July 24, 2024
To whom it may concern:
Company Name: Canon Marketing Japan Inc.
Representative: Masachika Adachi, President & Representative Director
TSE Code: 8060
Tokyo Stock Exchange (Prime Market)
Contact: Akihiro Shirone, General Manager, Accounting Division(TEL: +81-3-6719-9074)

Notice Regarding Acquisition of and Tender Offer for Own Shares
Canon Marketing Japan Inc. (the “Company”) hereby announces that it resolved at a meeting of the Board of Directors
held on July 24, 2024, to acquire its own shares pursuant to the provisions of its Articles of Incorporation in accordancewith the provisions of Article 459, Paragraph 1 of the Companies Act (Act No. 86 of 2005; as amended, the “CompaniesAct”), and to conduct a tender offer to acquire its own shares (the “Tender Offer”) as the specific method of suchacquisition.
1.

Purpose of the Purchase, etc.
With respect to the distribution of profits, the Company’s basic policy is to distribute dividends, aiming for a
consolidated dividend payout ratio of 40% or more and taking into consideration the medium-term profit forecast andinvestment plans, as well as cash flows to be generated therefrom and other factors.
In addition, with respect to the frequency of dividends, the Company plans, as a basic policy, to pay dividends
twice a year; once as an interim dividend and once as a year-end dividend. With respect to such dividends of surplus,
the Company’s Articles of Incorporation stipulates that the Company may pay dividends from surplus or make other
distributions by a resolution of the Board of Directors pursuant to the provisions of Article 459, Paragraph 1 of theCompanies Act, and that the Company may pay interim dividends pursuant to the provision of Article 454, Paragraph
5 of the Companies Act. Based on the above policy, the Company declared a dividend of 120 yen per share (interim
dividend: 50 yen, year-end dividend: 70 yen) for the fiscal year ended December, 2023, resulting in a consolidated
payout ratio of 42.6%.
Further, with respect to the acquisition of its own shares, the Company’s Articles of Incorporation stipulates that
the Company may acquire its own shares by a resolution of the Board of Directors, rather than by a resolution of aGeneral Meeting of Shareholders, pursuant to Article 459, Paragraph 1 of the Companies Act. The purpose of this is
to carry out flexible capital and dividend policies, and the Company has acquired shares of its common stock asfollows. As it is difficult to obtain a comprehensive overview of all the date, details and background of the Company’s
acquisition of its own shares in the past, please note that the following information is presented to the extent that it ispossible to obtain such information.
(i)

Acquisition through a tender offer to acquire its own shares pursuant to the provisions of Article 210,
Paragraph 1 of the Commercial Code (Act No. 48 of 1899) prior to amendment by Article 1 of the Act
Partially Amending the Commercial Code (Act No. 79 of 2001)
Date of Board
Aggregate
Acquisition Date
Number of Shares Acquired
Resolution
Acquisition Price
3,800,000 shares

June 14, 2002

July 17, 2002

(shareholding ratio at the time of acquisition 3,860,800,000 yen(Note 1): 2.52%)

1

(Note 1) Refers to the ratio of the number of relevant shares to 151,012,896 shares, which is calculated by deducting
the 11,000 shares of treasury stock held by the Company as of December 31, 2001, from 151,023,896
shares, which is the total number of issued shares as of December 31, 2001 (the ratio is rounded to thesecond decimal place; the same applies hereinafter in the calculation of shareholding ratios at the time ofacquisition).
(ii)

Acquisition from Sanin Canon Jimuki Inc. (currently Canon System & Support Inc.), which is a subsidiaryof the Company, through off-market trading pursuant to the provision of Article 163 of the Companies Act
Date of Board
Aggregate
Acquisition Date
Number of Shares Acquired
Resolution
Acquisition Price
4,300 shares

June 14, 2007

June 15, 2007

(shareholding ratio at the time of acquisition(Note 2): 0.00%）

10,535,000 yen(Note 2) Refers to the ratio of the number of relevant shares to 148,828,764 shares, which is calculated by deducting
the 847,566 shares of treasury stock held by the Company as of May 31, 2007, from 149,676,330 shares,
which is the total number of issued shares as of May 31, 2007.
(iii)

Acquisition from Argo 21 Corporation (currently Canon IT Solutions Inc.), which is a subsidiary of theCompany, through off-market trading pursuant to the provision of Article 163 of the Companies Act
Date of Board
Aggregate
Acquisition Date
Number of Shares Acquired
Resolution
Acquisition Price
4,000 shares

December 13, 2007 December 27, 2007

(shareholding ratio at the time of acquisition(Note 3): 0.00%）

8,460,000 yen(Note 3) Refers to the ratio of the number of relevant shares to 141,721,584 shares, which is calculated by deducting
the 4,679,194 shares of treasury stock held by the Company as of November 30, 2007, from 146,400,778,
which is the total number of issued shares as of November 30, 2007.
(iv)

Acquisition through market purchases on Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”)
Date of Board
Period forAggregate
Number of Shares Acquired
Resolution
Acquisition
Acquisition Price
2,368,300 shares

August 9, 2007

August 10, 2007 September 5, 2007

(shareholding ratio at the time of acquisition 4,999,843,800 yen(Note 4): 1.59%)
2,257,200 shares

October 23, 2007 October 22, 2007
November 27, 2007

(shareholding ratio at the time of acquisition 4,999,873,000 yen(Note 5): 1.57%)
2,764,700 shares

February 14, 2008 February 13, 2008
March 11, 2008

(shareholding ratio at the time of acquisition 4,999,986,000 yen(Note 6): 1.95%)

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2,861,300 shares
August 8, 2008

August 11, 2008 September 11, 2008

October 23, 2008

October 24, 2008 November 12, 2008

November 5, 2010

November 8, 2010 December 3, 2010

October 23, 2012

October 24, 2012 December 3, 2012

November 1, 2013

November 5, 2013 December 12, 2013

(shareholding ratio at the time of acquisition 4,999,986,000 yen(Note 7): 2.10%)
3,406,100 shares(shareholding ratio at the time of acquisition 4,999,932,400 yen(Note 8): 2.61%)
4,348,500 shares(shareholding ratio at the time of acquisition 4,999,952,200 yen(Note 9): 3.29%)
4,248,200 shares(shareholding ratio at the time of acquisition 4,999,973,500 yen(Note 10): 3.44%)
3,402,900 shares(shareholding ratio at the time of acquisition 4,999,939,300 yen(Note 11): 2.96%)(Note 4) Refers to the ratio of the number of relevant shares to 148,818,452 shares, which is calculated by deducting
the 852,722 shares of treasury stock held by the Company as of July 31, 2007, from 149,671,174 shares,
which is the total number of issued shares as of July 31, 2007.
(Note 5) Refers to the ratio of the number of relevant shares to 144,082,378 shares, which is calculated by deducting
the 3,220,759 shares of treasury stock held by the Company as of September 30, 2007, from 147,303,137
shares, which is the total number of issued shares as of September 30, 2007.
(Note 6) Refers to the ratio of the number of relevant shares to 141,707,916 shares, which is calculated by deducting
the 4,686,028 shares of treasury stock held by the Company as of January 31, 2008, from 146,393,944
shares, which is the total number of issued shares as of January 31, 2008.
(Note 7) Refers to the ratio of the number of relevant shares to 136,176,450 shares, which is calculated by deducting
the 7,451,761 shares of treasury stock held by the Company as of July 31, 2008, from 143,628,211 shares,
which is the total number of issued shares as of July 31, 2008.
(Note 8) Refers to the ratio of the number of relevant shares to 130,452,260 shares, which is calculated by deducting
the 10,313,856 shares of treasury stock held by the Company as of September 30, 2008, from 140,766,116
shares, which is the total number of issued shares as of September 30, 2008.
(Note 9) Refers to the ratio of the number of relevant shares to 131,986,650 shares, which is calculated by deducting
the 9,546,661 shares of treasury stock held by the Company as of October 31, 2010, from 141,533,311
shares, which is the total number of issued shares as of October 31, 2010.
(Note 10) Refers to the ratio of the number of relevant shares to 123,591,282 shares, which is calculated by deducting
the 13,744,345 shares of treasury stock held by the Company as of September 30, 2012, from 137,335,627
shares, which is the total number of issued shares as of September 30, 2012.
(Note 11) Refers to the ratio of the number of relevant shares to 115,087,732 shares, which is calculated by deducting
the 17,996,120 shares of treasury stock held by the Company as of October 31, 2013, from 133,083,852
shares, which is the total number of issued shares as of October 31, 2013.
In order to improve capital efficiency and put in place a flexible capital strategy, the Company has acquired its own
shares, mainly by means of market purchases. In late September 2023, from the perspective that if the shares in the
Company that are held by major shareholders were to be acquired, the Company would be able to acquire a3

