[Translation]
May 16, 2018
To Whom It May Concern,
Listed Company’s Name:
Representative:(Code Number:Contact:(Telephone:
Listed Company’s Name:
Representative:(Code Number:Contact:(Telephone:
Company’s Name:
Representative:
Contact:(Telephone:

Nippon Steel & Sumitomo Metal Corporation
Kosei Shindo, Representative Director andPresident
5401, First Section of the TSE, First Section of theNSE, FSE, and SSE)
Fumiaki Onishi, General Manager, Public Relations
Center+81-3-6867-2135, 2146, 2977, 3419)
Nisshin Steel Co., Ltd.
Kinya Yanagawa, President & CEO, andRepresentative Director
5413, First Section of the TSE)
Hirokazu Kuwasako, Executive Officer, General
Manager, General Administration Dept.
+81-3-3216-5566)
Nippon Steel & Sumikin Stainless Steel Corporation
Hitoshi Ito, Representative Director and President
Manabu Tani, Executive Officer, General Manager,
Corporate Planning Div.
+81-3-6841-4853)

Notice Regarding the Execution of a Share Exchange Agreement to Make Nisshin Steel Co., Ltd.
a Wholly Owned Subsidiary of Nippon Steel & Sumitomo Metal Corporation, and the Executionof a Basic Agreement for the Integration of the Stainless Steel Sheet Businesses of Nippon Steel& Sumitomo Metal Corporation, Nisshin Steel Co., Ltd., and Nippon Steel & Sumikin StainlessSteel Corporation
Nippon Steel & Sumitomo Metal Corporation (“NSSMC”) and Nisshin Steel Co., Ltd. (“Nisshin
Steel”) resolved at their respective board of directors’ meetings held today to conduct a shareexchange effective as of January 1, 2019 wherein NSSMC will become a wholly owning parent
company and Nisshin Steel will become a wholly owned subsidiary (the “Share Exchange”), making
Nisshin Steel a wholly owned subsidiary of NSSMC (the “Conversion into a Wholly Owned
Subsidiary”), in order to realize the maximum effects of synergies at an early stage by accelerating
the mutual utilization of management resources and further promoting deeper alliances in the NSSMC
group. NSSMC and Nisshin Steel entered into a share exchange agreement regarding the Share
Exchange as of today (the “Share Exchange Agreement”).
The Share Exchange will be conducted effective as of January 1, 2019 in the following manner: The
Share Exchange will be conducted through a short-form share exchange procedure under Article 796,
paragraph 2 of the Companies Act, under which no approval at a shareholders meeting is required,with respect to NSSMC. With respect to Nisshin Steel, the Share Exchange Agreement will beapproved at Nisshin Steel’s extraordinary shareholders meeting to be held around December 2018.
Prior to the effective date of the Share Exchange, common shares of Nisshin Steel will be delistedfrom the First Section of Tokyo Stock Exchange, Inc. (the “TSE”) on December 26, 2018 (the last dayof trading will be December 25, 2018).

In connection with the Share Exchange, NSSMC will file a registration statement on Form F-4 with
the U.S. Securities and Exchange Commission (the “SEC”), pursuant to the U.S. Securities Act of
1933, prior to Nisshin Steel’s extraordinary shareholders meeting to approve the Share Exchange.
Further, in order to maximize synergy in the NSSMC group’s stainless steel business at an early stage,
NSSMC, Nisshin Steel, and Nippon Steel & Sumikin Stainless Steel Corporation (“NSSC”) resolved
at their respective board of directors’ meetings held today that NSSC will assume part of the steel
sheet business contained within the special stainless steel business (steel sheets, shaped steel) of
NSSMC and the steel sheet business contained within the stainless steel business (steel sheets, steel
pipes and tubes) of Nisshin Steel (the “Integration of Stainless Steel Sheet Business”) around April
1, 2019, after the Conversion into a Wholly Owned Subsidiary, resulting from the Share Exchange,
and the three companies entered into a basic agreement regarding the Integration of Stainless Steel
Sheet Business as of today.
The details of the foregoing resolutions are announced as follows.
I.

Regarding the Conversion into a Wholly Owned Subsidiary1.

Objective of the Conversion into a Wholly Owned Subsidiary

NSSMC was formed in October 2012 through the business integration of Nippon Steel Corporation(established in 1950) and Sumitomo Metal Industries, Ltd. (established in 1949). Since its formation,
NSSMC has strived to become the “Best Steelmaker with World-Leading Capabilities” and has taken
measures to reduce costs by combining the technologies of the two former companies and improving
efficiency as a result of the business integration, to integrate facilities, to invest in downstream
processes overseas, and to integrate and reorganize its group companies. Through these measures,
NSSMC has constantly generated synergy effects.
Nisshin Steel was established in April 2014 through the merger of Nisshin Steel Holdings Co., Ltd.
(established in 2012), the former Nisshin Steel Co., Ltd. (established in 1959), and Nippon Metal
Industry Co., Ltd. (established in 1932). Nisshin Steel specializes in coated steel sheets, special steel
and stainless steel and has received high evaluations from its markets for distinctive product groups
and meticulous development marketing in line with customer needs, together with its MOONSTAR
corporate symbol. In addition, since the establishment of Nisshin Steel Holdings Co., Ltd., Nisshin
Steel has implemented the measures, including enhancing business competitiveness by reducing costs,
ensuring multi-stratified earnings through core products strategies, and creating new markets bydeepening customer-centrism, and has achieved certain positive results.
In March 2017, NSSMC successfully made Nisshin Steel its subsidiary (the “Conversion into a
Subsidiary”), in order to provide better products, technologies and services to consumers in andoutside Japan, build cost competitiveness to survive global competition and build strong finances
through efficient utilization of funds and assets, thereby facilitating various measures to maximize
corporate value and creating synergies.
Since the Conversion into a Subsidiary, NSSMC and Nisshin Steel have constantly realized synergistic
effects through the mutual utilization of their management resources and deepening of their sales
alliance and optimization of their production system by using technological advancement and flexible
merchandizing at a global top level, cost competitiveness and global responsiveness focusing on steel
scrap, which are the strengths of NSSMC, and customer and market responsiveness through attentive
business development based on consumer needs, which are the strengths of Nisshin Steel.
The two companies recognize that, while global demands for steel products are expected to constantly
expand in the long run, the environment surrounding the steel-making industry is at a turning point for
long-term and structural changes, exemplified by: changes in the steel supply-demand structure suchas domestic depopulation, movements toward protectionism, a shift to domestic production by-2-

