its board of directors
meeting held on December 21, 2022 to implement the Tender Offer, as part of the Transaction,with the Tender Offer Price of 9,300 yen.
(i)Name of the Third Party from Whom the Tender Offeror Obtained Opinions in Calculation
In order to ensure the fairness of the Tender Offer Price, when deciding the Tender Offer Price,
the Tender Offeror requested that Mizuho Securities, which is a financial advisor and third-party
valuation agency independent of the Tender Offeror, Mitsui & Co., and the Target Company,
calculate the value of the Target Company Shares, and obtained the Share Valuation Report(Tender Offeror). The Tender Offeror made a judgment and a decision on the Tender Offer
Price after comprehensively taking into account the various elements stated in this“(Background Leading to the Determination of the Tender Offer Price),” and discussing andnegotiating with the Target Company; therefore, it did not obtain an opinion on the fairness of
the Tender Offer Price (fairness opinion) from Mizuho Securities.
Mizuho Securities is not a related party of the Tender Offeror, Mitsui & Co., or the Target
Company, and has no material interest in the Tender Offer.

(ii)

Overview of the Opinions
As a result of considering the calculation methods for the Tender Offer, Mizuho Securities
calculated the value of the Target Company Shares using the average market price method, thecomparable company method, and the DCF Method. The methods adopted and the ranges ofvalue per share of the Target Company Shares calculated by using such methods are as follows:
Average market price method: 5,020 yen to 5,172 yen
Comparable company method: 3,078 yen to 6,968 yen
DCF Method:
6,429 yen to 11,556 yen(iii)

Background Leading to the Determination of the Tender Offer Price Taking into Consideration
the Opinions
The Tender Offeror ultimately determined that the Tender Offer Price would be 9,300 yen on
December 21, 2022, comprehensively taking into account: (i) the Share Valuation Report(Tender Offeror) obtained from Mizuho Securities; (ii) the results of the Due Diligence on theTarget Company by the Tender Offeror conducted from early October 2022 to lateNovember 2022; (iii) whether the board of directors of the Target Company would support theTender Offer; and (iv) the prospects of the Target Company Shares being tendered to the Tender
Offer. The Tender Offer Price, 9,300 yen, is the following amount out of the share valuation- 51 -

results under the methods stated in the Share Valuation Report (Tender Offeror) obtained from
Mizuho Securities: above the upper limit of the calculation result under the average market pricemethod and the calculation result under the comparable company method; and within thecalculation result under the DCF Method.
Thereafter, since the Tender Offeror confirmed that all of the Conditions Precedent were
fulfilled, on March 10, 2023, it decided to commence the Tender Offer on March 13, 2023.
There is no change in the Tender Offer Price of 9,300 yen.
(III)

Relationship with the Valuation Agency
Mizuho Securities, which is the Tender Offeror’s financial advisor (valuation agency), is neither
a related party of the Tender Offeror, Mitsui & Co., or the Target Company, nor does it have amaterial interest in the Tender Offer.

(6)

Number of Shares Planned for Purchase

Class of Shares

Number of Shares
Planned for Purchase

Minimum Number of
Shares Planned forPurchase

Maximum Number of
Shares Planned forPurchase

Common stock

14,686,938 shares

3,934,571 shares— sharesTotal

14,686,938 shares

3,934,571 shares— shares(Note 1)

If the total number of the Tendered Shares falls short of the minimum number of shares
planned for purchase (3,934,571 shares), the Tender Offeror will purchase none of theTendered Shares. If the total number of the Tendered Shares is the same as or more than theminimum number of shares planned for purchase (3,934,571 shares), the Tender Offeror willpurchase all of the Tendered Shares.

(Note 2)

Because the maximum number of shares planned for purchase has not been set in the Tender
Offer, the “Number of Shares Planned for Purchase” is the possible maximum number ofTarget Company Shares (14,686,938 shares) to be obtained by the Tender Offeror throughthe Tender Offer. This maximum number of shares (14,686,938 shares) is obtained bydeducting (a), (b), and (c) from (d), wherein (a) is the number of treasury shares owned by
the Target Company as of December 31, 2022, notified by the Target Company to the Tender
Offeror (50,533 shares), (b) is the number of the Target Company Shares owned by theTender Offeror as of today (11,141,529 shares), and (c) is the number of the Target Company
Shares owned by Mitsui & Co. (6,428,800 shares), and (d) is the total number of issued shares
as of December 31, 2022, stated in the Target Company’s Third Quarterly Report(32,307,800 shares).