considerable number of its own shares in a relatively short period of time without impairing liquidity, and could
expect to continue to improve capital efficiency, the Company, on the assumption that the Company would acquire a
portion of the shares of the Company’s common stock held by Canon Inc. (hereinafter referred to as “Canon”; numberof shares held: 75,708,684 shares; shareholding ratio (Note 12): 58.38%), which is the largest shareholder and theparent company of the Company, began initial discussions with Canon regarding the possibility of acquiring its own
shares. Subsequently, in early April 2024, the Company began a full-scale examination of the acquisition of its own
shares, and in the middle of April 2024, on the assumption that funds totaling approximately 80,000 million yen were
expected to be required for the settlement of the Tender Offer, based on the estimation that multiplying approximately
4,000 yen, which is the estimated purchase price calculated by applying a provisional discount rate of 10% to theCompany’s common stock market price in the middle of April 2024 of approximately 4,500 yen, by the abovementioned 20,000,000 shares to be acquired is equal to 80,000 million, the Company proposed to Canon that theCompany acquire, as treasury shares, 20,000,000 shares, which is a portion of the Company’s common stock held byCanon, and received the response from Canon that it was willing to sell a portion of its shares of the Company’scommon stock. If all of the funds required for the settlement of the Tender Offer are allocated from such cash anddeposits, it would affect the Company’s future business operations; therefore, the Company proposed to Canon that
the Company allocate the repayment of 80,000 million yen for the settlement of the Tender Offer, which is a portionof the existing short-term loans of 130,000 million yen (outstanding as of March 31, 2024) to Canon, expected to beallocated for the funds required for the settlement of the Tender Offer at that time.
(Note 12) The term “shareholding ratio” refers to the ratio of the number of relevant shares to 129,680,740 shares,
which is calculated by deducting the 1,399,232 shares of treasury stock held by the Company as of June30, 2024 from 131,079,972 shares, which is the total number of issued shares as of June 30, 2024, as
described in the “Summary Report of Consolidated Financial Results for the second (interim) quarter ended
June 30, 2024” (the “Company’s Second Quarterly (Interim) Financial Results”) disclosed by the Company
on July 24, 2024 (the ratio is rounded to the second decimal place; the same applies hereinafter in thecalculation of shareholding ratios).
Thereafter, in early May 2024, the Company determined that, with respect to the specific method for acquiring its
own shares, an acquisition through a tender offer would be most appropriate from the perspective of ensuring fairness
among shareholders and transactional transparency. In addition, in determining the price of the purchase, etc. for theTender Offer (the “Tender Offer Price”), the Company believed that emphasis must be placed on the clarity andobjectivity of criteria, and the market price should be used as the basis for appropriate pricing of the Company’scommon stock, considering that, among others, the Company’s common stock is listed on a financial instruments
exchange and listed companies often acquire their own shares through market purchases on financial instruments
exchanges. Therefore, from the perspective of respecting the interests of those shareholders who do not tender theirshares in the Tender Offer and will continue to retain ownership of the shares of the Company’s common stock, theCompany determined that purchasing the shares at a price that is discounted to a certain degree from the market pricewould be desirable in order to minimize the outflow of capital from the Company as much as possible. Under theassumption that Canon will continue to be the parent company of the Company, since the ratio of voting rights ofCanon (Note 13) would be 50.79% even if the Company acquires 20,000,000 shares of its own common stock heldby Canon (shareholding ratio: 15.42%) through the Tender Offer, funds totaling approximately 80,000 million yen
are expected to be required for the settlement of the Tender Offer, based on the estimation that multiplying
approximately 4,000 yen, which is the estimated purchase price calculated by applying a provisional discount rate of
10% to the Company’s common stock market price in early May 2024 of approximately 4,400 yen, by the abovementioned 20,000,000 shares to be acquired is equal to 80,000 million, while the Company’s consolidated cash anddeposits totaled 97,866 million yen as of March 31, 2024. If all of the funds required for the settlement of the Tender
Offer are allocated from such cash and deposits, it would affect the Company’s future business operations; therefore,
the Company determined that it is desirable to pay the entire amount of cash required for the settlement of the Tender
Offer with cash on hand after securing the funds by receiving repayment of 80,000 million yen, which is a portion of
the existing short-term loans of 130,000 million yen (outstanding as of March 31, 2024) to Canon, expected to beallocated to the funds required for the settlement of the Tender Offer.

