May 13, 2024
To whom it may concern:
Company
Name:
Representative:

I’rom Group Co., Ltd.

Toyotaka Mori, President andRepresentative Director(Code: 2372 Prime Market of the Tokyo Stock
Exchange)
Contact:
Shuichi Kojima, Executive Officer
Responsible for CEO Office Center(Tel: +81 3-3264-3148)
Notice Concerning Planned Implementation of MBO
and Recommendation to Tender
On May 13, 2024, I’rom Group Co., Ltd. (the “Company” or “we”) resolved at its boardof directors’ meeting, in the opinion of the Company as of the same date, if a tender offer(the “Tender Offer”) under the Financial Instruments and Exchange Act of Japan (ActNo. 25 of 1948, as amended; the “Act”) with respect to common shares of the Company(the “Company Shares”) by BJXB II Holding KK (the “Tender Offeror”) which will be
conducted as a management buyout (“MBO”) (Note 1) is commenced, to express theopinion in favor of the Tender Offer and recommend the Company’s shareholders to apply
for the Tender Offer. We therefore make the following announcement.
With respect to the Tender Offer, based on our consideration to date, i t is anticipated thata certain period of time will be necessary to complete the relevant procedures and takeother actions in relation to the obtaining of approvals, etc. under Australian competition
law (the “Clearance”) (Note 2). Therefore, it is intended that the Tender Offer will be
implemented promptly after the completion of the obtaining of the Clearance and thesatisfaction (or waiver by the Tender Offeror) of certain other conditions (Note 3) (the“Conditions Precedent”) that are set forth in the Tender Offer Agreement (as defined in“① Overview of the Tender Offer” of “(2) Basis and reason for opinion” of “3. Detailsof, and basis and reason for the opinion regarding the Tender Offer ” below; the same
applies hereinafter). As of the date hereof, taking into consideration the discussions heldwith local legal advisors in relation to these procedures, etc., since it is expected to takea minimum of four weeks from today to obtain the Clearance, the Tender Offeror is aiming
to commence the Tender Offer around mid -June in 2024. However, as it is difficult toaccurately estimate the amount of time that will be necessary to complete the review
procedures by the Australian authorities responsible for the Clearance process, the Tend er
Offeror will promptly make an announcement once the details of the schedule have been

fixed. The Tender Offeror will also promptly make an announcement if the expected
timing of the commencement of the Tender Offer is changed.
For this reason, as described in “④ Unanimous Approval by All of the Non -Interested
Directors (including directors who are Audit & Supervisory Committee members) of theCompany” in “(6) Measures to secure the fairness of the Tender Offer, such as measures
to secure the fairness of the Tender Offer Price and measures to avoid conflicts of interest ”
in “3. Details of, and basis and reason for the opinion regarding the Tender Offer ” below,
the Company’s board of directors also resolved that, at the time the Tender Offer
commences, the Company shall request the Special Committee (as defined in “ ③Background to the decision of the Company to support the Tender Offer and reasons
therefor” of “(2) Basis and reason for opinion” in “3. Details of, and basis and reason forthe opinion regarding the Tender Offer” below; the same applies hereinafter) establishedby the Company to consider whether there is any change in the opinion of the Special
Committee in the Report (as defined in “③ Background to the decision of the Company
to support the Tender Offer and reasons therefor ” of “(2) Basis and reason for opinion”
in “3. Details of, and basis and reason for the opinion regarding the Tender Offer ” below;
the same applies hereinafter) submitted by the Special Committee to the board of
directors of the Company dated May 10, 2024, and if there is no change in the previous
opinion, to state that opinion to the Company’s board of directors, and if there is a change,
to state the opinion after the change, and that based on such opinion, the Compan y willreiterate its opinion on the Tender Offer at the time of its commencement.
The resolution of the Board of Directors was adopted, subject to the conditions that theTender Offeror intends to make the Company its wholly owned subsidiary through theTender Offer and a series of subsequent procedures, and that the Company ’s shares will
be delisted.
(Note 1)

A “management buyout (MBO)” generally refers to a transaction in which
the management of the target company acquires shares of the target
company by investing all or part of the acquisition funds on the assumptionthat the target company’s business will continue.

(Note 2)Blackstone (as defined in “① Overview of the Tender Offer” of “(2) Basisand reason for opinion” in “3. Details of, and basis and reason for theopinion regarding the Tender Offer ” below; the same applies hereinafter)
may, voluntarily, prior to the acquisition of the Company Shares throughthe Transaction (as defined in “① Overview of the Tender Offer” of “(2)Basis and reason for opinion” in “3. Details of, and basis and reason forthe opinion regarding the Tender Offer ” below; the same applies
hereinafter) (the “Share Acquisition”), request the Australian Competition
and Consumer Commission to conduct a preliminary pre -review of the
Share Acquisition. Blackstone has requested a voluntary pre -review of the
Share Acquisition in private form on April 6, 2024 (local time), which
request has been accepted as of the same date.

(Note 3)

(1) The representations and warranties given by Mr. Mori (as defined in“① Overview of the Tender Offer” of “(2) Basis and reason for opinion”
in “3. Details of, and basis and reason for the opinion regarding the TenderOffer” below; the same applies hereinafter) (Note 4) are true and accurate
in material respects; (2) Mr. Mori and Mr. Mori ’s Asset Management
Company (as defined in “① Overview of the Tender Offer” of “(2) Basisand reason for opinion” in “3. Details of, and basis and reason for theopinion regarding the Tender Offer ” below; the same applies hereinafter)
have performed or complied with in material respects the obligations thatare required to be performed or complied with in relation to the Tender
Offer by or until the tender offer commencement date (Note 5) inaccordance with the Tender Offer Agreement; (3) upon the implementationof the Tender Offer, the board of directors of the Company (at a meeting
attended by 13 directors; these 13 directors comprise of all 14 directors of
the Company, less Mr. Mori, who has a conflictin g interest) have resolved
to issue an opinion stating that they approve the Tender Offer and that they
recommend to the shareholders of the Company to tender their shares in theTender Offer (the “Opinion of Support”), and such opinion has been
publicly announced; (4) there has been no material adverse effect on thebusiness, assets, liabilities, financial condition, operational performance,
cash flow or future revenue plan of the Company ’s Group (as defined in “a.
Background, purpose and decision -making process of the Tender Offer” of“ ② Background, Purpose and Decision -Making Process of the Tender
Offer, and Management Policy After the Tender Offer ” of “(2) Basis andreason for opinion” in “3. Details of, and basis and reason for the opinion
regarding the Tender Offer” below; the same applies hereinafter ); (5) there
has been no event that would have allowed the withdrawal of the Tender
Offer if the Tender Offer had been commenced; (6) there is no pending
claim, suit or proceeding that seeks to restrict or prohibit any of theTransactions, and that there is no any laws and regulations or order,
decision or judgement of any judicial or administrative organization, etc.
that restricts or prohibits any of the Transactions; (7) there is no
unpublished material fact (as prescribed in Article 166, Paragraph 2 of theAct) regarding the Company’s business, or fact of tender offer, etc. (asprescribed in Article 167, Paragraph 2 of the Act) that has not beenannounced (as prescribed in Article 166, Paragraph 4 or 167, Paragraph 4of the Act) by the Company; (8) the Tender Offeror has received acommitment letter from each of Mizuho Bank, Ltd., Mitsubishi UFJ Bank,
Ltd., and Sumitomo Mitsui Trust Bank, Limited, which confirms theirrespective undertaking to provide the f unds required for the implementationof the Transaction; such commitment letters have not been withdrawn by
the commencement date of the Tender Offer; further, in the case wherecompletion of the Tender Offer is taking place, each of the conditionsprescribed in these commitment letters has been satisfied and it isreasonably anticipated that the provision of these funds will be
implemented; (9) the Tender Offeror has received from Blackstone CapitalPartners Asia II L.P. (“BX Asia Fund”) a certificate of financing
confirming its undertaking to the Tender Offeror that it will, directly or
indirectly, invest part of the funds that will be used to settle the Tender
Offer; such letter of undertaking has not been withdrawn by thecommencement date of the Tender Offer; further, in the case wherecompletion of the Tender Offer is taking place, each of the conditionsprescribed in the certificate of financing has been satisfied and it isreasonably anticipated that the provision of these funds will be
implemented; (10) in countries or regions where domestic or foreigncompetition laws or other regulatory permits or licenses are required for
the Tender Offer, such permits or licenses have been obtained andimplemented, and (if there is a waiting peri od) the waiting period has
expired (including receipt of notification that a cease and desist order will
not be issued) (Note 6); it is reasonably expected that no measures orprocedures will be taken by judicial or administrative authorities in therelevant country or region to prevent the execution of the Transaction; (11)the Special Committee has made a recommendation to the board of directorsof the Company to the effect that it is appropriate to express its Opinion of
Support, and such recommendation has not been withdrawn; and (12) noshareholder proposal has been made by any shareholder of the Company
regarding the distribution of dividends out of the Company ’s retained
earnings.
(Note 4)For details of the representations and warranties given by Mr. Mori under
the Tender Offer Agreement, please refer to “4. Matters concerning material
agreements between the Tender Offeror and the shareholders of theCompany regarding tending shares in the Tender Offer ” below.