emerging countries; changes in social and industrial structures such as rapid progress of IT, increased
needs of auto-manufacturers for lighter and stronger vehicle bodies, the spread of cars powered by
new and alternative sources of energy, such as electric vehicles, and automated driving; andexpectation from companies for measures toward the realization of a sustainable society.
Under these circumstances, in order to respond to the future business environment surrounding theordinal steel and stainless steel industries, NSSMC and Nisshin Steel reached the conclusion that it
would be necessary to enhance their respective strengths and realize the maximum effects of synergies
at an early stage by accelerating the mutual utilization of management resources and further promoting
alliances within the NSSMC group, and agreed to conduct the Conversion into a Wholly Owned
Subsidiary. NSSMC believes that the Conversion into a Wholly Owned Subsidiary will enable it tomore speedily enact intercompany measures including those for pursuit of an optimized production
system and business restructuring of its group companies in a more expeditious and flexible manner inline with the changes in the business environment, without creating concern for conflict between theshareholders of each company. Nisshin Steel is also convinced that, by becoming a wholly owned
subsidiary of NSSMC, it will be able to further show the strength of its customer and market
responsiveness, and reinforce its brand power, which has been built under customer-centric principles
through the promotion of its alliances within the NSSMC group, because the Conversion into a
Wholly Owned Subsidiary will allow Nisshin Steel to make the most of the NSSMC group’s
management resources, and that this will contribute to the improvement of Nisshin Steel’s corporate
value.
2.

Outline of the Share Exchange(1)

Schedule for the Share Exchange
Board of directors’ meetings to approve execution of the Share
Exchange Agreement (each of NSSMC and Nisshin Steel)
Execution of the Share Exchange Agreement (each of NSSMC
and Nisshin Steel)Record date for extraordinary shareholders meeting to approve
the Share Exchange Agreement (Nisshin Steel)
Extraordinary shareholders meeting to approve the Share
Exchange Agreement (Nisshin Steel)
Last day of trading (Nisshin Steel)Date of delisting (Nisshin Steel)Date the Share Exchange is conducted (the effective date)(2)

May 16, 2018
May 16, 2018
September 30, 2018
(planned)
Around December 2018
(planned)
December 25, 2018
(planned)
December 26, 2018
(planned)
January 1, 2019 (planned)(Note 1)The Share Exchange will be conducted through a short-form share exchange
under Article 796, paragraph 2 of the Companies Act, under which no
approval at a shareholders meeting is required for NSSMC.

(Note 2)

The foregoing schedule is subject to change upon agreement between NSSMC
and Nisshin Steel depending on the progress of their preparation of aregistration statement on Form F-4 to be filed with the SEC and otherpreparations for the Share Exchange.

Method of the Share Exchange

The Share Exchange will be in the form of a share exchange wherein NSSMC will become a wholly
owning parent company and Nisshin Steel will become a wholly owned subsidiary. The Share
Exchange will be conducted effective as of January 1, 2019 in the following manner: The Share
Exchange will be conducted through a short-form share exchange under Article 796, paragraph 2 of-3-the Companies Act, under which no approval at a shareholders meeting is required, with respect to
NSSMC. With respect to Nisshin Steel, the Share Exchange Agreement will be approved at Nisshin
Steel’s extraordinary shareholders meeting to be held around December 2018.
(3)

Allotment in the Share Exchange
NSSMC(Wholly owning parent
company in share exchange)

Nisshin Steel(Wholly owned subsidiary inshare exchange)

1

0.71

Allocation ratio in the Share
Exchange(Note 1)

Share allocation ratio
0.71 common shares of NSSMC will be allocated and delivered against one
common share of Nisshin Steel; however, 56,020,563 common shares ofNisshin Steel held by NSSMC (as of May 16, 2018) will not be allocated in
the Share Exchange.

(Note 2)

Number of NSSMC shares to be delivered in the Share Exchange
NSSMC will allocate and deliver 38,161,032 common shares of NSSMC
stock through the Share Exchange; however, the common shares to bedelivered will be sourced from treasury shares held by it (66,436,595 shares asof March 31, 2018), and no new shares will be issued.
Nisshin Steel will, by a resolution at the board of directors’ meeting to be held
on a date on or before to the day preceding the effective date of the Share
Exchange, cancel all of the treasury shares held by it (including the treasury
shares to be acquired through the purchase of such shares upon a sharepurchase request of any dissenting shareholder to be exercised in relation to
the Share Exchange pursuant to Article 785, paragraph 1 of the CompaniesAct) at the time immediately before NSSMC’s acquisition of all the issued
shares of Nisshin Steel in the Share Exchange (excluding the common sharesof Nisshin Steel held by NSSMC). Therefore, regarding the number ofcommon shares (38,161,032 shares) to be allocated and delivered in the Share
Exchange above, common shares of NSSMC are not supposed to be allocatedand delivered to the treasury shares held by Nisshin Steel (75,427 shares as ofMarch 31, 2018). Additionally, the number of said common shares(38,161,032 shares) is subject to change due to acquisition or cancellation by
Nisshin Steel of its treasury shares.

(Note 3)

Handling of shares comprising less than one unit
Upon the Share Exchange, it is expected that there will be Nisshin Steelshareholders who thereafter hold shares comprising less than one unit (lessthan 100 shares) of NSSMC. In particular, Nisshin Steel shareholders who
hold less than 141 Nisshin Steel shares are expected to hold less than one unitof NSSMC shares. Although it is impossible to sell such shares comprisingless than one unit on a financial instruments exchange market, theshareholders expected to hold shares of less than one unit of NSSMC may use
the following schemes for NSSMC shares on and after the effective date of the
Share Exchange:

-4-

(i)

Scheme for requesting purchase by NSSMC of shares comprising lessthan one unit (sale of less than 100 shares)

This is a scheme where shareholders holding shares comprising less than one
unit of NSSMC may request that NSSMC purchase back such shares held byrespective shareholders pursuant to Article 192 and other provisions of theCompanies Act.
(ii)

Scheme for requesting sale by NSSMC of shares comprising less than
one unit (additional purchase up to 100 shares)

This is a scheme where shareholders holding shares comprising less than one
unit of NSSMC may request that NSSMC sell its common shares in thenumber constituting one unit share (100 shares) together with their respective
shares, and may purchase the same from NSSMC pursuant to Article 194 of
the Companies Act, the Articles of Incorporation of NSSMC and otherdocuments.
(Note 4)

Handling of fractions less than one share
As a result of the Share Exchange, if there are fractions of less than one
common share of NSSMC, NSSMC will sell such fractions in a lump sum anddeliver the sales proceeds thereof to shareholders of Nisshin Steel proportional
to their holding ratio of such fractions pursuant to Article 234 of theCompanies Act and other relevant laws.