4

(Note 13) The “ratio of voting rights” means the ratio of the number of voting rights (557,086 units) represented by
the number of shares of the Company’s common stock (55,708,684 shares) to be held by Canon after theTender Offer to the number of voting rights (1,096,807 units) represented by the number of shares(109,680,740 shares) calculated by deducting, from the number of issued shares (131,079,972 shares) as
of June 30, 2024 stated in the Company’s Second Quarterly (Interim) Financial Results, the number oftreasury shares (1,399,232 shares) held by the Company and the number of the Tendering Shares(20,000,000 shares) existing as of the same date. The figures are rounded to the second decimal place;hereinafter the same applies to calculations of the ratio of voting rights.
Considering the acquisition of such a considerable amount of its own shares at one time and the amount of theCompany’s consolidated cash and deposits (97,866 million yen) as of March 31, 2024, in the middle of May, 2024,
the Company (i) informed Canon that approximately 80,000 million yen would be required to acquire 20,000,000
shares, a portion of the Company’s common stock held by Canon, at a certain discount on the market price of theCompany’s common stock on the Prime Market of the Tokyo Stock Exchange through tender offer, and (ii) proposed
to Canon that with respect to the funds required for the settlement of the tender offer, the Company request andsubsequently receive the repayment of 80,000 million yen, which is a portion of the short-term loans to Canon, andallocate such repayment in addition to the cash on hand for the settlement of the Tender Offer. As for the discount rateof the Tender Offer Price to the market price and the price of the Company’s common stock as the basis of the discount,
the Company determined to refer to 48 cases of tender offers of its own shares that were resolved on or after May 10,2021, and ended its tender offer period by April 9, 2024 (the “Cases”). Of the 48 Cases, there were five cases with a
discount rate of 9% or less (rounded to the nearest whole number in regard to the calculation of the discount rate of
the Cases) and 35 cases with a discount rate of 10%, which was the most common discount rate, and eight cases witha discount rate of 11% or more. Taking into consideration the fact that the most common discount rate was 10%,which was used in 35 cases, the Company determined that it is appropriate to adopt a discount rate of approximately
10% of the simple average of the closing prices of the Company’s common stock on the Prime Market of the Tokyo
Stock Exchange over a certain period, and made a proposal to Canon to that effect.
After the above proposal, in late May 2024, the Company received a response from Canon that it would positively
consider applying for the Tender Offer based on the Tender Offer Price calculated by the method the Company had
proposed and that it would accept the partial repayment of 80,000 million yen of the Company’s short-term loans toCanon.
Under the Securities Listing Regulations of the Tokyo Stock Exchange, in the event where a listed company makes
a decision on significant transactions, etc. with controlling shareholders, the listed company is required to obtain an“opinion that the decision will not undermine interests of minority shareholders” from an entity who has no interestin such controlling shareholder. Therefore, on January 29, 2024, considering that Canon is the parent company of theCompany, holding 75,708,684 shares of the Company’s common stock (shareholding ratio: 58.38%), the Company
established a special committee (the “Special Committee”), consisting of three Independent Outside Directors of theCompany (Mr. Yoshio Osawa, Mr. Toshiharu Hasebe and Ms. Hiroko Kawamoto), who have no interest in Canon, asa standing organization to deliberate transactions that the Company deems necessary to deliberate and consider therisk of conflicts of interest between the controlling shareholders and the minority shareholders from the perspectiveof protecting the interests of minority shareholders and to report to the Board of Directors. At the time of theestablishment of the Special Committee, the Company, on the assumption that the Company would acquire a portionof the shares of the Company’s common stock held by Canon, had begun initial discussions with Canon regarding thepossibility of acquiring its own shares; however, had not specifically contemplated the implementation of the Tender
Offer. Upon the implementation of the Tender Offer by the Company, and since the acquisition of its own shares from
Canon through the Tender Offer falls under the category of a significant transaction, etc. with controlling shareholders
as set forth in the Securities Listing Regulations of the Tokyo Stock Exchange, on June 11, 2024, Mr. Masachika
Adachi, the Chairperson of the Board of Directors of the Company, inquired with the Special Committee whether theTender Offer, which the Company is considering to conduct, would not undermine the interests of the minority
shareholders of the Company. Subsequently, Mr. Masachika Adachi requested the Special Committee to make a reporton this matter, and concluded to make a decision whether to implement the Tender Offer based on the report made by5the Special Committee.
Thereafter, on July 11, 2024, after reconsidering the method of securing the funds required for the settlement of theTender Offer, it became possible for the Company to borrow funds from Mizuho Bank, Ltd. (“Mizuho Bank”) at afavorable interest rate; therefore, the Company determined to adopt a policy of allocating such borrowings for thefunds required for the settlement of the Tender Offer, based on the judgment that the Company, as the entity executing
the Tender Offer, would benefit financially from raising funds through such borrowings. Under such policy, theCompany considered that it would be appropriate to receive 80,000 million yen as the partial repayment of the shortterm loans to Canon, for which Canon had previously expressed its intention to accept the repayment, after thecompletion of the Tender Offer, and upon consultation with Canon, it has been agreed with Canon that the short-termloans will be repaid in exchange for the commencement of settlement of the Tender Offer (September, 13, 2024).
In light of the above response from Canon in late May 2024, on July 23, 2024, the Company presented to Canona Tender Offer Price of 4,091 yen (rounded to the nearest yen; hereinafter the same applies to calculations of theTender Offer Price), which is the price calculated by applying a 10% discount to 4,546 yen (rounded to the nearest
yen; hereinafter the same applies to calculations of the simple average of the closing prices), which is the simple
average of the closing price of the Company’s common stock on the Prime Market of the Tokyo Stock Exchange forthe past one (1) month period until July 23, 2024, the business day immediately preceding July 24, 2024, the date of
the Board of Directors meeting that resolved to conduct the Tender Offer, as such simple average closing price is not
subject to short-term price fluctuations and is considered to fully factor in recent business performance. Thereafter,
Canon explained to the Company that it intends to tender 20,000,000 shares (shareholding ratio: 15.42%; hereinafterreferred to as the “Tendering Shares”), which is a portion of the shares of common stock of the Company held byCanon, in the Tender Offer if the Company carries out the Tender Offer under the above terms. Further, Canon
explained to the Company that it currently intends to continue to hold the shares of the Company’s common stock to
be held by Canon after the Tender Offer (55,708,684 shares (shareholding ratio: 42.96 %) if all the Tendering Sharesare purchased). On the other hand, if the total number of share certificates tendered in the Tender Offer (the “Tendered
Share Certificates”) exceeds the number of share certificates planned for purchase, all or part of the excess portion
will not be purchased, and instead the shares will be purchased based on the pro rata allocation method provided forin the provisions of Article 27-13, Paragraph 5 of the Financial Instruments and Exchange Act (Act No. 25 of 1948;
as amended; the “Act”), as applied mutatis mutandis pursuant to the provisions of Article 27-22-(2), Paragraph 2 of
the Act, and the provisions of Article 21 of the Cabinet Office Ordinance on Disclosure Required for Tender Offer
for Listed Share Certificates, etc. by Issuer (Ordinance of the Ministry of Finance No. 95 of 1994, as amended; the“Cabinet Office Ordinance”). In such case, the Company will acquire a portion of the Tendering Shares (20,000,000
shares). However, Canon explained to the Company that it intends to continue to hold the shares of the Company’scommon stock that it has tendered in the Tender Offer but that cannot be acquired by the Company.
Even if all of the Tendering Shares are purchased in the Tender Offer, Canon’s ratio of voting rights will be 50.79%
and it will continue to be the parent company of the Company.
In addition, regarding the number of share certificates planned for purchase in the Tender Offer, as a result of
deliberations on providing an opportunity for shareholders other than Canon to tender their shares, the Company
believed that the number of shares calculated by adding 10% to the number of tendering shares is appropriate since
given that among the 48 Cases, in 26 cases, which is the largest number, the number of share certificates planned forpurchase was set by adding 10% to the number of tendering shares; therefore, 22,000,000 shares (shareholding ratio:
16.96%), as calculated by adding 10% to the number of Tendering shares (20,000,000 shares, shareholding ratio:
15.42%), was set.
The Special Committee was held on July 11, 2024, July 16, 2024, and July 24, 2024, to discuss whether conducting
the Tender Offer would not undermine the interests of the minority shareholders of the Company. As a result, theCompany received a report (the “Report”) dated July 24, 2024, from the Special Committee to the effect that theSpecial Committee judges that conducting the Tender Offer will not undermine the interests of the minority
shareholders of the Company. For a summary of the Report, please refer to “(ii) Process of calculation” of “(3) Basisfor the calculation of the price of the purchase, etc.” of “3. Outline of the Purchase, etc.” below. In determining the6

