For Institutional Investors/Analystssts

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

September 18, 2018

KAGA ELECTRONICS CO., LTD.
President & COO
Ryoichi Kado■ Forward-looking statements in these materials are based on information available to management
at the time this report was prepared and assumptions that management believes are reasonable.
Actual results may differ significantly from these statements for a number of reasons.
■ Display method in this material
Number : Truncated less than the display unit.
Ratio: After calculation in yen units, Round down one digit of Display unit.
1

Framework of the Medium-Term Management Plan
Basic Policies

Management Target(FY Ending March 2019)（１）Reinforce profit foundations

Sales

290 billion yen（２）Create new business

Ordinary income

10 billion yen（３）Reinforce managementfoundations

ROE

8% or higher

Medium- to Long-Term Vision
 Establish management that prioritizes profits
 Prepare for a major advance as “next-generation Kaga Electronics”
 Become No. 1 in Japanese industry and aim for continuous
growth as a company that can do business globally© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

2“Five important themes” for the Group’s growthEMSbusiness
Automotivedevices

・ Expand overseas bases toward business scale expansion
・ Response to market needs and new technologies
of ADAS/DMS*・ Response to a shift to hybrid/electric vehicles

Telecommunication ・ Develop LPWA* market and create cloud business using AI(IoT)
Execution ofM&A

・ Reinforce management foundations and profit foundations
while monitoring industry reorganization

Investment
in ventures

・ Start investment activity targeting venture companies andbusinesses using 5 billion yen over three years© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

3Overview of the Acquisition

Scheme・ Acquire 70% of shares in Fujitsu Electronics from Fujitsu Semiconductor,
forming a subsidiary. Acquire gradually until becoming a wholly owned
subsidiary in January 2022

AcquisitionPrice・ Total 20.5 billion yen (forecast total)

Financing・ Plan to finance with self-funding and new bridging loan
・ Consider switching to the procurement of various long-term funding for thisbridging loan

Financial
Impact・ Amortization schedule of goodwill and intangible fixed assets to be released
after acquisition・ However, Acquisition Price ≒ Net Assets, so the impact is expected to beslight

Schedule ofStockTransfer

・ First Phase : January 2019 (70％)
・ Second Phase: December 2020 (15%)
・ Third Phase : December 2021 (15%)

・ The acquisition price at each phase will be adjusted based on fluctuations in the value of the consolidated net assets of Fujitsu Electronics,
and the above acquisition price is the estimated amount at current prices.
・ This share acquisition is subject to approval by relevant authorities in accordance with domestic and international competition laws.
・ The impact on consolidated results for the current fiscal year (ending March 2019) will be released after confirmation.
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

4

Purpose of the Acquisition
 Drastic expansion of business scale for core electronic components businessbecoming the “Industry No. 1”
Fujitsu Semiconductor

Kaga Electronics GroupElectronic Components

Fujitsu Electronics

Trading Business

EMS BusinessInformation Equipment

SoftwareOther

Subsidiary
Short-term Goal ＝ Trading BusinessMedium-term Goal ＝ EMS Business

Sales UPProfitability
UPExpansion of the Trading BusinessLeading to Growth in EMS BusinessTrading Business

Expanded Quantities© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

EMS Business

Improved Quality

5

Aims of This Acquisition

AimAimAim&Expand product offerings andshare customer base forming

Japan’s No.1
corporate group in the industry© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Begin with trading
and move into EMS to realize

Through this acquisition, aim
to become aExpanded Profits
andImproved Margins

World ClassCompany
which can survive globalcompetition

6

SWOT Analysis of the Acquisition
 Aim to maximize revenue through acquisition synergy by supplementingeach other’s weaknesses with our strengths
Kaga Electronics Group

Kaga Electronics Group▶ Independent trading company not▶ Lack of proprietary technologies andtied to manufacturers

original products▶ Global EMS network

Fujitsu Electronics

Complementary

Fujitsu Electronics▶ Backbone of the Fujitsu Group▶ Ability to handle IoT, solutions▶ Global support system

Trading Business▶ Lack of expansion into new products

Strengths

Opportunities

Weaknesses

Threats▶ Automobile hybridization/EV▶ Semiconductor market with large

conversion▶ Need for energy-saving products

fluctuations in supply and demand/priceto reduce environment burden

Fujitsu Electronics

EMS Business

Kaga Electronics Group▶ Customer cost reduction needs▶ Need for entry to ASEAN, Eastern