(4)
Treatment of Stock Acquisition Rights and Bonds with Stock Acquisition Rights upon the
Share Exchange
Nisshin Steel has issued neither stock acquisition rights nor bonds with stock acquisition rights.
3.

Basis for Particulars of Allotment of Shares Relating to the Share Exchange(1)

Basis and Reasons for Particulars of Allotment of Shares

In order to ensure the fairness and reasonableness of the calculation of the share allocation ratio (the“Share Exchange Ratio”) to be used in the Share Exchange and stated in “2. (3) Allotment in the
Share Exchange” above, NSSMC and Nisshin Steel agreed to ask third-party valuation organizations
independent of both companies to calculate the Share Exchange Ratio. NSSMC appointed Nomura
Securities Co., Ltd. (“Nomura Securities”) and Nisshin Steel appointed Mitsubishi UFJ Morgan
Stanley Securities Co., Ltd. (“Mitsubishi UFJ Morgan Stanley Securities”) to be their respective
third-party valuation organizations.
NSSMC and Nisshin Steel deliberated based on the results of their respective due diligence
investigations into the other company, making reference to the calculation result of the Share
Exchange Ratio submitted by their respective third-party valuation organizations, and engaged in
repeated negotiations and consultations, comprehensively taking into account such factors as financial
conditions, asset conditions and the future prospects of NSSMC and Nisshin Steel. As a result,
NSSMC and Nisshin Steel reached the conclusion that the Share Exchange Ratio is reasonable and not
detrimental to the interests of their respective shareholders. Therefore, NSSMC and Nisshin Steelresolved at their respective board of directors’ meetings held today to execute the Share Exchange
Agreement between them to conduct the Share Exchange using the Share Exchange Ratio.
If there is any material change in the conditions used as a basis for the calculation, the Share Exchange
Ratio is subject to change upon mutual consultation between the companies.
-5-

(2)

Matters Regarding Valuation(i)Name of Valuation Organizations and Relationship with Listed Companies
Nomura Securities, a third-party valuation organization retained by NSSMC, andMitsubishi UFJ Morgan Stanley Securities, a third-party valuation organization
retained by Nisshin Steel, are valuation organizations independent of NSSMC and
Nisshin Steel, are not related parties of NSSMC and Nisshin Steel and have nomaterial interest in the Share Exchange to be noted.

(ii)

Outline of Valuation
For NSSMC, Nomura Securities made calculations using a market share price analysis
because NSSMC is listed on a financial instruments exchange and its market shareprice exists.
For Nisshin Steel, Nomura Securities made calculations using (i) a market share priceanalysis because Nisshin Steel is listed on a financial instruments exchange and its
market share price exists, (ii) a comparable company analysis because there areseveral listed companies comparable to Nisshin Steel and thus its share value can beanalogized under the comparable company analysis, and (iii) a discounted cash flow
method (the “DCF Method”) in order to reflect Nisshin Steel’s future businessactivities into the valuation.
The ranges of Nisshin Steel’s share values are as follows, where the per-share value of
NSSMC’s shares is assumed to be 1 under each valuation method:

Market Share Price Analysis
Comparable Company Analysis
DCF Method

Calculation Result of
the Share Exchange Ratio
0.57 - 0.60
0.50 - 0.63
0.35 - 0.87

Under the market share price analysis, using May 15, 2018 as the reference date, andmaking reference to the closing price on the TSE on the reference date, the simple
averages of the closing price for the one week, one month, three months, and six
months immediately preceding the reference date were applied.
When calculating the above share exchange ratios, Nomura Securities used
information which was provided by both companies or was publicly available,
assumed that all of those materials and information are accurate and complete, and has
not independently verified their accuracy and completeness. Moreover, Nomura
Securities has not independently evaluated, appraised, or assessed the assets or
liabilities (including financial derivatives, off-the-book assets and liabilities, and othercontingent liabilities) of both companies and their affiliates, including analysis andvaluation of each individual asset and liability, nor has it requested appraisal orassessment from any third-party organization. Nomura Securities reflected theinformation and economic conditions up to May 15, 2018 in its calculation of theshare exchange ratio, and assumed that NSSMC’s management team had reasonably
examined or prepared Nisshin Steel’s financial forecast (including profit planning andother information) based on the best estimates and judgments currently available.

-6-Under Nisshin Steel’s future financial forecasts, which Nomura Securities has used as
the basis of its calculation under the DCF Method, a substantial increase in operating
profit is expected for FY2020, which increase will be by 30 percent or more,compared to FY2019. This expectation is mainly due to maximization of its synergy
with the NSSMC group and business structure reforms utilizing the group’s
technologies and know-how following the Conversion into a Subsidiary in March
2017, as well as advancement of its core product strategy through reviewing its coreproduct group and enhancing branding, and advancement of a CS (customer
satisfaction) pursuit strategy as part of strengthening of the value chain. Note thatsuch financial forecasts are not premised on the presumption that the Share Exchange
will be conducted.
As stated in “(4) Measures to Ensure Fairness” below, NSSMC obtained a fairness
opinion dated May 15, 2018 from Nomura Securities to the effect that the agreed
Share Exchange Ratio is reasonable to NSSMC from a financial viewpoint subject tothe above conditions precedent and other certain conditions.
On the other hand, for NSSMC, Mitsubishi UFJ Morgan Stanley Securities madecalculations using a market share price analysis based on its judgment that commonshares of NSSMC are listed on the First Section of the TSE, NSSMC’s aggregate
market value is significantly high compared with that of Nisshin Steel, and the market
liquidity of NSSMC shares is high; thus, when calculating the value of NSSMC sharesas consideration for the Share Exchange, it would obtain sufficiently fair results underthe market share price analysis.
For Nisshin Steel, Mitsubishi UFJ Morgan Stanley Securities made calculations using(i) a market share price analysis because its shares are listed on a financial instruments
exchange and their market share prices exist, (ii) a comparable company analysis
because there are several listed companies comparable to Nisshin Steel and thus its
share value can be analogized under the comparable company analysis, and (iii) a
discounted cash flow analysis (the “DCF Analysis”) in order to reflect Nisshin Steel’s
future business activities into the valuation.
The ranges of Nisshin Steel’s share values are as follows, where the per-share value of
NSSMC’s shares is assumed to be 1 under each valuation method:

Market Share Price Analysis
Comparable Company Analysis
DCF Analysis

Calculation Result of
the Share Exchange Ratio
0.57 - 0.60
0.43 - 0.64
0.57 - 0.79