Tender Offer Price, the Company has not obtained a computation document from a third-party valuation institution
because the Company believes that it is objective to use such market price as a reference when calculating anddetermining the Tender Offer Price since the common stock of the Company is listed on the Prime Market of theTokyo Stock Exchange and has a market price, and also because it will not undermine the interests of the minority
shareholders of the Company to acquire the shares of the Company’s common stock from Canon, the parent companyof the Company, at a discount from the market price.
Based on the above, the Company resolved, at a meeting of the Board of Directors held on July 24, 2024, byunanimous consent of all seven (7) Directors of the Company who participated in the deliberation and resolution, that
the Company will acquire its own shares pursuant to the provisions of its Articles of Incorporation in accordance withthe provisions of Article 459, Paragraph 1 of the Companies Act, and that the Company will conduct the Tender Offer
as the specific method of such acquisition, as well as that the Tender Offer Price will be set at 4,091 yen, which is a
10% discount of 4,546 yen, the simple average closing price of the Company’s common stock on the Prime Marketof the Tokyo Stock Exchange for the past one (1) month period until the business day immediately preceding July 24,
2024, the date of the meeting of the Board of Directors at which the Tender Offer was resolved to be conducted (July23, 2024), and furthermore, from the perspective of providing an opportunity for shareholders other than Canon totender their shares, that the maximum number of shares to be purchased in the Tender Offer shall be 22,000,000 shares(shareholding ratio: 16.96%), which is 10% more than the 20,000,000 shares of the Tendering Shares. Out of the five(5) Audit & Supervisory Board Members, four (4) Audit & Supervisory Board Members (Mr. Shiro Hamada, Mr.
Yoshihiro Hashimoto, Mr. Iwao Hashimoto, and Mr. Shigeo Hasegawa) who participated in the deliberation expressed
no objection to the Board of Directors’ decision on the said resolution. In view of the fact that Mr. Seijun Suzuki, afull-time Audit & Supervisory Board Member of the Company, is from Canon and Canon (China) Co., Ltd., asubsidiary of Canon, he did not participate in any deliberation on the proposal for the Tender Offer at the meeting of
the Board of Directors of the Company and refrained from expressing his opinion on such proposal from theperspective of avoiding any suspicion of conflict of interest and ensuring the fairness of the Tender Offer.
The Company entered into a tender offer agreement with Canon (the “Tender Offer Agreement”) on July 24, 2024,
in which Canon agreed to tender in the Tender Offer 20,000,000 shares (shareholding ratio: 15.42%), which is aportion of 75,708,684 shares (shareholding ratio: 58.38%) of the Company’s common stock held by Canon. The
Tender Offer Agreement contains no conditions precedent to Canon’s tendering of shares in the Tender Offer.
With respect to the funds required for the settlement of the Tender Offer, the Company borrowed 80,000 million
yen from Mizuho Bank on July 23, 2024, the day immediately preceding the announcement date of the Tender Offer,and the entire funds required for the settlement of the Tender Offer will be allocated by cash on hand, including suchborrowed funds. The Company received a loan of 80,000 million yen from Mizuho Bank on July 23, 2024, and as aresult of the addition of such loan amounts, the amount of the deposit that can be allocated to the funds required forthe purchase, etc., is 92,767 million yen. In addition, the Company’s liquidity on hand on a consolidated basis as ofJune 30, 2024 (cash and deposits) as described in the Company’s Second Quarterly (Interim) Financial Results is
115,317 million yen (the liquidity on hand ratio is 2.2 months (Note 14)), and cash flows generated by the businessare expected to continue to accumulate. The Company received a loan of 80,000 million yen from Mizuho Bank andthe funds required for the settlement of the Tender Offer will be temporarily covered by cash on hand, including suchborrowed funds; however, the Company has agreed with Canon on repayment from Canon, in exchange for thecommencement of settlement of the Tender Offer on September 13, 2024, of the 80,000 million yen which is a portionof the existing short-term loans of 130,000 million yen provided by the Company to Canon, and the Company plans
to allocate such repayment for its repayment of the entire amount borrowed from Mizuho Bank on September 13,
2024, after receiving repayment of the short-term loans. Therefore, the Company believes that it will be able tomaintain the soundness and stability of its future business operations and finance.
(Note 14) It is the number (rounded to the first decimal place) calculated by dividing the Company’s liquidity on handas of June 30, 2024, as described in the Company’s Second Quarterly (Interim) Financial Results by theCompany’s monthly sales (the number obtained by dividing the Company’s consolidated net sales for thesix months ended June 30, 2024, by 6).

7In addition, after the settlement of the Tender Offer, the Company plans to cancel, by the end of September 2024,
the Tendering Shares (200,000,000 shares) out of its own shares acquired through the Tender Offer.
2.

Resolution of the Board of Directors meeting on the Acquisition of Own Shares(1)

Details of the resolution(2)

Class of share certificates, etc.

Total number of shares

Total acquisition priceCommon stock

22,000,100 shares (maximum)

90,002,409,100 yen (maximum)(Note 1)

Total number of issued shares: 131,079,972 shares (as of July 24, 2024)(Note 2)

Ratio of the total number of issued shares: 16.78% (rounded to the second decimal place)(Note 3)

Period of acquisition: From Thursday, July 25, 2024, to Monday, September 30, 2024

(Note 4)

The total number of shares to be purchased pursuant to the resolution of the Board of Directors
meeting is calculated by adding the number of shares corresponding to one minimum trading
unit (100 shares) to the number of shares to be purchased, because the number of tendered shares
may exceed the number of shares to be purchased and the actual number of shares purchased
may exceed the number of shares to be purchased as a result of unit adjustment on a pro rata
basis.

Listed share certificates, etc. relating to the treasury stock already acquired based on the aforementioned
resolution
Not applicable.

3.

Outline of the Purchase, etc.

(1)

Schedule(2)(i) Resolution of Board of
Directors meeting

Wednesday, July 24, 2024(ii) Date of public notice ofcommencement of tender offer

Thursday, July 25, 2024
Public notice will be made electronically via the Internet, and anotice to that effect will be published in The Nikkei.
(URL of the electronic notice:https://disclosure2.edinet-fsa.go.jp/)(iii) Filing date of tender offer
registration statement

Thursday, July 25, 2024(iv) Period of Tender Offer

From Thursday, July 25, 2024, to Thursday, August 22, 2024 (20business days)

Price of the purchase, etc.
4,091 yen per share of common stock(3)

Basis for the calculation of the price of the purchase, etc.
(i)

Basis of calculation

In determining the Tender Offer Price, the Company believed that emphasis must be placed on the clarityand objectivity of criteria, and the market price should be used as the basis for appropriate pricing of theCompany’s common stock, considering that, among others, the Company’s common stock is listed on afinancial instruments exchange and listed companies often acquire their own shares through market purchases

8

on financial instruments exchanges. Therefore, from the perspective of respecting the interests of thoseshareholders who do not tender their shares in the Tender Offer and will continue to retain ownership of theshares of the Company’s common stock, the Company determined that purchasing the shares at a price that is
discounted to a certain degree from the market price would be desirable in order to minimize the outflow ofcapital from the Company as much as possible.
In the middle of May 2024, as for the discount rate of the Tender Offer Price to the market price and theprice of the Company’s common stock as the basis of the discount, the Company determined to refer to the 48
Cases. Of the 48 Cases, there were five cases with a discount rate of 9% or less and 35 cases with a discountrate of 10%, which was the most common discount rate, and eight cases with a discount rate of 11% or more.
Taking into consideration the fact that the most common discount rate was 10%, which was used in 35 cases,
the Company determined that it is appropriate to adopt a discount rate of approximately 10% of the simple
average of the closing prices of the Company’s common stock on the Prime Market of the Tokyo Stock
Exchange over a certain period, and made a proposal to Canon to that effect.
After the above proposal, in late May 2024, the Company received a response from Canon that it would
positively consider applying for the Tender Offer based on the Tender Offer Price calculated by the method theCompany had proposed.
In light of the above response from Canon in late May 2024, on July 23, 2024, the Company presented toCanon a Tender Offer Price of 4,091 yen, which is the price calculated by applying a 10% discount to 4,546
yen, which is the simple average of the closing price of the Company’s common stock on the Prime Market of
the Tokyo Stock Exchange for the past one (1) month period until July 23, 2024, the business day immediately
preceding July 24, 2024, the date of the Board of Directors meeting that resolved to conduct the Tender Offer,as such simple average closing price is not subject to short-term price fluctuations and is considered to fully
factor in recent business performance. Thereafter, Canon explained to the Company that it intends to tender theTendering Shares (20,000,000 shares, shareholding ratio: 15.42%), which is held by Canon, in the Tender Offer
if the Company carries out the Tender Offer under the above terms.
Based on the above, the Company resolved, at a meeting of the Board of Directors held on July 24, 2024,
that the Tender Offer Price will be set at 4,091 yen.
The Tender Offer Price of 4,091 yen is equivalent to the price representing a 9.99% discount (rounded to thesecond decimal place; hereinafter the same applies to calculations of discount rate in this item) from 4,545 yen,which is the closing price of the Company’s common stock on the Prime Market of the Tokyo Stock Exchange
on July 23, 2024, the business day immediately preceding July 24, 2024, the date of the Board of Directors
meeting that resolved to conduct the Tender Offer; equivalent to the price representing a 10.01% discount from4,546 yen, which is the simple average of the closing prices of the Company’s common stock for the past one(1) month period until the same day; and equivalent to the price representing a 8.05% discount from 4,449 yen,which the simple average of the closing prices of the Company’s common stock for the past three (3) month
period until the same day.