(Note 5)For details of Mr. Mori’s obligations under the Tender Offer Agreement,
please refer to “4. Matters concerning material agreements between theTender Offeror and the shareholders of the Company regarding tending
shares in the Tender Offer” below.

(Note 6)

In addition to the completion of the obtaining of the Clearance, thefollowing shall also be included: (1) the expiration of the interim measure
period and the acquisition prohibition period under the Act on Prohibitionof Private Monopolization and Maintenance of Fair Trade of Ja pan (Act No.
54 of 1947, as amended; “Antimonopoly Act”), without receiving from the
Fair Trade Commission any prior notification regarding a cease and desist
order, or any request for a report, etc. under Article 10, Paragraph 9 of the
Antimonopoly Act; and (2) the expiration of the waiting period under theForeign Exchange and Foreign Trade Act (Act No. 228 of 1949, as
amended).

1. Overview of Tender Offeror
(1)

Name

BXJB II Holding KK(2)Location

5-1-4, Toranomon, Minato-ku, Tokyo(3)

Job title and name ofAtsuhiko Sakamoto, Representative Director
representative

(4)1. Investing in, holding and managing securities such as
stocks and corporate bonds
Description of business
2. Any and all businesses incidental or related to thepreceding item

(5)

Share capital

1 yen

(6)

Date of establishment

April 22, 2024

(7)

Major shareholders and
BXJB I Holding KK
ownership ratios(8)

Relationship between the Company and tender offeror

100%

Capital relationship

There is no capital relationship between the Tender Offeror
and the Company that should be noted.

Personnel relationship

There is no personnel relationship between the Tender
Offeror and the Company that should be noted.

Business relationship

There is no business relationship between the Tender
Offeror and the Company that should be noted.

Relatedrelationship

The Tender Offeror is not a related party of the Company.

party

2. Price of purchase, etc.
¥2,800 per common share (the “Tender Offer Price”)
3. Details of, and basis and reason for the opinion regarding the Tender Offer(1) Details of opinion
Based on the basis and reasons stated in “(2) Basis and reasons for opinion” below,
the board of directors of the Company resolved at its meeting held today to express
an opinion in favor of the Tender Offer and recommend that the shareholders of theCompany tender their shares in the Tender Offer, if the Tender Offer is commenced
as the Company’s opinion at present.
As stated above, according to the Tender Offeror, the Tender Offer is planned tocommence promptly upon the fulfillment (or waiver by the Tender Offeror) of theConditions Precedent. Although, as of today, the Offeror cannot accurately predict
the time required for foreign competition laws and regulations and domestic andforeign investment control laws and regulations, the Tender Offeror is aiming tocommence the Tender Offer by mid -June 2024. However, as it is difficult toaccurately forecast the time required for the review procedures by the Australianauthorities responsible for the Clearance process , the Tender Offeror will announce
the details of the schedule of the Tender Offer as soon as they are determined. The
Company will promptly announce the details of the schedule of the Tender Offer assoon as they are determined. Therefore, at the time of commencement of the Tender
Offer, the Company's board of directors resolved that as stated in “④ Unanimous
Approval by All of the Non-Interested Directors (including directors who are Audit& Supervisory Committee members) of the Company ” in “(6) Measures to securethe fairness of the Tender Offer, such as measures to secure the fairness of theTender Offer Price and measures to avoi d conflicts of interest” in “3. Details of,and basis and reason for the opinion regarding the Tender Offer ” below, at the timeof commencement of the Tender Offer, the Company shall request the Special
Committee established by the Company to consider whet her or not there are anychanges in the opinion of the Special Committee in the Report and to state that
opinion if there is no change in the previous opinion, and if there is a change, tostate the opinion after the change , and that based on such opinion, the Company willreiterate its opinion on the Tender Offer at the time of its commencement.
The above resolution of the board of directors was resolved in the manner describedin “ ④ Unanimous Approval by All of the Non -Interested Directors (including
directors who are Audit & Supervisory Committee members) of the Company ” in“(6) Measures to secure the fairness of the Tender Offer, such as measures to secure
the fairness of the Tender Offer Price and measures to avoid conflicts of interest ”.
(2) Basis and reason for opinion
The statements in this “(2) Basis and reason for opinion” regarding the Tender
Offeror are based on the explanation received from the Tender Offeror.
①

Overview of the Tender Offer

The Tender Offeror is a joint -stock company established on April 22, 2024, for the
purpose of acquiring the Company Shares through the Tender Offer. The main
purpose of the Tender Offeror is to own the Company Shares and to control andmanage the business activities of the Company. All of the outstanding shares of theTender Offeror are held by BXJB I Holding KK (the “ Tender Offeror’s Parent
Company”), all of whose issued and outstanding shares are indirectly held by funds
managed, advised or operated by Blackstone Inc. (including its affiliates and otheraffiliated entities, hereinafter referred to as “ Blackstone”). As of the date hereof,
Blackstone, the Tender Offeror’s Parent Company, and the Tender Offeror do not
own any Company Shares.
On May 13, 2024, the Tender Offeror determined to conduct the Tender Offer as apart of a transaction (the “Transaction”) which aims to privatize the Company
Shares by acquiring all of the Company Shares listed on the Prime Market (the“Tokyo Stock Exchange Prime Market”) of the Tokyo Stock Exchange, Inc. (the“Tokyo Stock Exchange”) (excluding treasury shares held by the Company),subject to the satisfaction (or waiver by the Tender Offeror) of the Conditions
Precedent. The Transaction corresponds to a so-called management buyout (MBO),
and it is anticipated that Mr. Mori, who is a representative director and president
and also the largest shareholder of the Company (as of May 13, 2024) (number ofshares held: 4,779,450 shares (ownership ratio (Note 1): 39.48%)), will continue tomanage the Company after the Transaction is completed. However, the title of Mr.
Mori after the Transaction has not been determined as of the date hereof.
(Note 1)