Under the market share price analysis, for both companies, using May 15, 2018 as thereference date, and making reference to the closing price of each company’s shares on
the First Section of TSE on the reference date, the simple averages of the closing priceon each business day for the one month, three months, and six months immediately
preceding the reference date were applied.
Under the comparable company analysis, the value of Nisshin Steel shares wascalculated in the following manner. JFE Holdings, Inc., Kobe Steel, Ltd., Hitachi
Metals, Ltd., Daido Steel Co., Ltd., Sanyo Special Steel Co., Ltd., ArcelorMittal S.A.,
Baoshan Iron & Steel Co., Ltd., Posco Co., Ltd., Nucor Corporation, thyssenkrupp AG,
Novolipetsk Steel PJSC , voestalpine AG, Tata Steel Ltd., Hyundai Steel Company,
Gerdau S.A., United States Steel Corporation, and Steel Authority of India Ltd. were-7-

chosen as listed companies analogous to Nisshin Steel, taking into consideration theiranalogousness in terms of type of businesses undertaken, profits and losses, conditionof financial affairs, and an EBITDA multiple of 5.75 times to 6.25 times, and a PER
multiple of 9.75 times to 10.25 times were used to calculate the value of Nisshin
Steel’s shares. Based on the results of that calculation, the share exchange ratio was
calculated to range from 0.43 to 0.64.
Under the DCF Analysis, the enterprise value of Nisshin Steel was calculated bydiscounting the future free cash flow based on the financial forecasts prepared by
Nisshin Steel at a certain discount rate to the present value. The going concern value
under the DCF Method was calculated using the perpetuity growth rate method andthe multiple method. A discount rate of 5.00% to 5.50% was used. Further, aperpetuity growth rate of -0.25% to 0.25% was used, and under the multiple method,an EBITDA multiple of 5.75 times to 6.75 times was used. Based on the results
above, the share exchange ratio was calculated to range from 0.57 to 0.79.
Under Nisshin Steel’s financial forecasts, which were used by Mitsubishi UFJ Morgan
Stanley Securities as a base to calculate the share exchange ratio, a substantial increasein operating profit is expected for FY2019 and FY2020, which increase will be by 30
percent or more, compared to the previous year. This expectation is mainly due tomaximization of its synergy with the NSSMC group and business structure reforms
utilizing the group’s technologies and know-how following the Conversion into a
Subsidiary in March 2017, as well as advancement of its core product strategy throughreviewing its core product group and enhancing branding, and advancement of a CS
(customer satisfaction) pursuit strategy as part of strengthening of the value chain.
Note that such financial forecasts are not premised on the presumption that the Share
Exchange will be conducted.
(Note) The analysis by Mitsubishi UFJ Morgan Stanley Securities, and in particular,
analysis of the share exchange ratio which is the basis of that analysis, isaddressed to Nisshin Steel’s board of directors for informational purposes only.
Such analysis is not a financial opinion or recommendation by Mitsubishi UFJ
Morgan Stanley Securities or any of its affiliates and does not constitute an
opinion or recommendation to any shareholders of Nisshin Steel or NSSMC
as to how such shareholders should exercise their voting rights or otherwise
act with respect to any shareholders meetings regarding the Share Exchange.
In performing its analysis, Mitsubishi UFJ Morgan Stanley Securities has
assumed and relied upon, without independent verification, the accuracy andcompleteness of the information that was publicly available or supplied orotherwise made available to it by Nisshin Steel or NSSMC as an appropriate
basis for its analysis. With respect to the financial projections, including
information relating to certain strategic, financial and operational benefits
anticipated from the Share Exchange, Mitsubishi UFJ Morgan Stanley
Securities has assumed that they have been reasonably prepared by the
management of Nisshin Steel to reflect the best estimates and judgments
available at present regarding the future financial performance of Nisshin
Steel. Mitsubishi UFJ Morgan Stanley Securities has not made any
independent valuation or appraisal of the assets or liabilities of Nisshin Steelor NSSMC. The analysis by Mitsubishi UFJ Morgan Stanley Securities isnecessarily based on financial, economic, exchanges, market and otherconditions as in effect on, and the information made available to Mitsubishi
UFJ Morgan Stanley Securities as of, the reference date for its valuation report
regarding the share exchange ratio. Events occurring after such date may
affect the analysis and the assumptions used in preparing it, and Mitsubishi-8-UFJ Morgan Stanley Securities does not assume any obligation to update,revise or reaffirm the report and its analysis.
The preparation of a valuation report regarding the share exchange ratio andthe analysis forming the basis thereof is a complex process and is notnecessarily susceptible to a partial analysis or summary description. The
range of valuations resulting from any particular analysis described thereinshould not be taken to be an assertion by Mitsubishi UFJ Morgan Stanley
Securities’ of the actual value of Nisshin Steel or NSSMC.
Mitsubishi UFJ Morgan Stanley Securities has acted as financial advisor to
Nisshin Steel in connection with the Share Exchange and will receive a fee forits services, a portion of which is contingent upon the closing of the Share
Exchange.
(3)

Prospect of Delisting and Reasons

Upon the Share Exchange, Nisshin Steel will be a wholly owned subsidiary of NSSMC on theeffective date (January 1, 2019 (planned)), and Nisshin Steel shares will be delisted as of December
26, 2018 (the last day of trading will be December 25, 2018). After the delisting, it will be
impossible to trade Nisshin Steel shares on the TSE.
Although Nisshin Steel’s shares will be delisted, the NSSMC shares to be allocated to Nisshin Steelshareholders through the Share Exchange are listed on the TSE, the Nagoya Stock Exchange, theFukuoka Stock Exchange and the Sapporo Stock Exchange and it will be possible to trade them on
financial instruments exchange markets on and after the effective date of the Share Exchange.
Accordingly, we believe that we can maintain the liquidity of the shares for Nisshin Steel shareholders
who hold 141 or more Nisshin Steel shares and will be allocated 100 NSSMC shares (one unit of
NSSMC shares) or more through the Share Exchange.
In the meantime, Nisshin Steel shareholders who hold less than 141 Nisshin Steel shares will beallocated less than 100 NSSMC shares (one unit of NSSMC shares). It is impossible to sell suchshares comprising less than one unit on financial instruments exchange markets; however,shareholders holding shares comprising less than one unit of NSSMC may request that NSSMC
purchase back such shares held by respective shareholders. In addition, they may purchase additional
NSSMC shares in the number constituting one unit share (100 shares) together with their respective
shares from NSSMC. For details, please refer to “2. (3) (Note 3) Handling of shares comprising lessthan one unit” above. For details of the handling of fractions less than one share, if any, upon the
Share Exchange, please refer to “2. (3) (Note 4) Handling of fractions less than one share” above.
(4)