(ii)
Process of calculation(Process leading to the determination of the Tender Offer Price)
In determining the Tender Offer Price, the Company believed that emphasis must be placed on the clarityand objectivity of criteria, and the market price should be used as the basis for appropriate pricing of theCompany’s common stock, considering that, among others, the Company’s common stock is listed on afinancial instruments exchange and listed companies often acquire their own shares through market purchases
on financial instruments exchanges. Therefore, from the perspective of respecting the interests of thoseshareholders who do not tender their shares in the Tender Offer and will continue to retain ownership of theshares of the Company’s common stock, the Company determined that purchasing the shares at a price that is
discounted to a certain degree from the market price would be desirable in order to minimize the outflow ofcapital from the Company as much as possible.
In the middle of May, 2024, the Company proposed to Canon that the Company acquire 20,000,000 shares,
a portion of the Company’s common stock held by Canon, at a certain discount on the market price of the9Company’s common stock on the Prime Market of the Tokyo Stock Exchange through tender offer. As for the
discount rate of the Tender Offer Price to the market price and the price of the Company’s common stock as
the basis of the discount, the Company determined to refer to the 48 Cases. Of the 48 Cases, there were fivecases with a discount rate of 9% or less and 35 cases with a discount rate of 10%, which was the most common
discount rate, and eight cases with a discount rate of 11% or more. Taking into consideration the fact that themost common discount rate was 10%, which was used in 35 cases, the Company determined that it isappropriate to adopt a discount rate of approximately 10% of the simple average of the closing prices of theCompany’s common stock on the Prime Market of the Tokyo Stock Exchange over a certain period, and madea proposal to Canon to that effect.
After the above proposal, in late May 2024, the Company received a response from Canon that it would
positively consider applying for the Tender Offer based on the Tender Offer Price calculated by the method theCompany had proposed.
In light of the above response from Canon in late May 2024, on July 23, 2024, the Company presented toCanon a Tender Offer Price of 4,091 yen, which is the price calculated by applying a 10% discount to 4,546
yen, which is the simple average of the closing price of the Company’s common stock on the Prime Market of
the Tokyo Stock Exchange for the past one (1) month period until July 23, 2024, the business day immediately
preceding July 24, 2024, the date of the Board of Directors meeting that resolved to conduct the Tender Offer,as such simple average closing price is not subject to short-term price fluctuations and is considered to fully
factor in recent business performance. Thereafter, Canon explained to the Company that it intends to tender theTendering Shares (20,000,000 shares, shareholding ratio: 15.42%), which is held by Canon, in the Tender Offer
if the Company carries out the Tender Offer under the above terms.
Based on the above, the Company resolved, at a meeting of the Board of Directors held on July 24, 2024,
by unanimous consent of all seven (7) Directors of the Company who participated in the deliberation andresolution, that the Company will acquire its own shares pursuant to the provisions of its Articles ofIncorporation in accordance with the provisions of Article 459, Paragraph 1 of the Companies Act, and that theCompany will conduct the Tender Offer as the specific method of such acquisition, as well as that the Tender
Offer Price will be set at 4,091 yen, which is a 10% discount of 4,546 yen, the simple average closing price of
the Company’s common stock on the Prime Market of the Tokyo Stock Exchange for the past one (1) month
period until the business day immediately preceding July 24, 2024, the date of the meeting of the Board of
Directors at which the Tender Offer was resolved to be conducted (July 23, 2024), and furthermore, from theperspective of providing an opportunity for shareholders other than Canon to tender their shares, that the
maximum number of shares to be purchased in the Tender Offer shall be 22,000,000 shares (shareholding ratio:
16.96%), which is 10% more than the 20,000,000 shares of the Tendering Shares.
(Matters concerning measures to ensure fairness and measures to avoid conflict of interests, and summaryof opinions obtained from entities, who have no interest in the controlling shareholders, regarding the factthat the transaction, etc. will not undermine interests of minority shareholders)(A) Matters concerning measures to ensure fairness and measures to avoid conflict of interests
With respect to the specific method for acquiring its own shares, the Company intends to acquire
such shares through a tender offer that provides shareholders an opportunity to determine whether
or not to tender their shares based on market share price trends after a certain amount of time forconsideration, from the perspective of ensuring fairness among shareholders and transactionaltransparency.
In view of the fact that Mr. Seijun Suzuki, a full-time Audit & Supervisory Board Member of theCompany, is from Canon and Canon (China) Co., Ltd., a subsidiary of Canon, he did not participate
in any deliberation on the proposal for the Tender Offer at the meeting of the Board of Directors of
the Company and refrained from expressing his opinion on such proposal from the perspective of
avoiding any suspicion of conflict of interest and ensuring the fairness of the Tender Offer.
Under the Securities Listing Regulations of the Tokyo Stock Exchange, in the event where alisted company makes a decision on significant transactions, etc. with controlling shareholders, the10

listed company is required to obtain an “opinion that the decision will not undermine interests ofminority shareholders” from an entity who has no interest in such controlling shareholder. Therefore,on January 29, 2024, considering that Canon is the parent company of the Company, holding
75,708,684 shares of the Company’s common stock (shareholding ratio: 58.38%), the Company
established the Special Committee, consisting of three Independent Outside Directors of theCompany (Mr. Yoshio Osawa, Mr. Toshiharu Hasebe and Ms. Hiroko Kawamoto), who have nointerest in Canon, as a standing organization to deliberate transactions that the Company deems
necessary to deliberate and consider the risk of conflicts of interest between the controllingshareholders and the minority shareholders from the perspective of protecting the interests ofminority shareholders and to report to the Board of Directors. At the time of the establishment of theSpecial Committee, the Company, on the assumption that the Company would acquire a portion of
the shares of the Company’s common stock held by Canon, had begun initial discussions with Canon
regarding the possibility of acquiring its own shares; however, had not specifically contemplated theimplementation of the Tender Offer. Upon the implementation of the Tender Offer by the Company,
and since the acquisition of its own shares from Canon through the Tender Offer falls under the
category of a significant transaction, etc. with controlling shareholders as set forth in the Securities
Listing Regulations of the Tokyo Stock Exchange, on June 11, 2024, Mr. Masachika Adachi, theChairperson of the Board of Directors of the Company, inquired with the Special Committee whether
the Tender Offer, which the Company is considering to conduct, would not undermine the interestsof the minority shareholders of the Company. Subsequently, Mr. Masachika Adachi requested theSpecial Committee to make a report on this matter, and concluded to make a decision whether toimplement the Tender Offer based on the report made by the Special Committee.
The Special Committee was held on July 11, 2024, July 16, 2024, and July 24, 2024, to discuss
whether conducting the Tender Offer would not undermine the interests of the minority shareholdersof the Company. As a result, the Company received the Report dated July 24, 2024, from the Special
Committee to the effect that the Special Committee judges that conducting the Tender Offer will notundermine the interests of the minority shareholders of the Company. For a summary of the Report,
please refer to “(B) Summary of opinions obtained from entities, who have no interest in thecontrolling shareholders, regarding the fact that the transaction, etc. will not undermine interests ofminority shareholders” below.
(B)