(Note 3)

Shares in quantities of less than one unit and cross-held shares (referring to the Target
Company Shares owned by Tetsusho Kayaba Corporation; hereinafter the same applies) arealso subject to the Tender Offer. If a right to demand the purchase of shares in quantities ofless than one unit is exercised by a shareholder pursuant to the Companies Act, the Target
Company may purchase those shares during the Tender Offer Period in accordance with theprocedures under the laws and regulations.

(Note 4)The Tender Offeror does not intend to acquire any treasury shares owned by the Target
Company through the Tender Offer.

- 52 -

(7)Changes in the Ownership Ratio of Shares as a Result of the Purchase

Number of voting rights pertaining to(Ownership ratio of sharesshares owned by the Tender Offeror
111,415 voting rights
before the purchase: 34.54%)
before the purchase
Number of voting rights pertaining to
67,746 voting rights(Ownership ratio of sharesshares owned by specially related
before the purchase: 21.00%)
parties before the purchase
Number of voting rights pertaining to258,284 voting rights(Ownership ratio of shares after
shares owned by the Tender Offeror
the purchase: 80.07%)
after the purchase
Number of voting rights pertaining to
64,288 voting rights(Ownership ratio of shares after
shares owned by specially related
the purchase: 19.93%)
parties after the purchase
Number of voting rights of all
320,978 voting rights
shareholders of the Target Company(Note 1) The “number of voting rights pertaining to shares owned by the Tender Offeror after thepurchase” is the number obtained by adding the “number of voting rights pertaining to Shares
owned by the Tender Offeror before the purchase,” namely, 111,415 voting rights to thenumber of voting rights pertaining to the number of shares planned for purchase in the Tender
Offer (14,686,938 shares) stated in “(6) Number of Shares Planned for Purchase” above,
namely, 146,869 voting rights.
(Note 2)The “number of voting rights pertaining to shares owned by specially related parties before
the purchase” is the total of the voting rights pertaining to the Shares owned by speciallyrelated parties (excluding those that are excluded from specially related parties pursuant to
Article 3, paragraph (2), item (i) of the Cabinet Office Order on Disclosure Required for
Tender Offer for Share Certificates by Persons Other Than Issuers (Ministry of Finance OrderNo. 38 of 1990, as amended; the “Cabinet Office Order”) in the calculation of the ownership
ratio of shares under the items of Article 27-2, paragraph (1) of the Act). Moreover, since
the shares owned by specially related parties (excluding treasury shares owned by the Target
Company and the Target Company Shares owned by Mitsui & Co.) are also subject to theTender Offer, the “number of voting rights pertaining to Shares owned by specially relatedparties after the purchase” is the number of the voting rights pertaining to the Target
Company Shares owned by Mitsui & Co. as of today.

(Note 3)The “number of voting rights of all shareholders of the Target Company” is the number ofthe voting rights of all shareholders as of September 30, 2022, stated in the Target Company’s
Third Quarterly Report. However, since shares in quantities of less than one unit and crossheld shares are also subject to the Tender Offer, for the purpose of calculating the “ownership
ratio of shares before the purchase” and the “ownership ratio of shares after the purchase,”
the number of voting rights (322,572 voting rights) pertaining to the number of shares, which
is obtained by deducting the number of treasury shares owned by the Target Company as ofDecember 31, 2022, notified by the Target Company to the Tender Offeror (50,533 shares)
from the total number of issued shares of the Target Company as of December 31, 2022,
stated in the Target Company’s Third Quarterly Report (32,307,800 shares), was used as thedenominator.

(Note 4)

With regard to the “ownership ratio of shares before the purchase” and the “ownership ratioof shares after the purchase,” any fraction is rounded off to two decimal places.