Measures to Ensure Fairness

Since NSSMC is already the controlling shareholder of Nisshin Steel, holding 51.27% of the voting
rights of Nisshin Steel, both NSSMC and Nisshin Steel have taken the following measures in order toensure the fairness of the Share Exchange:(i)

Receipt of Valuation Reports from Independent Third-party Valuation Organizations

NSSMC appointed Nomura Securities as its third-party valuation organization and obtained avaluation report regarding the Share Exchange Ratio dated May 15, 2018 from Nomura
Securities. For the overview of the valuation report, please refer to “(2) Matters Regarding
Valuation” above. NSSMC also obtained a fairness opinion dated May 15, 2018 from
Nomura Securities to the effect that the Share Exchange Ratio is reasonable to NSSMC from afinancial viewpoint subject to the conditions precedent stated in “(2) Matters Regarding
Valuation” above and other certain conditions.
-9-On the other hand, Nisshin Steel appointed Mitsubishi UFJ Morgan Stanley Securities as athird-party valuation organization and obtained a valuation report regarding the Share
Exchange Ratio dated May 16, 2018 from Mitsubishi UFJ Morgan Stanley Securities. For
the overview of the valuation report, please refer to “(2) Matters Regarding Valuation” above.
Nisshin Steel did not obtain a fairness opinion from Mitsubishi UFJ Morgan Stanley Securities
to the effect that the Share Exchange Ratio is reasonable to Nisshin Steel from a financial
viewpoint.
(ii)

Advice from Independent Law Firms

As legal advisors regarding the Share Exchange, NSSMC appointed Nishimura & Asahi and
Nisshin Steel appointed Nomura & Partners. NSSMC and Nisshin Steel respectively
received legal advice regarding the decision-making method and process of the board of
directors, including the procedures for the Share Exchange. Both Nishimura & Asahi and
Nomura & Partners are independent of both NSSMC and Nisshin Steel and have no materialinterest in either NSSMC or Nisshin Steel.
(5)

Measures to Avoid Conflicts of Interest

Since NSSMC is already the controlling shareholder of Nisshin Steel, holding 51.27% of the voting
rights of Nisshin Steel, Nisshin Steel has taken the following measures to avoid conflicts of interest.
(i)

Unanimous Approval of Directors and Audit & Supervisory Board Members (otherthan the interested audit & supervisory board member) of Nisshin SteelAt the board of directors’ meeting of Nisshin Steel held today, with all directors in attendance,
the proposed resolution regarding the Share Exchange Agreement was adopted with
unanimous approval of the directors in attendance.
All audit & supervisory board members (excluding Mr. Manabu Uehara, who is an NSSMC
employee) participated in deliberations at the board of directors’ meeting mentioned above
and expressed that they did not object to the resolution mentioned above.
In order to avoid conflicts of interest regarding the Share Exchange, Mr. Manabu Uehara,
mentioned above, did not participate in the deliberations regarding the Share Exchange anddid not express an opinion regarding the Share Exchange at the board of directors’ meetings ofNisshin Steel.
(ii)

Obtaining a Report from a Disinterested Third-Party Committee at Nisshin SteelIn order to prevent the Share Exchange from being conducted on conditions disadvantageous
to Nisshin Steel’s minority shareholders, on March 2, 2018, Nisshin Steel established a thirdparty committee (the “Third-Party Committee”) consisting of three members, namely, Mr.
Yoshihide Hirowatari (CPA, Representative Director of AGS Consulting Co., Ltd.) who is anindependent external expert having no interest in NSSMC, the controlling shareholder ofNisshin Steel; Mr. Isao Endo, outside and independent director of Nisshin Steel; and Mr. Tatsu
Katayama, outside and independent audit & supervisory board members of Nisshin Steel.
When examining the Share Exchange, Nisshin Steel asked the Third-Party Committee toprovide advice as to (i) whether the purpose of the Share Exchange is reasonable, (ii) whether
fairness is maintained in the procedures for the Share Exchange (i.e., background leading toappointment of valuation organizations regarding the Share Exchange Ratio, involvement ofoutside directors or outside audit & supervisory board members in the decision-making
process), (iii) whether the terms and conditions for the Share Exchange are fair and- 10 -

reasonable, and (iv) whether the Share Exchange is not disadvantageous to Nisshin Steelminority shareholders considering (i) to (iii) above.
The Third-Party Committee held five meetings in total from March 20, 2018 to May 14, 2018,
collected information and consulted from time to time when necessary, and deliberated
regarding the matters requested for advice mentioned above. Upon such deliberation, theThird-Party Committee received explanations (a) respectively from Nisshin Steel and NSSMC
about the purpose of the Share Exchange, and background leading to the Share Exchange; (b)from Mitsubishi UFJ Morgan Stanley Securities about the valuation of the Share Exchange
Ratio; and (c) from Nisshin Steel about its decision-making method and process regarding theShare Exchange.
As a result of the deliberation based on the valuation report regarding the Share Exchange
Ratio prepared by Mitsubishi UFJ Morgan Stanley Securities and other various materials andexplanations from the interested parties above, as stated in “8. (3) Overview of Opinion
Obtained from Persons without Interest in Controlling Shareholder Regarding the Relevant
Transaction Being Not Disadvantageous to Minority Shareholders” below, the Third-Party
Committee submitted to Nisshin Steel’s board of directors a report dated today, prior to
discussion of the proposed resolution regarding the Share Exchange Agreement, that deemedthat the Share Exchange was not disadvantageous to Nisshin Steel’s minority shareholders.
4.

Outline of the Companies to the Share Exchange (as of March 31, 2018)