Summary of opinions obtained from entities, who have no interest in the controllingshareholders, regarding the fact that the transaction, etc. will not undermine interests ofminority shareholders
The Company received the Report dated July 24, 2024, from the Special Committee to the effectthat, considering the matters described in (a) to (d) below, the Special Committee judges that
conducting the Tender Offer will not undermine interests of the minority shareholders of theCompany.
(a) Reasonableness of the purpose of the Tender Offer
The acquisition of own shares through the Tender Offer will have the effect of contributing
to the improvement of the Company’s return on equity (ROE), price book-value ratio(PBR), and other capital efficiencies, as well as the improvement of earnings per share(EPS) and other profitability, and since this is in line with the Company’s policy ofreturning profits to shareholders, it is believed that there is a reasonable purpose for theCompany to conduct the Tender Offer.
The use of the tender offer method for the acquisition of its own shares from Canon also
has merit for the Company and is not considered unreasonable because (i) it is possible toensure that shareholders other than Canon will have an opportunity to determine whether
or not to tender their shares based on market share price trends after a certain amount oftime for consideration, from the perspective of ensuring fairness among shareholders and

11

(b)

(c)

transactional transparency and (ii) in the case of acquisition of own shares through offauction own share repurchase transaction on the Tokyo Stock Exchange (ToSTNeT-3), theacquisition price is determined based on the market price, whereas the tender offer method
makes it possible to purchase at a certain discount from the market price.
Impact of the Tender Offer on the Company’s corporate value and common interests ofshareholders
With respect to the funds required for the settlement of the Tender Offer, the Company
borrowed 80,000 million yen from Mizuho Bank on July 23, 2024, the day immediately
preceding the announcement date of the Tender Offer, and the entire funds required forthe settlement of the Tender Offer will be allocated by cash on hand, including suchborrowed funds. The Company received a loan of 80,000 million yen from Mizuho Bankon July 23, 2024, and as a result of the addition of such loan amounts, the amount of thedeposit that can be allocated to the funds required for the purchase, etc., is 92,767 million
yen. In addition, the Company’s liquidity on hand on a consolidated basis as of June 30,2024 (cash and deposits) is 115,317 million yen, and cash flows generated by the businessare expected to continue to accumulate. As stated above, the Company received a loan of
80,000 million yen from Mizuho Bank and the funds required for the settlement of theTender Offer will be temporarily covered by cash on hand, including such borrowed funds;
however, the Company has agreed with Canon on repayment from Canon, in exchange
for the commencement of settlement of the Tender Offer, of the 80,000 million yen which
is a portion of the existing short-term loans of 130,000 million yen provided by theCompany to Canon, and the Company will use such repayment funds to repay the entire
amount borrowed from Mizuho Bank promptly, after receiving repayment of the shortterm loans. Therefore, it is believed that the Company will be able to maintain thesoundness and stability of its finance in the future.
In addition, such loan from Mizuho Bank was executed at a lower interest rate than theinterest rate for the loan to Canon, and is considered to be financially beneficial andeconomically rational for the Company and not detrimental to the common interests of its
shareholders.
Even if all of Canon’s Tendering Shares (20,000,000 shares) are purchased by Canonthrough the Tender Offer, Canon’s ratio of voting rights will be approximately 50.79%
and it will continue to be the parent company of the Company. Therefore, no significant
change in the relationship between the Company and Canon is expected.
Based on the above, the Company’s conducting the Tender Offer is not considered to haveany adverse effect on the Company’s corporate value.
On the other hand, as stated in (a) above, the Tender Offer will have the effect ofcontributing to the improvement of the Company’s return on equity (ROE), price bookvalue ratio (PBR), and other capital efficiencies, as well as earnings per share (EPS) andother profitability, and therefore, the Tender Offer is considered to be beneficial to thecommon interests of the Company’s shareholders.
Appropriateness of the terms and conditions of the Tender Offer
The Tender Offer Price is set at the price calculated by applying a 10% discount to thesimple average of the closing price of the Company’s common stock for the past one (1)month period until the business day immediately preceding the date of the Board of
Directors meeting that resolved to conduct the Tender Offer.
First, given that the Company’s common stock is listed on a financial instruments
exchange, from the perspective of ensuring the objectivity of the purchase price, it isreasonable to determine the Tender Offer Price based on the market price of theCompany’s common stock. In addition, from the perspective of protecting the interests ofthe minority shareholders who do not tender their shares in the Tender Offer and will

12

(d)

continue to retain ownership of the shares of the Company’s common stock, it is also
reasonable to set the Tender Offer Price at a price that is discounted to a certain degreefrom the market price of the Company’s common stock in order to minimize the outflow
of capital from the Company as much as possible.
Furthermore, with regard to the discount rate, the discount rate in this case is considered
to be reasonable, given the fact that the largest number of cases in the Cases involved a
discount rate of 10%.
In addition, for the price of the Company’s common stock as the basis of the discount,rather than using a specific point in time as the basis, it is better to use a leveled averagestock price over a certain period of time as the basis to eliminate irregular factors such as
the effects of temporary stock price fluctuations and to ensure objectivity andreasonableness as the basis for the calculation. On the other hand, since it is consideredthat the Company’s recent performance is better reflected in the stock prices if more recent
stock prices are adopted, it is reasonable to use as the basis the simple average closing
price of the Company’s common stock on the Prime Market of the Tokyo Stock Exchange
for the past one (1) month period until the business day immediately preceding the dateof Board resolution, which is shorter than the simple average closing price of theCompany’s common stock on the Prime Market of the Tokyo Stock Exchange for the past
three (3) month period or the past six (6) month period until the business day immediately
preceding the date of Board resolution.
As stated above, it is believed that the terms and conditions of the Tender Offer areappropriate.
Fairness of the decision-making procedures and other procedures regarding the Tender
Offer
Based on the circumstances set forth in (x) to (z) below, it is considered that the decisionmaking procedures and other procedures regarding the Tender Offer are fair.
(x) Deliberations by the Special Committee, in relation to the protection of minority
shareholders
The Special Committee consists of three Independent Outside Directors of theCompany, who have no interest in Canon.
The Special Committee, having received explanations and relevant materials from theCompany regarding, among others, the purpose and impact of the Tender Offer, thereasonableness of the terms and conditions of the Tender Offer, including the Tender
Offer Price, and the fairness of the Company’s decision-making procedures regarding
the Tender Offer, deliberated and considered the matters which were to be deliberated
from the perspective of protecting the interests of minority shareholders.
(y) Non-participation of officers who may have an interest in deliberations and resolutions
regarding the Tender Offer
Since Mr. Seijun Suzuki, a full-time Audit & Supervisory Board Member, is from
Canon and Canon (China) Co., Ltd., a subsidiary of Canon, he will not participate inany deliberation on the proposal for the Tender Offer at the meeting of the Board of
Directors of the Company and will refrain from expressing his opinion on suchproposal from the perspective of avoiding any suspicion of conflict of interest andensuring the fairness of the Tender Offer.