“Ownership ratio” means any ownership ratio relative to 12,107,372
shares (the “Total Number of Issued Shares After Deduction ofTreasury Shares”), which are the number of shares calculated bydeducting the number of treasury shares held by the Company as ofMarch 31, 2024 (230,993 shares) set forth in the “Sum mary ofConsolidated Financial Results for the Fiscal Year Ended March 31,
2024 (Based on Japanese GAAP)” (the “ Company’s Financial
Results”), as announced by the Company on May 13, 2024, from thetotal number of issued shares of the Company as of March 31 , 2024
(12,338,365 shares) set forth in the Company’s Financial Results(ownership ratios are rounded to two decimal places; the same applies
hereinafter in the calculation of ownership ratio unless otherwise
stated). However, due to changes after March 31 , 2024 and otherreasons, the ownership ratio calculated based on the latest information
available at the time of commencement of the Tender Offer may differ
from the above figures; the same applies hereinafter.
The Transaction consists of (i) the Tender Offer, (ii) a transaction in which, after
completion of settlement of the Tender Offer, APPLeCROSS. Ltd., an asset
management company held by Mr. Mori and its relatives (“ Mr. Mori’s AssetManagement Company”), will acquire common shares of the Tender Offer or’s
Parent Company (the “Tender Offeror’s Parent Company Shares ”) by reinvesting in the Tender Offeror’s Parent Company with a portion of theconsideration received by Mr. Mori for tendering the Tendered Agreed Shares(defined below), and (such transacti on is hereinafter referred to as “ ReinvestmentI”), (iii) Squeeze-Out Procedures (defined below), (iv) Share Transfer (defined
below) and (v) a transaction in which Mr. Mori’s Asset Management Company will
acquire the Tender Offeror’s Parent Company Shares by re-investing in the Tender
Offeror’s Parent Company with assuming the payment claims against the Tender
Offeror that Mr. Mori will acquire through the Share Transfer (such transaction ishereinafter referred to as “Reinvestment II”, and collectively with the
Reinvestment I, the “Reinvestment”) (Note 2), and finally, it is intended that the
number of voting rights pertaining to the Tender Offeror’s Parent Company Shares
held by Mr. Mori’s Asset Management Company and the number of voting rights
pertaining to the Tender Offeror’s Parent Company Shares held by Blackstone shallbe in the ratio of 45.0 to 55.0, with the shareholders of the Company being theTender Offeror only and all the issued shares of the Tender Offeror held by theTender Offeror’s Parent Company.
(Note 2)Since Mr. Mori’s continued engagement in the management of theCompany will contribute to the development of the entire business of
the Company’s Group, the Reinvestment shall be implemented for the
purpose of having Mr. Mori involved in the Company after the
execution of the Transaction through re -investment in the Tender
Offeror’s Parent Company, and it was considered independently from
Mr. Mori’s acceptance of tendering the Tender Offer. In addition, thevaluation of the Company Shares (held indirectly by the Tender
Offeror’s Parent Company through the Tender Offeror), which is thepremise for determining the amount of payment per share of thecommon shares of the Tender Offeror’s Parent Company, is expected
to be substantially the same as the Tender Offer Price, and shall not belower than such amount. Therefore, the terms and conditions, including
the amount paid in, for the subscription of the shares of the Tender
Offeror’s Parent Company by Mr. Mori’s Asset Management Company
are not considered to be substantially more favorable than the Tender
Offer Price. Thus, Blackstone believes that the act of allocating thecommon shares of the Tender Offeror’s Parent Company to Mr. Mori’s
Asset Management Company is not against the purpose of theregulation on uniformity of the tender offer price (Article 27 -2,
Paragraph 3 of the Act).
On May 13, 2024, the Tender Offeror and the Tender Offeror’s Parent Company and
BXJB Holdings (CYM) L.P. (“BX Fund”) (Note 3), have entered into an agreementwith Mr. Mori and Mr. Mori’s Asset Management Company which provides (i) thatamong the Company Shares held by Mr. Mori, 3,124,250 shares (ownership ratio:
25.80%; hereinafter referred to as “Tendered Agreed Shares”) will be tendered in
the Tender Offer, and the remaining 1,655,200 shares (ownership ratio: 13.67%;
hereinafter referred to as “Non-Tendered Agreed Shares”) will not be tendered in
the Tender Offer due to a security interest therein, (ii) that Mr. Mori will endeavor
to have Ms. Rie Mori (825,000 shares, ownership ratio: 6.81%) and Mr. Ryusuke
Mori (75,000 shares, ownership ratio: 0.62%), who are relatives of Mr. Mori, tendertheir shares in the Tender Offer, (iii) that the security interest that has been
established on the Non-Tendered Agreed Shares shall be released, and (iv) that the
Squeeze-Out Procedures, the Reinvestment I, the Share Transfer, and theReinvestment II shall be implemented (the “Tender Offer Agreement”). For detailsof the Tender Offer Agreement, please refer to the section titled “ ① The Tender
Offer Agreement” of “4. Matters concerning material agreements between theTender Offeror and the shareholders of the Company regarding tending shares in
the Tender Offer” below.
(Note 3)BXJB Holdings (CYM) L.P. is an exempted limited partnershipincorporated under the laws of the Cayman Islands, all of whose issued
shares are indirectly held by funds managed, advised or operated byBlackstone.