(8)

Amount of Consideration for the Purchase(Note)

136,588,523,400 yen“Amount of Consideration for the Purchase” is the amount obtained by multiplying thenumber of shares planned for purchase in the Tender Offer (14,686,938 shares) by- 53 -

the Tender Offer Price (9,300 yen).
(9)

Method of Settlement(I)

Name and Head Office Location of Securities Company, Bank, or Any Other Institution
Conducting Settlement of the PurchaseMizuho Securities Co., Ltd.

(II)

1-5-1 Otemachi, Chiyoda-ku, Tokyo

Commencement Date of Settlement
April 14, 2023 (Friday)(Note) Pursuant to Article 27-10, paragraph (3) of the Act, if the Target Company submits aposition statement seeking an extension of the Tender Offer Period, thecommencement date of settlement will be April 28, 2023 (Friday).

(III)

Method of Settlement
After expiration of the Tender Offer Period, a notice of purchase through the Tender Offer will
be mailed to the addresses or locations of the shareholders who tender their shares in the Tender
Offer (the “Tendering Shareholders”) (or in the case of shareholders who are residents of foreigncountries (including corporate shareholders; “Foreign Shareholders”), their standing proxies)
without delay. The purchase will be made in cash. The proceeds from selling the Sharespurchased will be remitted by the tender offer agent to the places designated by the Tendering
Shareholders (or in the case of Foreign Shareholders, their standing proxies) or will be paid tothe accounts of the Tendering Shareholders opened with the tender offer agent and used to accept
their tender applications in accordance with the Tendering Shareholders’ instructions (or in thecase of Foreign Shareholders, their standing proxies) on or after the commencement date ofsettlement without delay.

(IV)

Method of Returning Shares
If it is decided that all of the Tendered Shares will not be purchased pursuant to the conditions
stated in “(I) Existence or Non-existence of Conditions Set Forth in the Items of Article 27-13,
Paragraph (4) of the Act, And the Details Thereof” or “(II) Existence or Non-existence ofConditions of Withdrawal of the Tender Offer, Details Thereof, and Method of Disclosing
Withdrawal” in “(10) Other Conditions and Methods for the Purchase” below, the tender offer
agent will return the Shares that are required to be returned promptly on or after two businessdays following the last day of the Tender Offer Period (where the Tender Offer is withdrawn,
the day on which the withdrawal is made) by restoring the record to the state it was in when thetender application was made.

(10)

Other Conditions and Methods for the Purchase(I)

Existence or Non-existence of Conditions Set Forth in the Items of Article 27-13, Paragraph (4)of the Act, And the Details Thereof
If the total number of the Tendered Shares falls short of the minimum number of shares to bepurchased (3,934,571 shares), the Tender Offeror will purchase none of the Tendered Shares.
If the total number of the Tendered Shares is the same as or more than the minimum number ofshares to be purchased (3,934,571 shares), the Tender Offeror will purchase all the Tendered
Shares.

- 54 -

(II)Existence or Non-existence of Conditions of Withdrawal of the Tender Offer, Details Thereof,
and Method of Disclosing Withdrawal
The Tender Offer may be withdrawn upon the occurrence of any event listed in Article 14,
paragraph (1), items (i)(a) through (i)(j) and items (i)(m) through (i)(s), items (iii)(a) through(iii)(h) and (iii)(j), as well as Article 14, paragraph (2), items (iii) through (vi) of the Order for
Enforcement of the Financial Instruments and Exchange Act (Cabinet Order No. 321 of 1965,
as amended; the “Order”). With respect to Article 14, paragraph (1), item (iii)(j) of the Order,
the “facts equivalent to those set forth in (a) to (i)” means (i) any case where it is found that
there is a false statement regarding a material matter, or an omission of a material matter required
to be stated in the statutory disclosure documents submitted by the Target Company in the past,and (ii) any case where any of the events listed in items (iii)(a) through (iii)(g) occurs withrespect to any of the important subsidiaries of the Target Company.
If the Tender Offeror intends to withdraw the Tender Offer, it will give public notice thereofthrough electronic disclosure and make an announcement with respect thereto in the Nihon
Keizai Shimbun; however, if it is difficult to give such public notice by the last day of the Tender
Offer Period, the Tender Offeror will make a public announcement pursuant to Article 20 of the
Cabinet Office Order and give public notice immediately thereafter.