Wholly Owning Parent Company
Wholly Owned Subsidiaryin Share Exchange
in Share Exchange(1) Name
Nippon Steel & Sumitomo Metal
Nisshin Steel Co., Ltd.
Corporation(2) Location
6-1, Marunouchi 2-chome, Chiyoda- 4-1, Marunouchi 3-chome, Chiyodaku, Tokyoku, Tokyo(3) Name and Title ofKosei Shindo, Representative Director Kinya Yanagawa, President & CEO,
Representativeand President
and Representative Director(4) Description of
Steelmaking and steel fabrication,
Steelmaking and steel fabrication
Business Activities
Engineering, Chemicals, New(production and sale of steel
materials, and System solutions
products)(5) Capital
419,524 million yen
30,000 million yen(6) Date of Establishment April 1, 1950
October 1, 2012(7) Number of
950,321,402 shares
109,843,923 shares
Outstanding Shares(8) Fiscal Year End
March 31
March 31
(9) Number of Employees (Consolidated) 93,557 persons(Consolidated) 7,859 persons(10) Major BusinessNippon Steel & Sumikin Bussan
Metal One Corporation
Partners
Corporation
Nihon Teppan Co., Ltd.
Sumitomo Corporation
Marubeni-Itochu Steel Inc.
Mitsubishi Chemical Corporation(11) Major Banks
Sumitomo Mitsui Banking
The Bank of Tokyo-Mitsubishi UFJ,
CorporationLtd.
The Bank of Tokyo-Mitsubishi UFJ,
Sumitomo Mitsui Trust Bank,
Ltd.
LimitedMizuho Bank, Ltd.
Mizuho Bank, Ltd.
(12) Major Shareholders
Japan Trustee Services Bank, 4.2% Nippon Steel & Sumitomo
51.0%
and Shareholding
Ltd. (Trust Account)
Metal Corporation
Ratio
The Master Trust Bank of
4.0% Japan Trustee Services Bank, 4.3%
Japan, Ltd. (Trust Account)Ltd. (Trust Account)
Nippon Life Insurance
2.6% The Master Trust Bank of
4.3%- 11 -

Company
Japan, Ltd. (Trust Account)
Sumitomo Corporation
1.9% Japan Trustee Services Bank, 2.3%
Japan Trustee Services Bank,
1.8% Ltd. (Trust Account 9)
Ltd. (Trust Account 5)
ACERINOX, S.A.
1.0%
Mizuho Bank, Ltd.
1.7% Japan Trustee Services Bank, 0.9%
STATE STREET BANK
1.6% Ltd. (Trust Account 5)
WEST CLIENT-TREATY
Sumitomo Metal Mining
0.9%505234Co., Ltd.
Sumitomo Mitsui Banking
1.5% Japan Trustee Services Bank, 0.8%
Corporation
Ltd. (Trust Account 4)
Meiji Yasuda Life Insurance
1.5% Japan Trustee Services Bank, 0.8%
CompanyLtd. (Trust Account 2)
Japan Trustee Services Bank, 1.5% Japan Trustee Services Bank, 0.7%
Ltd. (Trust Account 9)
Ltd. (Trust Account 1)(13) Relationship between the Companies
As of March 31, 2018, NSSMC owned 56,020,563 shares representing
Capital Relationship51.00% of Nisshin Steel’s outstanding shares.
Two persons who used to work at NSSMC are currently serving as directors
Personnelof Nisshin Steel. One employee of NSSMC is currently serving as an audit
Relationship& supervisory board member of Nisshin Steel.
NSSMC supplies to Nisshin Steel substrates (steel slabs, hot-rolled steel
sheets and cold-rolled steel sheets) and purchases products from Nisshin SteelBusiness Relationship(pickled steel sheets, electro-galvanized steel sheets, hot-dip galvanized steel
sheets, and aluminized steel sheets).
NSSMC is the parent company of Nisshin Steel and thus a related party of
Status as Related
Nisshin Steel. Nisshin Steel is a subsidiary of NSSMC and thus a related
Partiesparty of NSSMC.
(14) Operating Results and Financial Conditions for Past Three Years
NSSMC (consolidated)
Nisshin Steel (consolidated)
FY ended FY ended FY ended FY ended FY ended FY ended
Fiscal Year
March
March
March
March
March
March
2016
2017
2018
2016
2017
2018
Net Assets
3,009,075 3,291,015 3,515,501
217,978
226,223
247,860
Total Assets
6,425,043 7,261,923 7,592,413
708,167
706,418
716,693
Consolidated Net Assets
3,074.28
3,340.21
3,563.80
1,931.19
1,945.79
2,131.12
per Share (yen)Sales4,907,429 4,632,890 5,668,663
547,026
525,563
614,196
Operating Profit
167,731
114,202
182,382
10,087
7,834
17,801
Ordinary Profit
200,929
174,531
297,541
6,206
5,998
18,873Net Income (Loss)
Attributable to Owners of
145,419
130,946
195,061
1,672
13,014△6,613
Parent for the Period
Net Income (Loss) per
158.71147.96221.0015.26
118.74△60.33
Share for the Period (yen)Dividend per Share (yen)
18.0
45.0
70.0
40.0
5.0
30.0
(In millions of yen unless otherwise specified)(Note) The Bank of Tokyo-Mitsubishi UFJ, Ltd. has changed its trade name to MUFG Bank, Ltd. asof April 1, 2018.
5.

(1)

Status after the Share Exchange

Name

Wholly Owning Parent Company in Share Exchange
Nippon Steel & Sumitomo Metal Corporation- 12 -

(2)
(3)
(4)
(5)
(6)
(7)
(8)
6.

Location
Name and Title ofRepresentative
Description of Business
Activities
CapitalFiscal Year End
Net Asset
Total Assets

6-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo
Kosei Shindo, Representative Director and President
Steelmaking and steel fabrication, Engineering, Chemicals, New
materials, and System solutions
419,524 million yen
March 31
Yet to be determined.
Yet to be determined.

Outline of Accounting Treatment

The Share Exchange is expected to be a transaction with non-controlling shareholders among thetransactions under common control.
7.

Future Outlook

Since Nisshin Steel is already a consolidated subsidiary of NSSMC, the impact of the Share Exchangeon the business results of NSSMC and Nisshin Steel is expected to be minor.
8.

Matters Relating to Transactions, etc. with a Controlling Shareholder(1)

Falling under a Transaction with a Controlling Shareholder and Conformity to Guidelines for
Measures to Protect Minority Shareholders

Since NSSMC is already the controlling shareholder of Nisshin Steel, holding 51.27% of the voting
rights of Nisshin Steel, the Share Exchange falls under a transaction with the controlling shareholder
for Nisshin Steel. The corporate governance report disclosed by Nisshin Steel on June 27, 2017contains the following statement in the “Guidelines for measures to protect minority shareholders
when conducting a transaction with the controlling shareholder”:“When conducting a transaction with the parent company, we have fully confirmed that the terms andconditions for the transaction do not significantly differ from those for ordinary transactions with third
parties and do not damage our interest.”
When examining the Share Exchange, Nisshin Steel has taken measures to ensure fairness and to
avoid conflicts of interest as stated in “3. (4) Measures to Ensure Fairness” and “3. (5) Measures to
Avoid Conflicts of Interest” above and believes that such measures conform to the guidelines statedabove.
(2)