Europe, India, South Africa, etc.,© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Trading Business▶ Changes in the external environment

such as commercial rights/
commercial distribution, etc.
EMS Business▶ Rise in Chinese labor costs

7Industry Positioning after Acquisition（FY Ended March 2018 Results Base）
 The birth of an industry-leading class 500 billion yen Group.
Lead the further reorganization of the industry

Note: Simple sum base for “Kaga Electronics + Fujitsu
SIIX figures for FY ended December 2017
※Data Source: Internal study© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Electronics”,8（Reference）
Specialist Trading Company Sales Rankings（FY Ended March 2018 Results）
 “500 billion yen to trillions yen Class”: Requirements to become an industry
leader in a mega-competitive industry△△△△△△△△△
Note: Figures for Kokubu Group Headquarters, Coca-Cola Bottlers Japan for
FY ended December 2017, and Onward Kashiyama for FY ended February 2018
※Data Source: Internal study△・・・Indicates unlisted companies.

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

9Outline of Fujitsu Electronics

CompanyName

・ Fujitsu Electronics Inc.

Representative ・ President and Representative Director Junji Ogihara

Locations

History

・ Headquarters: 2-100-45, Shin-Yokohama, Kohoku-Ku,
Yokohama-shi, Kanagawa, Japan・ 1952: Established as Hirayama Denki Shoji Co., Ltd.
・ 1968: Involvement of Fujitsu Corporation in management
・ 2008: Fujitsu Limited spun off its LSI division to establish Fujitsu

Microelectronics Limited, becoming a wholly owned subsidiaryBusinessActivities

・Design, development, and sale of electronic devices

・ After acquiring the 70% stake in January 2019, Isao Tsukamoto (current representative director and chairman) fromthe Company, It is scheduled to take office as chairman of the company's representative director.
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

10

Business Content and Recent Achievements of Fujitsu Electronics
 Aim to become a global electronics solutions provider
DeviceSolutions

IoT
Solutions

Original Productsand Services

High quality and high-performance

Support customer businesses

Develop optimized hardware

cutting-edge device line-up inwith AI and platforms

and software, and provide

addition to Fujitsu Semiconductor

centered on the Fujitsu

customers with one stop for

products

Group IoT services

processes from design to mass
production.

Fujitsu Electronics
Consolidated Sales

Consolidated Ordinary Income/Net Profit（Billion yen）

323.6

242.8

（Billion yen）

5.9

258.7

0.0

3.9

3.8

3.0

2.2 1.50.0

FY2015FY2016© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

FY2017FY2015FY2016FY2017

11

Strengths of t Fujitsu Electronics Group The Fujitsu Electronics Group aims to develop our businessbased on the following strengths.

Own Engineers

1 4 0 people

Fujitsu Group
Fujitsu Electronics

Sales channel
Domestic：

3,000companies

Overseas：

500companies

CORE
Competencies Global Support
Network

Domestic：13places

Overseas：19places

268people

12

Direction for the Business Goals of Fujitsu Electronics
 Aim to expand business by (1) Expanding Products, (2) Expanding Solutions,and (3) Strengthening Global Development
1. Expansion of Products

3. Acceleration of Global Development throughthe Leveraging of Overseas Bases

Expansion of product offerings on a global level

2. Provision of Added Value to Customers through theStrengthening of Solutions Technologies
Provision of solutions combining optimal technologies andproducts from inside and outside of the company

Utilization of Fujitsu Group resources (development andcooperation with manufacturing companies)+ Overseas
Local

Domestic+Japanese
Customersin overseas
Sales Areas
Products



Active development of Japanese customers and local
customers in overseas market

Strengthening global supply chains

Strengthening Global
Development

Manufacturing and Trading
Companies

Existing Businesses

Expansion of Outside
Products

ASIC/ASSP
AnalogCOT
Microcomputar
Fujitsu Semiconductor
Products

Becoming a Global
ElectronicsSolutions Provider

Expansion of Solutions
Fujitsu Group Products

Other Products

Aim to expand business from a semiconductor manufacturing
trading company to a global electronics solutions provider
13

＜ｍemo＞

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20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629
Contact: Investor Relations & Public Relations Office
TEL:+81-3-5657-0106
FAX:+81-3-3254-7133
E-mail： webmaster@taxan.co.jp
https://www.taxan.co.jp© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

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