In the Tender Offer, the Tender Offeror sets the minimum number of shares to bepurchased to 6,416,400 shares (Note 4) (ownership ratio 53.00%), and will notpurchase all of the shares, etc. tendered in the Tender Offer (the “ Tendered Shares,Etc.”) if the total number of the Tendered Shares, Etc. is less than the minimum
number of shares to be purchased (6,416,400 shares). On the other hand, since theTender Offer is intended to acquire all of the Company Shares (excluding treasury
stocks held by the Company and Non-Tendered Agreed Shares), no maximum limit
is set for the number of shares to be purchased. If the total number of Tendered
Shares, Etc. is the minimum number of shares to be purchased or more, the Tender
Offer will purchase all of the T endered Shares, Etc. The minimum number of shares
to be purchased (6,416,400 shares) is the number of shares obtained by multiplying
the number of voting rights pertaining to the Total Number of Issued Shares After
Deduction of Treasury Shares (121,073 uni ts) by two-thirds (80,716 units; rounded
to the nearest whole number) multiplied further by the number of shares per unit
(100 shares) (8,071,600 shares), less the number of Non -Tendered Agreed Shares(1,655,200 shares) (6,416,400 shares). In the event the Tender Offeror is unable toacquire all of the Company Shares (excluding the treasury shares held by theCompany and Non-Tendered Agreed Shares) in the Tender Offer, after thecompletion of the Tender Offer, the Tender Offeror will request the Company toimplement a series of procedures (the “ Squeeze-Out Procedures”) to make theTender Offeror and Mr. Mori the only shareholders of the Company, as describedin “(5) Policy on Organizational Restructuring after the Tender Offer (Mattersconcerning so-called Two-Step Acquisition)”, and when implementing theconsolidation of the Company Shares (the “ Share Consolidation”) in accordancewith Article 180 of the Companies Act as part of the Squeeze -Out Procedures, aspecial resolution at a general meeting of shareho lders as stipulated in Article 309,
Paragraph 2 of the Companies Act (Act No. 86 of 2005, as amended) (the“Companies Act”) is required. This is the reason for setting the minimum numberof shares to be purchased to ensure that after the Tender Offer, the Tender Offeror
and Mr. Mori will hold two -thirds of the voting rights of all shareholders of theCompany or more.
(Note 4)The minimum number of shares to be purchased is a provisional number
based on the information as of today, and the actual minimum n umberof shares to be purchased in the Tender Offer may differ from the above
figure due to changes in the number of treasury shares held by theCompany after the said date and other reasons. The final minimum
number of shares to be purchased will be deter mined prior to thecommencement of the Tender Offer, based on the latest information
available as of the commencement of the Tender Offer.

As part of the Transaction, after release of the security interest established on the
Non-Tendered Agreed Shares and completion of the Squeeze -Out Procedures, theTender Offeror will obtain approval from the Prime Minister for the Company’s
application for suspension of the obligation to file securities reports pursuant to theproviso of Article 24, Paragraph 1 of the Act, and thereafter Mr. Mori will transfer
to the Tender Offeror all of the Company Shares held by him immediately after
completion of the Squeeze-Out Procedures, less any fraction of less than one (1)share as a result of the Share Consolidation (the “ Share Transfer”) (Note 5).
(Note 5)In the Tender Offer Agreement, it is agreed that the total transfer priceof the Company Shares to be acqui red by the Tender Offeror from Mr.
Mori through the Share Transfer shall be the amount obtained bymultiplying the number of the Non -Tendered Agreed Shares (1,655,200
shares (ownership ratio: 13.67%)) by the Tender Offer Price of 2,800
yen and deducting the fractional value (if any) to be delivered to Mr.
Mori pursuant to Article 235, Paragraph 1 of the Companies Act inconnection with the consolidation of the Company Shares which isscheduled to be implemented in the Squeeze -Out Procedure pursuant to
Article 180 of the Companies Act.

In addition, the Tender Offeror intends, after the execution of the Transaction, toimplement an absorption-type merger (the “Merger”) in which the Company is anabsorbed company, and the Tender Offeror is a surviving company. Details such as
the specific schedule of the Merger have yet to be determined as of the date hereof.
The Tender Offeror will pay the funds required for the Transaction including theTender Offer by contribution received from the Tender Offeror Parent Com pany andby borrowing from Mizuho Bank, Ltd., MUFG Bank, Ltd. and Sumitomo Mitsui
Trust Bank, Limited (the “Bank Loan”), by the business day immediately prior to
the settlement date for the Tender Offer, subject to completion of the Tender Offer,etc. Detailed terms and conditions for the Bank Loan shall be set forth in the loan
agreement after negotiation with Mizuho Bank, Ltd., MUFG Bank, Ltd. and
Sumitomo Mitsui Trust Bank, Limited. In addition, in the Bank Loan, the Company
Shares acquired by the Tender Offeror through the Transaction will be pledged ascollateral, and certain assets of the Company will be pledged as collateral after
completion of the Squeeze -Out Procedures.
The Transaction is illustrated in graphic form as follows.
(a) Before the Tender Offer (Current Status)
As of the date hereof, Mr. Mori, who is a representative director and president andalso the largest shareholder of the Company, holds 4,779,450 shares of the Company
Shares (ownership ratio: 39.48%), and other minority shareholders hold other
Company Shares.

(b) After the Tender Offer
The Tender Offeror will implement the Tender Offer for all of the Company Shares(excluding treasury shares held by the Company and Non -Tendered Agreed Shares),and if the minimum limit of the Tender Offer (6,416,400 shares) is met and theTender Offer is successful, the Tender Offeror will settle the Tender Offer.

The Tender Offeror plans to receive funding from BX Asia Fund , directly or
indirectly, through BX Fund and the Tender Offeror ’s Parent Company, by way ofequity investment or loan to the Tender Offeror up to eighteen (18) billion yen.

(c) Reinvestment I
After the completion of the settlement of the Tender Offer, Mr. Mori’s AssetManagement Company will acquire common shares of the Tender Offeror’s Parent
Company by re-investing in the Tender Offeror’s Parent Company with a portion of
the consideration received by Mr. Mori for tendering the Tendered Agreed Shares.

(d) Squeeze-Out Procedures

In the event the Tender Offeror is un able to acquire all of the Company Shares(excluding the treasury shares held by the Company and Non -Tendered Agreed
Shares) in the Tender Offer, after the completion of the Tender Offer, the Tender
Offeror will request the Company to implement the Squeeze -Out Procedures to makethe Tender Offeror and Mr. Mori the only shareholders of the Company.

(e) Share Transfer
As part of the Transaction, after release of the security interest established on the
Non-Tendered Agreed Shares and completion of the Squeeze-Out Procedures, theTender Offeror will obtain approval from the Prime Minister for the Company’s
application for suspension of the obligation to file securities reports pursuant to theproviso of Article 24, Paragraph 1 of the Act, and thereafter Mr. Mori will transfer
to the Tender Offeror the Company Shares held by him immediately after
completion of the Squeeze -Out Procedures, less any fraction of less than one (1)share as a result of the Share Consolidation.

(f) Reinvestment II
Mr. Mori’s Asset Management Company will acquire the Tender Offeror’s Parent
Company Shares by re-investing in the Tender Offeror’s Parent Company withassuming the payment claims against the Tender Offeror that Mr. Mori will acquire
through the Share Transfer. It is intended that the number of voting rights pertaining
to the Tender Offeror’s Parent Company Shares held by Mr. Mori’s AssetManagement Company and the number of voting rights pertaining to the Tender
Offeror’s Parent Company Shares held by Blackstone shall b e in the ratio of 45.0 to
55.0 (Note6).
(Note 6)②

Although the Shareholders Agreement (defined in “b. Management
policy after the Tender Offer” of “ ② Background, Purpose andDecision-Making Process of the Tender Offer, and Management Policy
After the Tender Offer” below) stipulates that the above voting rightratio shall include the number of voting rights held not only by BX
Fund but also by funds, etc. that fall under Blackstone, since only BX
Fund and Mr. Mori’s Asset Management Company are scheduled to
become shareholders of the Tender Offeror’s Parent Company
immediately after the Reinvestment II, only BX Fund is shown in thescheme diagram below.