Matters Regarding Measures to Ensure Fairness and to Avoid Conflicts of Interest

As stated in “(1) Falling under a Transaction with a Controlling Shareholder and Conformity to
Guidelines for Measures to Protect Minority Shareholders” above, the Share Exchange falls under atransaction with the controlling shareholder for Nisshin Steel, Nisshin Steel decided that the measures
to ensure fairness and the measures to avoid conflicts of interest are necessary, and by taking themeasures stated in “3. (4) Measures to Ensure Fairness” and “3. (5) Measures to Avoid Conflicts ofInterest” above, it has ensured fairness and avoided conflicts of interest, and carefully discussed andconsidered the terms and conditions for the Share Exchange at its board of directors.
(3)

Overview of Opinion Obtained from Persons without Interest in Controlling Shareholder
Regarding the Relevant Transaction Being Not Disadvantageous to Minority Shareholders

As stated in “3. (5) Measures to Avoid Conflicts of Interest” above, in order to ensure that the Share
Exchange is not conducted on conditions disadvantageous to Nisshin Steel minority shareholders,- 13 -

Nisshin Steel established the Third-Party Committee on March 2, 2018. When examining the Share
Exchange, Nisshin Steel asked the Third-Party Committee to provide advice as to (i) whether the
purpose of the Share Exchange is reasonable, (ii) whether fairness is maintained in the procedures for
the Share Exchange (i.e., background leading to appointment of valuation organizations regarding theShare Exchange Ratio, involvement of outside directors or outside audit & supervisory board membersin the decision-making process), (iii) whether the terms and conditions for the Share Exchange are fairand reasonable, and (iv) whether the Share Exchange is not disadvantageous to Nisshin Steel minority
shareholders considering (i) to (iii) above.
As a result, prior to discussion of the proposed resolution regarding the Share Exchange Agreement,
Nisshin Steel obtained a report dated today from the Third-Party Committee as follows: as to (i)above, the Share Exchange shall increase the corporate value of Nisshin Steel and thus the goal of the
Share Exchange is rational, because it is expected that, in terms of pursuit of optimal production
structures, reorganization of the corporate group businesses, and creation of intercompany policies, theShare Exchange will make it possible to provide a flexible, maneuverable response to changes in thebusiness environment in a more speedy manner and the profit structure of the group’s stainless steelbusiness is expected to improve after the integration of the stainless steel sheet business planned totake place after the Share Exchange; as to (ii) above, in the Share Exchange, Nisshin obtained a shareexchange ratio valuation report from an independent third-party valuation organization, received
advice from an external expert on the decision-making method and process regarding the Share
Exchange, and has taken measures to avoid conflicts of interest, and thus, the Share Exchange is fair;as to (iii) above, there are no unreasonable points regarding the valuation method and process by anindependent third-party valuation organization, and Nisshin Steel held substantive consultations andnegotiations with NSSMC several times using such valuation results as a reference in order todetermine the Share Exchange Ratio, and thus, the Share Exchange Ratio was fair and appropriate;
and as to (iv) above, by comprehensively considering the foregoing, the Share Exchange wasdetermined not disadvantageous to Nisshin Steel minority shareholders.

- 14 -

II.

Regarding the Integration of Stainless Steel Sheet Business

1.

Purpose of the Integration of Stainless Steel Sheet Business

NSSC was formed in October 2003 through the integration of the stainless steel business of Nippon
Steel Corporation and that of Sumitomo Metal Industries, Ltd., and its business domain covers
stainless steel sheets and stainless steel bars and wire rods. Since its formation, NSSC has achieved
consistent results by development and marketing of breakthrough new products based on the fusion of
the technology of the former two companies as well as promoting cost reduction by improving theirproduction capability for difficult-to-make materials and consolidating facilities.
After the Conversion into a Subsidiary, NSSMC, Nisshin Steel and NSSC have proceeded to develop
their alliance and complement each other’s respective stainless steel businesses in the areas ofproduction, sale and procurement. However, in order to respond to harsh business circumstancessuch as the substantial over-supply in Asian markets and future changes in social and industrial
structure, and to further develop and grow, NSSMC, Nisshin Steel and NSSC reached the conclusionthat it is imperative that they work toward the maximization of synergy by uniting forces in thestainless steel business of the NSSMC group, sharing and expanding the respective strengths of thethree companies, and addressing their weaknesses.
At this time, NSSMC, Nisshin Steel and NSSC have agreed to integrate the stainless steel sheetbusiness of each company around April 1, 2019, after the Conversion into a Wholly Owned
Subsidiary, aiming for future growth and development by increasing the competitiveness of thestainless steel sheet business of the NSSMC group as follows: by bringing together management
resources for the stainless steel sheet business cultivated so far by each company, integrating
respective business strategies, and creating further synergy effects not only through more efficientorganizational and operational system but also by creation of value to their customers by providing
appropriate products and processing technology, facilitating world-leading technical developments,
thoroughly pursuing best practices and increasing competitiveness through the optimized production
systems.
2.

Summary of the Integration of Stainless Steel Sheet Business(1)

Details and Method of the Integration of Stainless Steel Sheet Business

After the Conversion into a Wholly Owned Subsidiary, the three companies, namely NSSMC, Nisshin
Steel and NSSC, will have NSSC assume a part of the steel sheet business contained within NSSMC’s
special stainless steel business (steel sheets, shaped steel), by way of a company split wherein NSSMC
will be the split company and NSSC will be the successor company, and will have NSSC assume thesteel sheet business contained within Nisshin Steel’s stainless steel business (steel sheets, steel pipes
and tubes), by way of a company split wherein Nisshin Steel will be the split company and NSSC willbe the successor company.
The specific scope of the stainless steel sheet business that NSSC will assume, the integration method,and other details of the Integration of Stainless Steel sheet Business will be separately discussed
between the three companies, and will be stipulated in a definitive agreement for the Integration of
Stainless Steel sheet Business, around January 2019.
Regarding the steel pipe and tube business contained within the stainless steel business of Nisshin
Steel, the three companies will discuss the optimal way of business as the NSSMC group.