(III)

Existence or Non-existence of Conditions of Reduction in Purchase Price, Details Thereof, andMethod of Disclosing Reduction
In accordance with Article 27-6, paragraph (1), item (i) of the Act, if the Target Company
conducts any act listed in Article 13, paragraph (1) of the Order during the Tender Offer Period,
the purchase price may be reduced pursuant to the standards set forth in Article 19, paragraph(1) of the Cabinet Office Order.
If the Tender Offeror intends to reduce the purchase price, it will give public notice thereofthrough electronic disclosure and make an announcement with respect thereto in the Nihon
Keizai Shimbun. However, if it is difficult to give such public notice by the last day of theTender Offer Period, the Tender Offeror will make a public announcement pursuant to Article
20 of the Cabinet Office Order and give public notice immediately thereafter. If the purchaseprice is reduced, the Tendered Shares that were tendered on or before the date of the public
notice will be also purchased at the reduced purchase price.

(IV)

Matters Relating to Agreement Cancellation Rights of Tendering Shareholders
The Tendering Shareholders may cancel an agreement related to the Tender Offer at any time
during the Tender Offer Period. When canceling an agreement, please deliver or send adocument indicating the intention to cancel the agreement regarding the Tender Offer (a“Cancellation Document”) with an acceptance slip for the tender offer application to the head
office or any of the domestic branches of the tender offer agent that accepted the tender offer
application by 15:00 on the last day of the Tender Offer Period. The cancellation of theagreement will take effect when the Cancellation Document is delivered to or reaches the tender
offer agent. Therefore, please note that if sending a Cancellation Document, you cannot cancel
the agreement unless the Cancellation Document reaches the tender offer agent by15:00 on thelast day of the Tender Offer Period.
The Tender Offeror will not make any claim for damages or a penalty payment against theTendering Shareholders due to the cancellation of their agreements. In addition, the Tender
Offeror will bear the cost of returning the Tendered Shares. If a Tendering Shareholder applies
for cancellation, his/her Tendered Shares will be returned by the method stated in “(IV) Methodof Returning Shares” of “(9) Method of Settlement” above promptly after completion of theprocedures related to the application for cancellation.

- 55 -

(V)Method of Disclosing Changes Made to Terms and Conditions of the Purchase
The Tender Offeror may change the purchase terms during the Tender Offer Period, excluding
cases where it is prohibited by Article 27-6, paragraph (1) of the Act and Article 13 of the Order.
If the Tender Offeror intends to change the purchase terms, it will give public notice of thesechanges through electronic disclosure and make an announcement with respect thereto in the
Nihon Keizai Shimbun. However, if it is difficult to give such public notice by the last day of
the Tender Offer Period, the Tender Offeror will make a public announcement pursuant to
Article 20 of the Cabinet Office Order and give public notice immediately thereafter. If thepurchase terms are changed, the Tendered Shares that were tendered on or before the date of the
public notice will also be purchased based on the changed purchase terms.

(VI)

Method of Disclosure in the Case of Filing of Amended Statement
If the Tender Offeror files an amended statement with the Director-General of the Kanto Local
Finance Bureau (excluding the cases set forth in the proviso to Article 27-8, paragraph (11) of
the Act), the Tender Offeror will immediately make a public announcement of the details relating
to those described in the public notice of tender offer commencement among other things statedin the amended statement, pursuant to Article 20 of the Cabinet Office Order. The Tender
Offeror will also immediately amend the tender offer explanatory statement and deliver theamended tender offer explanatory statement to the Tendering Shareholders to whom the tender
offer explanatory statement has already been delivered. However, if the scope of theamendment is limited, the amendment may be made by preparing a document stating the reason
for the amendment and the subject matters before and after the amendment, and delivering the
document to the Tendering Shareholders.

(VII)

Method of Disclosing the Results of the Tender Offer
The results of the Tender Offer will be publicly announced on the day following the last day of
the Tender Offer Period by the method set forth in Article 9-4 of the Order and Article 30-2 of
the Cabinet Office Order.