Background, Purpose and Decision-Making Process of the Tender Offer,and Management Policy After the Tender Offera. Background, purpose and decision -making process of the Tender Offer
Blackstone was founded in 1985 and is the world’s largest alternative investment
management company. Blackstone manages assets with total equity of
approximately 147 trillion yen as of December 31, 2023 (Note: 1 U.S. Dollar =141.04 yen; the same applies hereinafter). Blackstone’s investment managementbusiness includes private equity funds, real estate funds, hedge fund solutions,credit-related investments, and closed-end mutual funds. The private equity fund,which is the investor in the Transaction (defined below), manages approximately
twenty (20) trillion yen globally at 126 portfolio companies. In addition, theBlackstone’s private equity team has offices worldwide, including six (6) Asianbases in Tokyo, Singapore, Mumbai, Shanghai, Sydney, and Seoul. These offices
are not divided into regional funds (North America, Europe, Asia, Japan, etc.), andacting as a single team enables Blackstone to c ollaborate closely and globally.
Blackstone has identified healthcare as one of its most focused areas and has built
a track record in these areas with leveraging its global scale and network. In Japan,
since the opening of our Tokyo office in 2007, Blacks tone have invested more than2 trillion yen in business investment and real estate investment through April 12,2024. Investment in companies in the healthcare field is a focus theme for theJapanese team, as evidenced by the capital participation to AYUMI Pharmaceutical
Corporation (“AYUMI Pharmaceutical”) in March 2019 and the acquisition of
Takeda Consumer Healthcare Company Limited (currently Alinamin PharmaceuticalCo., Ltd.; hereinafter “Alinamin”) in March 2021. It is also characterized by anumber of large-scale and listed companies going private, including the acquisitionof Japan Residential Investment Company, a London -listed company that invests inlease condominiums; the acquisition of the Japanese real estate portfolio of AstroJapan Property Group, an Australian listed company; and the acquisition of Croesus
Retail Trust, a Singapore -listed company that invests in commercial facilities inJapan. In addition to the aforementioned examples of investments in AYUMI
Pharmaceuticals and Alinamin, Bla ckstone is actively involved in building
partnerships with domestic operating companies, such as commencement ofcollaboration with Daiwa House Industry Co., Ltd. in the logistics field andacquisition of logistics facilities in July 2020, acquisition of I setan Mitsukoshi Real
Estate Co., Ltd. in November 2020, acquisition of the hotel portfolio (eightproperties) owned by Kintetsu Group Holdings Co., Ltd. in October 2021, andacquisition of Sony Payment Services Inc. with Sony Bank Inc. in January 2024.
The Company was founded in April 1997 as I’rom Co., Ltd in Kanda Surugadai,
Chiyoda-ku, Tokyo for the purpose of supporting clinical trial sites (the “ SMO
Business,” as detailed in A) below). In October 2006, the SMO Business, one of themain businesses of the Company, was transferred to I’rom Co., Ltd., a consolidated
subsidiary newly established by the Company through an incorporation-typecompany split, thereby realizing the transition to a holding company structure, andat the same time the Company changed its name to “I’rom Holdings Co., Ltd.”
Subsequently, in July 2015, the Company changed its name to “I’rom Group Co.,
Ltd.” in order to clarify that it will be responsible for promoting group businesses
and managing each of the group companies.
The Company Shares were listed on the Jasdaq Securities Exchange, Inc. in October
2003, and listed on the First Section of the Tokyo Stock Exchange in January 2005.
The Company Shares are now listed on the Tokyo Stock Exchange Prime Market
following the re-characterization of the market classification of the Tokyo Stock
Exchange implemented in April 2022.

As of the date hereof, the Company’s group consisted of the Company, 22
consolidated subsidiaries, and one affiliated company (the “ Company’s Group”).
The Company’s Group has set “For a future full of joy” as the brand promise, andin order to realize a better medical environment, as a comprehensive medical
support company in the medical -related field, the Company’s Group aims to realize
a sustainable society by ensuring that all people remain healthy. The Company’sGroup also pursues improving the sustainability of its business by leveraging thecomprehensive strengths generated by synergies among group companies andbusinesses and is working to further contribute the development of medical care,
thereby improving the health and quality of life of people. Through these efforts,
the Company’s Group is developing a variety of businesses described in “A) SMO
Business” through “E) Drug Discovery Business” below.
The business activities of each of the main segments of the Company’s Group are
as follows.
A) SMO Business“SMO” is an abbreviation of Site Management Organization and refers to anorganization that undertakes a part of the operation related to the impl ementationof a clinical trial (Note 7) from a medical institution and provides on -behalf support.
CRC (Note 8) provides support to physicians, medical staff, and patients in order tofacilitate the progress of clinical trials at the medical institutions t hat conductclinical trials. In collaboration with CRO (Note 9) business, the Company is
involved in the planning of clinical trials for pharmaceuticals, from the selection
stage of medical institutions and doctors who are responsible for trials, and has b een
comprehensively entrusted with support services for the implementation of clinical
trials from Phase I to Phase IV (Note 10). Since ethical, scientific, and reliable
clinical trials are required, they are conducted in accordance with strict standards
such as GCP (Good Clinical Practice: Ministerial Ordinance on Standards for
Conducting Clinical Trials on Pharmaceuticals), trial implementation protocol(Protocol) (Note 11) and SOP (Standard Operating Procedure).
(Note 7)

“Clinical trials” are trials conducted in the course of drug development
in order to assess the efficacy and safety of drugs in humans.

(Note 8)“CRC” is an abbreviation of Clinical Research Coordinator and refers
to staff members who support the proper and smooth conduct of clinical
trials at clinical trial institutions.

(Note 9)“CRO” is an abbreviation of Contract Research Organization and refers
to an organization that undertakes part or all of the operation related
to the implementation of clinical trials and post -marketing clinical
trials, etc. at the development stage of pharmaceuticals and medical
devices from pharmaceutical companies, etc., and provides on -behalf
support.

(Note 10)

This is a type of objective -specific trial to be conducted in the clinicaldevelopment of pharmaceuticals. It is divided into the following

phases: trials to confirm safety and pharmacokinetics in the body(Phase I); exploratory trials with the primary objective of exploring
therapeutic effects in patients (Phase II); confirmatory trials with theprimary objective of demonstrating or confirming therapeutic benefits(Phase III); and trials to collect further information on efficacy andsafety through therapeutic use after pharmaceutical approval (Phase
IV).
(Note 11)

“Trial implementation protocol” is a document that describes therequirements (e.g., objectives, design, methods and statisticalconsiderations of the trials) that sponsors of clinical trials such as
clinical trial institutions and pharmaceutical companies must comply
with in order to conduct clinical trials.