- 15 -

(2)Consideration for the Integration of Stainless Steel Sheet Business

Since the Integration of Stainless Steel Sheet Business will be conducted after the Conversion into a
Wholly Owned Subsidiary, NSSC will not deliver any consideration therefor to NSSMC and Nisshin
Steel.
(3)

Schedule for the Integration of Stainless Steel Sheet Business
Board of directors’ meeting to approve execution of thebasic agreement
Execution of the basic agreement
Board of directors’ meeting to approve execution of thedefinitive agreement
Execution of the definitive agreement
Planned date of the Integration of Stainless Steel Sheet
Business (the effective date)(4)

May 16, 2018
May 16, 2018
Around January 2019 (planned)
Around January 2019 (planned)
April 1, 2019 (planned)

Trade Name and Location of Head Office of the Integrated Company

The trade name and location of the head office of NSSC (the integrated company) after the Integrationof Stainless Steel Sheet Business will be stipulated in the definitive agreement for the Integration of
Stainless Steel Sheet Business.
3.
Overview of the Companies Integrating their Stainless Steel Sheet Businesses (as of March 31,
2018)*Overview of NSSMC and Nisshin Steel is as stated above.
(1)

Name

Nippon Steel & Sumikin StainlessSteel Corporation(2) Location
8-2, Marunouchi 1-chome, Chiyodaku, Tokyo(3) Name and Title ofHitoshi Ito, Representative Director
Representativeand President(4) Description of
Production and sale of stainless steel
Business Activities
products(5) Capital
5,000 million yen(6) Date of Establishment October 1, 2003
(7) Number of
100,000 shares
Outstanding Shares(8) Fiscal Year End
March 31
(9) Number of Employees (Consolidated) 2,302 persons(10) Major Business
NS-Stainless Corporation
Partners
Metal One Corporation
Nippon Steel & Sumikin Bussan
Corporation(11) Major Banks
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank, Ltd.
The Yamaguchi Bank, Ltd.
(12) Major Shareholders
NSSMC
100%
and Shareholding
Ratio(13) Relationship between the Companies
Capital Relationship As of March 31, 2018, NSSMC owns
- 16 -

100% of NSSC’s outstanding shares.
All five directors of NSSC were used
to work at NSSMC, and one corporate
Personnel
auditor out of the two was used toRelationshipwork at NSSMC and the other is an
NSSMC employee.
NSSMC sells chromium-based hotrolled stainless steel coils and the liketo NSSC while NSSC entrusts to
NSSMC the work of hot rolling
Business Relationshipnickel-based stainless steel sheets.
Nisshin Steel and NSSC mutually
supply hot-rolled stainless steel
products to each other.
NSSC is an NSSMC subsidiary andthus a related party of NSSMC.
Status as Related
NSSC’s parent company (NSSMC) is
Partiesthe same as that of Nisshin Steel andthus NSSC is a related party of
Nisshin Steel.
Operating Results and Financial Conditions for Past Three
(14)
Years
NSSC (consolidated)
FY ended FY ended FY ended
Fiscal Year
March
March
March
2016
2017
2018
Net Assets
68,327
89,667
102,422
Total Assets
131,657
154,585
168,127
Consolidated Net Assets
683,270896,670 1,024,220
per Share (yen)Sales234,200
219,564
258,804
Operating Profit
6,578
15,53422,927
Ordinary Profit
5,685
13,74622,212Net Income (Loss)
4,112
20,292
16,075Attributable to Owners of
Parent for the Period
Net Income (Loss) per
41,120202,920
160,750
Share for the Period (yen)Dividend per Share (yen)11,20028,60046,200(In millions of yen unless otherwise specified)4.

Future Prospects

There is nothing particular to note regarding future prospects at present.
End- 17 -

When NSSMC conducts the Share Exchange with Nisshin Steel, in relation thereto, NSSMC will file aregistration statement on Form F-4 with the SEC. Form F-4 will include a prospectus and other documents.
When Form F-4 is filed and becomes effective, the prospectus filed as part of Form F-4 will be sent to the U.S.
shareholders of Nisshin Steel before the date of shareholders meeting wherein voting rights are scheduled to be
exercised to approve the Share Exchange. Form F-4 and the prospectus to be filed will contain important
information, such as information on NSSMC and Nisshin Steel, information on the Share Exchange, and otherrelated information. The U.S. shareholders of Nisshin Steel are kindly requested to carefully read Form F-4,
the prospectus, and other documents that will be filed with the SEC in relation to the Share Exchange, before
exercising their voting rights relating to the Share Exchange at the shareholders meeting. All documents to be
filed with the SEC in relation to the Share Exchange will be publicized free of charge on the SEC website atwww.sec.gov after filing thereof. Furthermore, such documents will be mailed free of charge upon request.
Below is the contact information for mailing such a request.
Contact for inquiries about the Share Exchange:
Company name: Nippon Steel & Sumitomo Metal
Corporation
Address:
6-1, Marunouchi 2-chome,
Chiyoda-ku, Tokyo
Contact person: Fumiaki Onishi, General Manager,
Public Relations Center
TEL:
03-6867-2130
E-mail:ohnishi.x97.fumiaki@jp.nssmc.com

Company name: Nisshin Steel Co., Ltd.
Address:

4-1, Marunouchi 3-chome,
Chiyoda-ku, Tokyo
Contact person: Mitsuhiro Murashita, PR Team andSecretary of General
Administration Dept.
TEL:
03-3216-5566
E-mail:murashita.m977@nisshinsteel.co.jp

This document includes information constituting “forward-looking statements.” To the extent that statementsin this document do not relate to historical or current facts, they constitute forward looking statements. These
forward looking statements are based on our current assumptions and beliefs in light of the information currently
available to us, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties
and other factors may cause the actual results, performance, achievements or financial position of both or eitherof NSSMC and Nisshin Steel (or the NSSMC Group after the Share Exchange to be materially different fromany future results, performance, achievements or financial position expressed or implied by these forward
looking statements.
We undertake no obligation to publicly update any forward looking statements after the date of this document.
Investors are advised to consult any further disclosures by both or either of NSSMC and Nisshin Steel (or the
NSSMC Group after the Share Exchange) in subsequent submissions in Japan pursuant to the Financial
Instruments and Exchange Act of Japan and subsequent filings with the SEC, pursuant to the U.S. Securities
Exchange Act of 1934, as amended, as well as other publicly disclosed documents.
The risks, uncertainties and other factors referred to above include, but are not limited to:











Fluctuations in the supply and demand and prices of steel products;
Fluctuations in the prices of raw materials and fuels (such as iron ore, coal, alloy materials, and scrap
metal) and in maritime freight;
Changes in domestic and international macroeconomic conditions;
Fluctuations in the interest rates for loans and corporate bonds, and other fluctuations in financial markets;
Fluctuations in the value of securities and other assets (including pension plan assets);
Exchange rate fluctuations;
Changes in laws and regulations related to our business activities, including trade laws, tariffs and othertaxation systems, and environmental regulations;
The suspension of, restriction on or increase in cost for, our business activities due to natural disasters,
accidents or lawsuits;
The inability to conduct the Share Exchange due to a failure to complete necessary procedures (including
obtaining approval of the Share Exchange Agreement at Nisshin Steel’s extraordinary shareholders
meeting) or for other reasons; andDifficulties realizing synergies in the NSSMC Group after the Share Exchange.

- 18 -