(z) Appropriate information disclosureWith respect to the Tender Offer, it is deemed that sufficient information will be
disclosed in the Tender Offer Registration Statement and the Press Release regarding
the Tender Offer to contribute to judgment by the minority shareholders of theCompany as to the appropriateness of the terms and conditions of the transaction.

13

(4)

Number of shares to be purchased
Class of sharecertificates, etc.

Number of shares to bepurchased

Expected number of excess
sharesTotal

Common stock

22,000,000 (shares)- (shares)

22,000,000 (shares)(Note 1) If the total number of the Tendered Share Certificates does not exceed the number of shares to bepurchased (22,000,000 shares), the Company will purchase all of the Tendered Share Certificates.
However, if the total number of the Tendered Share Certificates exceeds the number of shares to bepurchased (22,000,000 shares), the Company will not purchase all or part of such excess, and will
implement the transfer of shares and other settlement with regard to the purchase, etc. of share certificates
and the like by the pro rata allocation method provided in the provisions of Article 27-13, Paragraph 5of the Act as applied mutatis mutandis pursuant to the provisions of Article 27-22-(2), Paragraph 2 of
the Act, and the provisions of Article 21 of the Cabinet Office Ordinance. (If the number, in respect ofeach of the Tendered Share Certificates, includes a portion of shares less than one trading unit (100shares), the maximum number of shares to be purchased, calculated on a pro rata basis, will be the said
number.)(Note 2) Shares less than one unit are also covered by the Tender Offer. If a shareholder exercises its right torequest purchase of shares less than one unit pursuant to the Companies Act, the Company may
repurchase its shares during the period of the purchase, etc. of the Tender Offer (the “Tender Offer
Period”) pursuant to the procedures prescribed under the relevant laws and regulations.
(Note 3) The Company issued stock acquisition rights and such stock acquisition rights may be exercised during
the Tender Offer Period. Shares of the Company’s common stock to be issued or transferred upon theexercise of such stock acquisition rights will also be subject to the Tender Offer.
(5)

Funds necessary for the purchase, etc.
90,046,300,000 yen(Note) The above-mentioned figure represents the amount of payment for purchasing all the shares to be purchased(22,000,000 shares) (90,002,000,000 yen), plus the estimated purchase commissions, expenses for the
public notice of the Tender Offer and miscellaneous expenses including the printing costs for required
documents such as the Tender Offer explanation statement.

(6)

Method of settlement(i)Name and location of head office of financial instruments business operator/bank etc. in charge ofsettlement of purchase, etc.
Mizuho Securities Co., Ltd. 5-1, Otemachi 1-chome, Chiyoda-ku, Tokyo(ii)
Commencement date of settlement
Friday, September 13, 2024
(iii)
Method of settlement
A notice regarding the purchase, etc. of the Tender Offer will be mailed to the address of those shareholders
who have tendered their shares in the Tender Offer (the “Tendering Shareholders”) or to the standing proxy inthe case of foreign resident shareholders (including corporate shareholders) (the “Foreign Shareholders”)
without delay after the expiration of the Tender Offer Period. The purchase will be settled in cash. The purchaseprice less withholding tax on deemed dividend (Note) is to be remitted from the tender offer agent to thelocation specified by the Tendering Shareholders (or to the standing proxy in the case of the Foreign
Shareholders), or to be paid to the accounts of the Tendering Shareholders at the tender offer agent which
received the application, in accordance with the instructions of the Tendering Shareholders (or the standing
proxy in the case of the Foreign Shareholders) without delay after the commencement date of the settlement.

14

(Note) The tax treatment in the event of a tender under the Tender Offer is as follows. (*)(A) Individual shareholders
If the amount of money to be delivered in return for tendering and delivering shares through theTender Offer exceeds the portion of the amounts of the share capital, etc. of the corporation issuingshares that is the tender offeror (in the case of a consolidated entity, the amount of consolidated
individual share capital, etc.) corresponding to the shares that gave rise to such delivery of money,
the amount of such excess (the “Amount of Deemed Dividend”) will be the amount of income
relating to dividend income. The amount of money to be delivered, less the Amount of Deemed
Dividend, will be deemed to be the amount of income from the transfer of shares.
If no Amount of Deemed Dividend arises, the entire amount of money to be delivered will be theamount of income from the transfer of shares.
The Amount of Deemed Dividend will be subject to 20.315% withholding tax in principle(income tax and special income tax for reconstruction under the Act on Special Measures for
Securing Financial Resources Necessary to Implement Measures for Reconstruction following theGreat East Japan Earthquake (Act No. 117 of 2011, as amended) (the “Special Income Tax for
Reconstruction”) at 15.315% plus inhabitant tax at 5%) (in the case of non-residents, no inhabitant
tax will be withheld); provided, however, that with respect to individual shareholders who fall under
the category of large shareholders, etc. as provided for in the provisions of Article 4-6-2, Paragraph
38 of the Order for Enforcement of the Act on Special Measures Concerning Taxation (Cabinet
Order No. 43, 1957, as amended), such Amount of Deemed Dividend will be subject to 20.42%
withholding tax (income tax and Special Income Tax for Reconstruction only). The amount ofincome from the transfer of shares less acquisition costs, etc. relating to such shares will, in principle,
be subject to separate self-assessment taxation (Non-residents with permanent establishments inJapan are, in principle, not subject to taxation.). In the case where a shareholder tenders the sharesin a tax-exempt account as provided for in the provisions of Article 37-14 (Tax exemption for capitalgains, etc. from small amounts of listed shares in a tax-exempt account) of the Act on Special
Measures Concerning Taxation (Act No. 26 of 1957, as amended) pursuant to the Tender Offer, if
the financial institution business operator at which such Tax-exempt Account is held is Mizuho
Securities Co., Ltd., income from the transfer of shares pursuant to the Tender Offer will, in principle,
be tax-exempt; provided, however, that if such Tax-exempt Account is held at a financial institution
other than Mizuho Securities Co., Ltd., the aforementioned treatment may not apply.
(B)

Corporate Shareholders
The Amount of Deemed Dividend will be the amount of dividend, etc., and, will be, in principle,
subject to 15.315% withholding tax (income tax and Special Income Tax for Reconstruction)(Corporate shareholders (limited to corporations with their head office or principal office in Japan(domestic corporations)) who directly hold more than one-third of the total number of issued shares(excluding treasury stock) of the tender offeror as of the record date for the payment of the Amountof Deemed Dividend are not subject to withholding tax.). The amount of money to be delivered,other than the Amount of Deemed Dividend, will be the amount of consideration for the transfer of
securities.

(C)

The Foreign Shareholders who, pursuant to an applicable tax treaty, are able to, and wish to,
enjoy the benefit of reduction of or exemption from income tax and Special Income Tax for
Reconstruction on such Amount of Deemed Dividend will be required to submit a written
notification concerning such tax treaty to the tender offer agent by the end of the Tender Offer
Period.