B) CRO Business
The Company’s Group is conducting early clinical trials at clinical trial institutionsin Japan and Australia to support global development of domestic and overseas
pharmaceutical companies. Furthermore, in addition t o supporting companyinitiated clinical trials in Japan, the company also provides support for physician initiated clinical trials and clinical studies of regenerative medicine and refractorydiseases, mainly for academia such as universities and research institutes.
C) Advanced Medical Business
The Company’s Group is engaged in research and development andcommercialization in the field of regenerative medicine based on the developmentof vaccines and gene therapy products and technology related to iPS c ells (Note 12)
using high-performance and safe vector technology (Note 13). The Company’sGroup is also engaged in contract manufacturing of clinical vectors, gene therapy
products, regenerative medicine products, etc. as a contract pharmaceuticalmanufacturing facility. In addition, the Company’s Group is also providing services
related to the development, manufacture and sales and contract manufacturing ofcosmetics and other products by using advanced medical technology.
(Note 12)

“iPS cells” is an abbreviation for induced Pluripotent Stem cell and isgenerally interpreted as “artificial pluripotent stem cells.” These cells
are established by introducing specific genes into somatic cells and arecapable of differentiating into any tissue or cell of an an imal such as ahuman.

(Note 13)“Vector” refers to a substance that acts to effectively introduce genes
into target cells and “vector technology” refers to technology for
generating vectors.

D) Medical Support Business
The Company’s Group is mainly engaged in establishment and leasing of clinic
malls (Note 14), medical consulting and other services related thereto, the overall

and comprehensive support of medical management, and EC business (Electronic
Commerce or E-Commerce) that sells over-the-counter drugs, quasi -drugs, etc.
(Note 14)

“Clinic mall” refers to a complex medical facility with a collection ofclinics with different clinical subjects on the same floor.

E) Drug Discovery Business
The Company’s Group is co-developing important biosimilars (Note 15) and otherpharmaceuticals with high efficacy based on license agreements with domestic andforeign pharmaceutical companies and other parties.
(Note 15)

“Biosimilars” refer to pharmaceuticals that are developed by different
manufacturers and distributors as pharmaceuticals that have the same
quality, safety, and efficacy as biologics that have already been
approved in Japan as pharmaceuticals with new active ingredients.

The business environment surrounding the Company’s Group is changing every day,and the needs for clinical trials are diversifying due to the increase in and theglobalization of the development of new technologies such as regenerative medicine,the shortening of development periods, and changes in development methods. The
issues such as “drug lag (Note 16)” and “drug loss (Note 17)” are also becoming
more apparent, and there is a need to resolve issues in the pharmaceuticaldevelopment environment in Japan and to respond promptly and appropriately to
drastic changes in the environment. Specifically, the development ofpharmaceuticals is increasing in the field of diseases such as cancer and refractorydiseases, and the development of pharmaceuticals such as gene therapy an dregenerative medicine is proceeding as a treatment for such diseases. In addition,in the drug development for refractory diseases and regenerative medicine, clinical
trials for patients tend to be conducted from an early stage, and therefore, higher
quality and multifaceted roles are required at the facilities where early clinical trials
are conducted. Drug discovery technologies in drug development are diversifying
from low-molecular-weight drugs to biopharmaceuticals, gene therapy, regenerative
medicine, etc., and the market for biopharmaceuticals is expanding, gene therapy
formulations are being developed, and iPS cells are being used in clinical trials.
(Note 16)

“Drug lag” refers to the delayed development or approval in Japan ofa therapeutic drug that can be used in Western countries.

(Note 17)

“Drug loss” refers to a situation in which a therapeutic drug that canbe used in Western countries cannot be developed or approved inJapan.

In this business environment, the Company’s Group is promoting the expansion of
the SMO Business and the CRO Business, which are its core businesses since its
foundation. In addition, as a group strategy, funds generated by the SMO Businessand the CRO Business are used to develop pharmaceuticals in the advanced medic albusiness and the drug discovery business and advanced medical technologies, andto invest in capex using the expertise of the medical support business. By doing so,the Company’s Group is strengthening the business foundation of each business,
improving the quality of products and services that can respond to the demands ofthe diversified and sophisticated market, and strengthening research anddevelopment capabilities. Specifically, in the SMO Business, the Company’s Grouphas expanded its alliances with core hospitals, such as specialized medical centers
and university hospitals, and has established a system that enables commissioning
testing in all disease fields. In addition, the Company’s Group is promoting thecommission of testing in the primary f ield, such as lifestyle-related diseases, whichis larger in size per trial than in the cancer and refractory diseases trials. In the CRO
Business, in addition to providing early -stage support for pharmaceutical companies
in the Asia-Oceania region, including Europe, the United States, and Japan, atclinical trial institutions owned in both Japan and Australia, the Company’s Groupis continuously working to expand commissioning operations and strengthen thefield of statistical analysis. By commissioning se veral new trials, including
physician-led clinical trials, the Company’s Group is also working to strengthen its
business foundation. In the advanced medical business and the drug discovery
business, the Company’s Group is promoting research and development of vaccinesand biosimilars using funds generated by the SMO Business and the CRO Businessbased on the group strategy described above. In addition , in the advanced medical
business, the licensing business of an iPS Cell Production Kit “CytoTun e-iPS”(Note 18) is expanding. The Company’s Group has executed new licensing
agreements with several companies, and has been working to create new business
opportunities using the Sendai Virus Vector (Note 19) as its core technology throughthe licensing business by, for example, exercising the right to sub -license thetechnology based on the executed licensing agreements.
(Note 18)

“iPS Cell Production Kit ‘CytoTune -iPS’” are iPS cell induction kits
developed by fusing the factors involved in the produc tion of iPS cells
developed by Professor Shinya Yamanaka of Kyoto University and the
Sendai Virus Vector technologies of the Target Group’s Company.

(Note 19)

“Sendai Virus Vector” is a vector developed independently by theCompany. With RNA as the backbone, the Company’s Group has
proven that it is highly safe through clinical studies and animal
experiments. In addition, the Company’s Group has proven that it ishighly reliable and proven results for use in gene -based therapeutic
products and in the field of regenerative medicine.