(11)

Date of Public Notice on Commencement of the Tender Offer
March 13, 2023 (Monday)(12)

Tender Offer Agent
Mizuho Securities Co., Ltd.

3.

1-5-1 Otemachi, Chiyoda-ku, Tokyo

Policies Following the Tender Offer and the Outlook Going Forward

For the policies after the Tender Offer, please refer to “(III) Post-Tender Offer Management Policy” of“(2) Background, Purpose and Decision-Making Process Leading to the Decision to Implement theTender Offer, and Post-Tender Offer Management Policy,” “(4) Post-Tender Offer Reorganization Policy(Matters Regarding a So-called Two-Step Acquisition),” and “(5) Possibility of Delisting and Reasons
Therefor,” respectively, of “1. Purpose of the Purchase” above.
4.

Others(1)

Agreement Between the Tender Offeror and the Target Company or Its Officers, and the Details
Thereof
According to the Target Company Press Release Dated December 21, 2022, at its board of- 56 -

directors’ meeting held on December 21, 2022, the Target Company resolved to express an
opinion in favor of the Tender Offer and to recommend that its shareholders tender their sharesin the Tender Offer when the Tender Offer is commenced, as the Target Company’s opinion atthat time.
Furthermore, the Target Company, at its board of directors’ meeting held on March 10, 2023,
again resolved to express an opinion in support of the Tender Offer and to recommend that theTarget Company’s shareholders tender their shares in the Tender Offer.
For details, please refer to the Target Company Press Releases and “(VIII) Approval of All
Directors of the Target Company Without Conflicts of Interest in the Transaction, and No
Objection from All Audit and Supervisory Board Members of the Target Company Without
Conflicts of Interest in the Transaction” of “(3) Measures to Ensure Fairness of the Tender Offer,
Such as Measures to Ensure Fairness of the Tender Offer Price as Well as Measures to Avoid
Conflicts of Interest” of “1. Purpose of the Purchase” above.
(2)

Other Information That Is Considered to Be Necessary When Investors Determine Whether toTender Shares in an Offer to Purchase(i) Announcement of the “Notice regarding Revisions to Dividend Forecast for Fiscal YearEnding in March 2023 (No Dividends)”
According to the Target Company, the Target Company, at its board of directors’ meeting held
on December 21, 2022, resolved to revise the dividend forecast for the fiscal year ending March
31, 2023, which was announced on November 8, 2022, and not to pay year-end dividends forthe fiscal year ending March 31, 2023 in light of the planned launch of the Tender Offer. For
details, please see the “Notice concerning Revisions to Dividend Forecast for Fiscal YearEnding March 2023 (No Dividends)” announced by the Target Company on December 21, 2022.
(ii) Filing a Petition for Appointment of a Provisional Audit and Supervisory Board Member(Temporary Delegate for Audit and Supervisory Duties)
According to the Target Company, it is expected that upon completion of the Tender Offer, theTender Offeror will become the parent company of the Target Company as of thecommencement date of settlement of the Tender Offer. Therefore, Mr. Hirofumi Funakoshi(He has been informally appointed to take the position of the Executive Vice President of theTender Offeror, effective as of April 1.), who is an outside Audit and Supervisory Board Memberof the Target Company and concurrently serves as a Managing Executive Officer of the Tender
Offeror as of the filing date of this Statement, will cease to qualify as an outside Audit andSupervisory Board Member of the Target Company, and the number of outside Audit andSupervisory Board Members will be under the statutory ratio (half or more of the number ofAudit and Supervisory Board Members); furthermore, Mr. Takaki Goto, who is a substituteoutside Audit and Supervisory Board Member of the Target Company and concurrently serves
as the General Manager, Head of Division, Group Companies Planning Division of the Tender
Offeror, will also cease to meet the statutory requirements to be an outside Audit andSupervisory Board Member. Based on this, on March 13, 2023, the Target Company will filea petition for appointment of a provisional Audit and Supervisory Board Member to a court inaccordance with the procedures specified in Article 346, paragraph (2) of the Companies Act
and other relevant laws and regulations. The decision on when the appointment of aprovisional Audit and Supervisory Board Member is determined by the court will ultimately bemade by the court; however, the Target Company aims for the decision on such appointment tobe made as of the commencement date of settlement of the Tender Offer.
If the Tender Offer is completed and it is determined that the Tender Offeror will become theparent company of the Target Company, Mr. Hirofumi Funakoshi will resign from the post of
the Audit and Supervisory Board Member of the Target Company as of the commencement date