(*) For specific questions concerning taxation, each shareholder is kindly advised to confirm with15

professionals such as tax accountants and to make decisions at its own discretion.
(7)

Other matters(i)
The Tender Offer is not and will not be made, directly or indirectly, in or toward the U.S., or byusing the U.S. postal service or any other means or instruments of interstate or foreign commerce (including,but not limited to, facsimile, e-mail, internet communication, telex, and telephone), or through any facilities ofa securities exchange in the U.S. No one can tender shares in the Tender Offer by any means or instruments
above, or through any facility above, or from the U.S.
In addition, the tender offer registration statement for the Tender Offer and other related documents are notand may not be sent or delivered by the postal service or any other means in, to, or from the U.S. Any tenderof shares in the Tender Offer that directly or indirectly breaches any of the restrictions above cannot be accepted.
When tendering their shares in the Tender Offer, the Tendering Shareholders (or the standing proxy in the caseof Foreign Shareholders) may be required to represent and warrant the following to the tender offer agent:(a) The Tendering Shareholder is not located in the U.S. neither at the time of tendering shares nor at thetime of sending the tender offer acceptance form; (b) the Tendering Shareholder did not receive or send any
information regarding the Tender Offer (including copies thereof), directly or indirectly, in, to or from the U.S.;(c) the Tendering Shareholder did not use, directly or indirectly, the U.S. postal service or any other means or
instruments of interstate or foreign commerce (including, but not limited to, facsimile, e-mail, internet
communication, telex, and telephone) or any facilities of a securities exchange in the U.S. with respect to thepurchase, etc. or for signing or delivering the tender offer acceptance form; and (d) the Tendering Shareholder
is not acting as an agent, a trustee or a mandatary without discretion for any other person (except for the casewhere such other person provides all instructions for the purchase, etc. from outside the U.S.).
(ii)
On July 24, 2024, the Company entered into the Tender Offer Agreement with Canon, the parent
company of the Company, pursuant to which Canon agreed to tender in the Tender Offer 20,000,000 shares(shareholding ratio: 15.42%), which is a portion of the 75,708,684 shares (shareholding ratio: 58.38%) of theCompany’s common stock held by Canon, if the Company adopts a resolution to conduct the Tender Offer.
The Tender Offer Agreement contains no conditions precedent to Canon’s tendering of shares in the Tender
Offer.
Canon explained to the Company that it currently intends to continue to hold the shares of the Company’scommon stock to be held by Canon after the Tender Offer (55,708,684 shares (shareholding ratio: 42.96%) if
all the Tendering Shares are purchased). On the other hand, if the total number of shares tendered exceeds thenumber of shares planned for purchase, all or part of the excess portion will not be purchased in the Tender
Offer, and instead the share will be purchased based on a pro rata allocation method provided for the provisionsof Article 27-13, Paragraph 5 of the Act and Article 21 of the Cabinet Office Ordinance as applied mutatis
mutandis pursuant to Article 27-22-2, Paragraph 2 of the Act. In such case, the Company will acquire a portionof the Tendering Shares (20,000,000 shares). However, Canon explained to the Company that it intends tocontinue to hold the shares of the Company’s common stock that it has tendered in the Tender Offer but thatcannot be acquired by the Company.
(iii)

Transactions, etc. with controlling shareholders(A) Applicability of transactions, etc. with controlling shareholders and compliance withguidelines for measures to protect minority shareholders
Under the Securities Listing Regulations of the Tokyo Stock Exchange, in the event where alisted company makes a decision on significant transactions, etc. with controlling shareholders, thelisted company is required to obtain an “opinion that the decision will not undermine interests ofminority shareholders” from an entity who has no interest in such controlling shareholder. Therefore,on January 29, 2024, considering that Canon is the parent company of the Company, holding
75,708,684 shares of the Company’s common stock (shareholding ratio: 58.38%), the Company
established the Special Committee, consisting of three Independent Outside Directors of the16Company (Mr. Yoshio Osawa, Mr. Toshiharu Hasebe and Ms. Hiroko Kawamoto), who have nointerest in Canon, as a standing organization to deliberate transactions that the Company deems
necessary to deliberate and consider the risk of conflicts of interest between the controllingshareholders and the minority shareholders from the perspective of protecting the interests ofminority shareholders and to report to the Board of Directors. At the time of the establishment of theSpecial Committee, the Company, on the assumption that the Company would acquire a portion of
the shares of the Company’s common stock held by Canon, had begun initial discussions with Canon
regarding the possibility of acquiring its own shares; however, had not specifically contemplated theimplementation of the Tender Offer.
In addition, in the “Guidelines for measures to protect minority shareholders when conducting
transactions, etc. with controlling shareholders” of the Corporate Governance Report published on
May 13, 2024, it was stated that “important master agreements for transactions with the controllingshareholder are concluded following a resolution by the Board of Directors. In addition, as to therisk of conflicts of interests occurring between the controlling shareholder and minority shareholders
regarding which deliberations and considerations are deemed necessary for the purpose of protecting
the interests of minority shareholders, the ‘Special Committee’ consisting of the Independent Outside
Directors makes discussions and delivers a report to the Board of Directors. No arbitrary decisions
are made on the terms, etc. of transactions with the controlling shareholder. In addition, the Company
protects the interests of all its shareholders by conducting all transactions appropriately and fairly,
including transactions with the controlling shareholder, to ensure there is no damage to theCompany’s independence and interests.”
In order to ensure that the acquisition of its own shares from Canon through the Tender Offer will
not be a transaction that would undermine interests of minority shareholders, the Company has taken
measures as stated in “(ii) Process of calculation” of “(3) Basis for the calculation of the price of thepurchase, etc.” of “3. Outline of the Purchase, etc.” above, and therefore, with respect to the termsof transaction and method of making decisions on the transaction, the Company has made its
determination in the same manner as that in general transactions and believes that it is in compliancewith the said guidelines.
(B)

Matters concerning measures to ensure fairness and measures to avoid conflict of interests,
and summary of opinions obtained from entities, who have no interest in the controllingshareholders, regarding the fact that the transaction, etc. will not undermine interests ofminority shareholders
Please refer to “(ii) Process of calculation” of “(3) Basis for the calculation of the price of thepurchase, etc.” of “3. Outline of the Purchase, etc.” above.

(iv)
The Company disclosed the Company’s Second Quarterly (Interim) Financial Results on July 24,
2024. The outline of the quarterly financial results is provided below based on such disclosure. The content ofsuch disclosure has not undergone a mid-term review by an auditing firm pursuant to the provisions of Article
193-2, Paragraph 1 of the Act. For details, please refer to the disclosure.
Outline of the Summary Report of Consolidated Financial Results for the second (interim) quarter ended
June 30, 2024
(From January 1, 2024, to June 30, 2024)(A) Profits and losses (consolidated)
Fiscal year ending December 31, 2024
Accounting period(Interim Consolidated Accounting Period)
Net sales

318,903 million yen

Cost of sales

215,476 million yen

17Selling, general
expensesandadministrative

77,392 million yen

Non-operating income

1,157 million yen

Non-operating expenses

200 million yen

Interim net income attributable to ownersof the parent

20,147 million yen(B) Per share information (consolidated)
Fiscal year ending December 31, 2024
(Interim Consolidated Accounting Period)

Accounting period(v)

Interim net income per share

155.36 yen

Dividend per share

60.00 yen

Net assets per share

3,439.62 yen

Disclosure of the “Notice regarding dividends from retained earnings (interim dividends) andrevisions to dividend forecasts”
The Company disclosed the “Notice regarding dividends from retained earnings (interim
dividends) and revisions to dividend forecasts” on July 24, 2024. For details, please refer to thecontent of the disclosure.

Reference: Status of treasury stock as of June 30, 2024
Total number of issued shares (excluding treasury stock):Number of treasury stock:
1,399,232 shares

131,079,972 shares

End of Document18