Mr. Mori believes that in the aforementioned drastic changes in the industry
environment, the pharmaceutical and medical device development industries
surrounding the Company’s Group are becoming more globalized and thedevelopment period is becoming short er, and the need for clinical trials continues
to diversify due to changes in the development methods. The demand for the SMO
Business at medical institutions is expanding, and securing human resources is
becoming an issue in the SMO Business. In addition, it is expected that the numberof trials with high difficulty in the rare diseases and cancer fields will increase, andhe anticipates that human resource training will continue to be a key issue in the
future. In the CRO Business, he understands that the Company’s Group is in a phasewhich requires it to restructure from the traditional business category on the backof a similar trend.
In addition to this situation, pharmaceutical development led by the United States
is becoming the mainstream and major global pharmaceutical companies are
becoming increasingly involved in Japan as a place for pharmaceutical development.
In this environment, Mr. Mori has believed that it is important to build a competitive
global system and win projects in order to further increase the corporate value of
the Company’s Group. Specifically, Mr. Mori believes that the corporate value of
the Company’s Group will be increased by promoting a hybrid type ofcomprehensive clinical development support in the CRO Business, which is b asedon the SMO Business and provides services domestically and internationally byutilizing the know-how cultivated in the SMO Business, by achieving growththrough the expansion of its global business base through the acquisition of CRO
Businesses in Japan and overseas and by evolving into a healthcare platform
overseas, especially in Asia.
Based on this thinking, at around early September 2021, Mr. Mori began searchingfor a method to improve the corporate value of the Company’s Group not only on
its own, but also through alliances with strategic partners in order to further
accelerate the business transformation that the Company’s Group has implemented
and considered, and to enable long term and sustainable business restructuring.
While Mr. Mori is considering various strategic options, including how to utilize
outside management resources, including alliances with strategic partners,
Blackstone has been investigating and considering investment destinations in Japanfor some time. Blackstone, via Daiwa Securities Co. Ltd. (“Daiwa Securities”),
held an interview with Mr. Mori in late January 2022 to exchange opinions on awide range of management measures for the Company’s Group. During thisinterview, Blackstone provided an overview of Blackstone’s gener al management
support to invested companies, explained Blackstone’s investment performance inthe medical and pharmaceutical industries globally and in Japan, and exchanged
views with Mr. Mori on the initial direction of management strategy of theCompany’s Group.
Subsequently, Mr. Mori recognized that Blackstone had deep knowledge ofbusinesses of the Company’s Group, and determined that it would be useful tocontinue to exchange opinions with Blackstone. Accordingly, Mr. Mori andBlackstone decided to continue discussions on the direction of the policy measures
the Company’s Group and on various capital policies, including privatization. Fromlate January 2022 to late February 2024, Mr. Mori and Blackstone conducted
multiple exchanges of opinions on the b usiness environment of the medical andpharmaceutical industries to which the Company’s Group belongs, the direction ofmanagement measures based on the relevant environment, and the content andoptimal capital structure as management support for the Company’s Group expectedby Blackstone.
Through the discussions, Mr. Mori has had a common view with Blackstone thatfurther external support is important to diversify the business while continuing togrow the existing businesses of the Company’s Group, and highly appreciatedBlackstone, which has a network throughout the world, and has a track record ofdiverse investments in the medical and pharmaceutical businesses both domesticallyand overseas. He believes that utilizing Blackstone’s global knowledge, expe rienceand network in other industries will enable the Company’s Group to acquire andcultivate high-quality human resources, and will also build a competitive global
management system that can compete with competitors and major global companies,
enabling the Company’s Group to evolve into a global healthcare platform. In
addition, he felt a high level of commitment from Blackstone members. Therefore,
in late February 2024, Mr. Mori decided that Blackstone was the trustworthy andappropriate partner of the Company’s Group.
In parallel with the discussions with Blackstone, Mr. Mori met several times withother private equity funds via Daiwa Securities from late January 2022 to earlyAugust 2022, and received proposals regarding the direction of the managemen t
policy of the Company’s Group and its capital policy, including privatization.
However, taking into consideration the content of the proposal, their understandingof the businesses of the Company’s Group, and their investment track record to date,he determined that Blackstone, which has defined healthcare fields as one of themost focused areas and has one of the world’s largest life science funds (“ BXLS”)
that provides funds for the research and development stage in the pharmaceuticals
as well as investing in companies, was more appropriate as a partner that supports
the Company’s Group’s future business to grow.
On the other hand, Blackstone highly evaluated the history of the Company’s Groupsupporting medical institutions for more than twenty (20) years in clinical trials,
which form the foundation of the medical and pharmaceutical industries since thedawn of the SMO industry, its top -level business foundation in Japan, its industry leading technology development capabilities, and its corporate cu lture that
continues to focus on providing value to doctors and nurses at the forefront of the
medical field. Blackstone believes that in order for the Company’s Group to achieve
further growth and increase its corporate value over the medium to long term, it isnecessary to implement various measures, including expansion of overseas businessand discontinuous growth through M&A. In order to promptly implement a seriesof measures, it is beneficial to utilize human resources and management know -howfrom outside the company, instead of limiting the use of internal management
resources. Against this backdrop, Blackstone determined that by going private andmaking Blackstone a partner, and utilizing Blackstone’s knowledge and network topromote management reform, the Company’s Group can, for example, further
expand the SMO Business through optimal resource allocation and advanced sales
strategies, and expand the CRO contracting opportunities by utilizing Blackstone’s
network, achieve new growth that the Company’s Group could not achieve on its
own, and evolve into a healthcare service platform with a larger scale of business.
Blackstone believes that it is specifically capable of providing the following value:(a) Support for the Continued Growth of Company’s Group
Blackstone recognizes that in the industry to which the Company’s Group belongs,
the number of trials with high difficulty such as cancer and rare diseases isincreasing, clinical trials are becoming more complicated, small -scale trials withfewer cases are becoming increasingly difficult, and patient recruitment is becoming
increasingly difficult. Accordingly, the number of multinational clinical trials that
efficiently recruit patients is increasing, and the diversity of quantity and quality ofhuman resources required is advancing. As the number of multinational clinical
trials is expected to increase in the future, Blackstone believes it is important toacquire projects efficiently. Blackstone will utilize its deep knowledge in thehealthcare field and its domestic and overseas networks, promote the constructionof a globally competitive sales system for the SMO Business and CRO Business of
the Company’s Group, and provide support for achieving long term and sustainablegrowth.
Specifically, Blackstone has BXLS under the umbrella through which Blackstone
provides development funding for late -stage clinical trials (Phase II and Phase III)
before their launch, and has an extensive experience and network. However, in thecancer field, clinical trials are ma inly multinational clinical trials, and in order toefficiently acquire projects, Blackstone plans to introduce a wide range ofinvestment projects by BXLS, including cancer and rare diseases, to Company’sGroup, to develop customers using BXLS human resou rces and networks, and to
consider business alliances with Blackstone’s portfolio companies.
(b) Exploring Discontinuous Growth Opportunities through M&A
Through discussions with Mr. Mori, Blackstone recognizes that with the increasing
ratio of international clinical trials and the increasing involvement of major global
CROs in Japan, discontinuous growth through M&A in Japan and overseas isnecessary for the Company’s Group to achieve future medium to long term growthand increase corporate value. Blackstone intends to provide one -stop M&A support,
from searching for acquisition opportunities to assisting in the execution of
acquisitions, not only in Japan but also overseas, utilizing Blackstone’s global M&A
experience and network to enable the Company’s Group to compete with major
global CROs.
(c) Initiatives to Strengthen Organizational Capabilities
In order to realize (a) and (b) above, Blackstone will prom ote initiatives tostrengthen the organizational capabilities of the Company’s Group. Specifically,
Blackstone intends to use data analytics (Note 20) to reduce the turnover rate by
implementing measures to prevent employees from leaving work, such as relo cation,for employees who are judged to be at increased risk of leaving work by AI. In
addition, by utilizing Blackstone’s network to invite outside management personnel
and promote the use of outside advisors, Blackstone intends to expand theCompany’s expertise and business experience in its business areas and potential
customer network, thereby leading to further growth. Furthermore, from theperspective of supporting the growth of the Company’s Group and encouraging themto increase their motivation to participate in management, Blackstone is considering
establishing an incentive plan commensurate with the growth of performance andcorporate value. As of the date hereof, the specific content of the incentive plan has
not been determined.

Through the above measures, Blackstone intends to further strengthen theorganizational capabilities of the Company’s Group.
(Note 20)

“Data analytics” refers to a process that uses methods and tools suchas statistical, machine learning, and predictive modeling toinvestigate, return, analyze data, identify trends and patterns, identify
important insights, and enhance decision -making.