- 57 -

of settlement of the Tender Offer. In addition, the Target Company, at the board of directors’
meeting held on March 13, 2023, resolved to cancel the appointment of Mr. Takaki Goto as a
substitute outside Audit and Supervisory Board Member on the condition that the Tender Offeror
becomes the parent company of the Target Company as a result of the Tender Offer, after
obtaining consent from the Audit and Supervisory Board.
End- 58 -

[Soliciting Regulations]This press release is intended to announce the Tender Offer to the general public and has notbeen prepared for the purpose of soliciting a sale of shares. If shareholders wish to makean offer to sell their shares, they should read the tender offer explanation statement
concerning the Tender Offer first and make an offer to sell their shares at their own
discretion. This press release shall neither be, nor constitute a part of, solicitation for anoffer to sell or 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 inrelation to the Tender Offer. Furthermore, this press release shall not be relied upon at thetime of entering into any such agreement.
[U.S. Regulations]
The Tender Offer will be conducted in compliance with the procedures and information
disclosure standards provided under the Financial Instruments and Exchange Act of Japan,
and those procedures and standards are not always the same as those applicable in the UnitedStates. In particular, neither Section 13(e) nor Section 14(d) of the U.S. Securities Exchange
Act of 1934 (as amended, the “U.S. Securities Exchange Act of 1934”) or the rules underthese sections apply to the Tender Offer; therefore, the Tender Offer is not conducted inaccordance with the procedures or standards prescribed thereby. The financial information
included in this press release does not conform to the U.S. accounting standards and may not
be equivalent to the financial information of a company in the United States. Also, because
the Tender Offeror and the Target Company are corporations incorporated outside the UnitedStates and some or all of their directors are non-U.S. residents, it may be difficult to exercise
rights or demands against them under the U.S. securities laws. In addition, it may not be
possible to commence any legal procedures in courts outside the United States against a nonU.S. corporation or its directors based on a breach of U.S. securities laws. Furthermore,
U.S. courts are not necessarily granted jurisdiction over a non-U.S. corporation or its
directors.
All procedures regarding the Tender Offer will be conducted in Japanese unless specificallyset forth otherwise. All or part of the documents regarding the Tender Offer will be preparedin English. However, if there is any discrepancy between the documents in English andthose in Japanese, the documents in Japanese shall prevail.
Before the commencement of the Tender Offer or during the Tender Offer Period of theTender Offer, the Tender Offeror and its affiliates, and affiliates of the financial advisors to
the Tender Offeror or the Target Company may, in the ordinary course of their business andto the extent permitted by Japanese laws and regulations related to financial instruments
transactions and other applicable laws and regulations and in accordance with therequirements of Rule 14e-5(b) of the U.S. Securities Exchange Act of 1934, purchase theTarget Company Shares other than as part of the Tender Offer, or take actions aimed at sucha purchase, on their own account or the account of their clients. If information regarding
such a purchase is disclosed in Japan, that information will also be disclosed in the English
language on the website of the person that conducted that purchase.
[Forward-Looking Statements]
This press release includes forward-looking statements as defined in Section 27A of the U.S.
Securities Act of 1933 (as amended) and Section 21E of the U.S. Securities Exchange Act of1934. The actual results may be significantly different from the predictions expressly or
impliedly indicated in the forward-looking statements, due to known or unknown risks,- 59 -

uncertainty, or other factors. The Tender Offeror or its affiliates do not guarantee that thepredictions expressly or impliedly indicated as the forward-looking statements will turn out
to be correct. The forward-looking statements included in this press release were preparedbased on the information held by the Tender Offeror as of the date hereof, and unless obligatedby laws or regulations or the rules of a financial instruments exchange, the Tender Offeror or
its affiliates shall not be obligated to update or revise the statements to reflect future incidents
or situations.

- 60 -