In late February 2024, Blackstone appointed Daiwa Securities as a financial advisor
independent of Blackstone, the Tender Offeror, t he Tender Offeror’s Parent
Company, Mr. Mori and the Company (“Tender Offer-Related Parties”), andNagashima Ohno & Tsunematsu as a legal advisor independent of the Tender Offer Related Parties. On February 27, 2024, Blackstone expressed to the Company its
initial intention to become a tender offeror and privatize the Company Sharesthrough a tender offer, and submitted a proposal (the “ Initial Proposal”) to request
cooperation in conducting due diligence in order to receive the necessary
information for a formal proposal to be made in the future. On the same day,Blackstone received a communication from the Company stating that it would
consider the content of the proposal and that it would cooperate in the due diligence,
after establishing the necessary fr amework. In the Initial Proposal, Blackstone alsomentioned that it is considering the possibility of a so -called management buyout(MBO) in which Mr. Mori would be the tender offeror in addition to Blackstone.
Subsequently, Blackstone began due diligence on the Company in early March 2024,
comprehensively analyzing and examining the Company’s business and financial
condition, and held discussions not only with Mr. Mori but also with the Company
toward the realization of the Tender Offer.
In the course of discussions between Blackstone and Mr. Mori regarding thedirection of the management measures and various capital policies of the Company’sGroup, including privatization, Blackstone highly appreciated Mr. Mori’s
management abilities and experience, and Blackstone believes that Mr. Mori is thebest person to manage the Company’s Group, and Blackstone and Mr. Mori havecome to a common understanding that a management buyout (MBO), in which Mr.
Mori would continue to lead the management of the Company’s Group as ashareholder as well as a member of the management team, with the support ofBlackstone’s deep knowledge, track record, and extensive network in the healthcare
field, would be the most effective means to ensure the stable continuation of thebusiness of the Company’s Group and to enhance the Company’s Group’s medium
to long term sustainable growth and corporate value. Therefore, on March 25, 2024,
Mr. Mori and Blackstone submitted a letter of intent to the Company, stating thatan acquisition company in which Mr. Mori and Blackstone will invest will be atender offeror and privatize the Company Shares through a tender offer, and on thesame day, received a notice from the Company that they would consider the proposal.
Subsequently, Blackstone conduct ed due diligence on the Company until mid-April
2024, and discussed with Mr. Mori, takin into account the results of the due
diligence. On April 17, 2024, Mr. Mori and Blackstone made a proposal to theCompany that the Tender Offer Price shall be 2,400 yen per share. This Tender Offer
Price is a premium of 33.19% (rounded to two decimal places; the same applies
hereinafter in the calculation of premiums) on 1,802 yen , which is the closing priceof the Company Shares on the Tokyo Stock Exchange Prime Market on April 16,
2024, a premium of 28.96% on 1,861 yen (rounded to the nearest whole number; thesame applies hereinafter in the calculation of the simple average of the closing
price), which is the simple average of the closing price of the Company Shares forthe past one (1) month up to April 16, 2024, a premium of 26.58% on 1,896 yen,which is the simple average of the closing price of the Company Shares for the past
three (3) months up to April 16, 2024, and a premium of 26.18% on 1,902 yen,which is the simple average of the closing price of the Company Shares for the pastsix (6) months up to April 16, 2024. Subsequently, on April 19, 2024, Blackstone
received a written response from the Company requesting an increase in the Tender
Offer Price on the grounds that the proposed Tender Offer Price of 2,400 yen was
insufficient in relation to the intrinsic value of the Company as considered based on
its business and financial information, and that th e Tender Offer Price was below
the premium level in similar cases, as well as requesting that the consideration for
setting a majority-of-minority condition. In response to such request from theCompany, on May 1, 2024, Mr. Mori and Blackstone made a proposal to theCompany to set the Tender Offer Price at 2,700 yen per share. This Tender Offer
Price is a premium of 49.01% on 1,812 yen, which is the closing price of theCompany Shares on the Tokyo Stock Exchange Prime Market on April 30, 2024, a
premium of 48.84% on 1,814 yen, which is the simple average of the closing priceof the Company Shares for the past one (1) month up to April 30, 2024, a premiumof 45.32% on 1,858 yen, which is the simple average of the closing price of theCompany Shares for the past three (3) months up to April 30, 2024, and a premiumof 41.21% on 1,912 yen, which is the simple average of the closing price of theCompany Shares for the past six (6) months up to April 30, 2024. In addition,
Blackstone responded that they do not plan to set the minimum number of shares tobe purchased in the Tender Offer to the number of shares subject to the majority of-minority condition, and that it is assumed that dividends (including the year -end
dividend for the fiscal year ending March 31, 2024 ) with a record date before thesettlement commencement date of the Tender Offer will not be implemented, basedon the grounds that the majority-of-minority condition may make the consummationof the Tender Offer unstable and may not be in the interests of the minority
shareholders of the Company who wish to tender their shares in the Tender Offer,and that they believe that sufficient consideration has been given to the interests ofminority shareholders of the Company through the implementation of suffici ent
other measures to ensure fairness, including the establishment of a special
committee in the Tender Offeror and the Company and the establishment of a tender
offer period of at least thirty (30) business days, which is longer than the twenty(20) business days required by law. Subsequently, on May 2, 2024, Blackstone
received a written response from the Company requesting that they consider raising
the Tender Offer Price in further consideration of the intrinsic value that theCompany’s public shareholders are expected to enjoy through long -term ownershipof the Company Shares and the achievement of its business plan, on the grounds
that the proposed Tender Offer Price of 2,700 yen cannot be evaluated as sufficientfor the Company’s minority shareholders in comparison with the results of thecalculation by KPMG FAS Co., Ltd. (“ KPMG”; for the process of selection, pleaserefer to “(iii) Background to the decision of the Company to support the Tender
Offer and reasons therefor” below), that it is assumed that no dividend (including
the year-end dividend for the fiscal year ending March 31, 2024) will be
implemented, and that the majority -of-minority condition will not be set. In
response to such request from the Company, on May 7, 2024, Mr. Mori andBlackstone proposed to the Company that the Tender Offer Price shall be 2,800 yen.
This Tender Offer Price is a premium of 54.44% on 1,813 yen, which is the closing
price of the Company Shares on the Tokyo Stock Exchange Prime Market on May
2, 2024, a premium of 54.61% on 1,811 yen, which is the simple average of theclosing price of the Company Shares for the past one (1) month up to May 2, 2024,
a premium of 51.52% on 1,848 yen, which is the simple average of the closing priceof the Company Shares for the past three (3) months up to May 2, 2024, and a
premium of 46.21% on 1,915 yen, which is the simple average of the closing priceof the Company Shares for the past six (6) months up to May 2, 2024. In addition,
Blackstone responded to the Company that the proposed Tender Offer Price of 2,800
yen takes into account the realization of the Company’s growth beyond its standalone operations, that it offers a fair sale price to the Company’s shareholders, eventaking into account the previously scheduled year -end dividend, and that it isdifficult to raise the Tender Offer Price further as a result of the final review.
Subsequently, on May 9, 2024, Blackstone received a response from the Company
that while the Company recognized that the intrinsic value of the Company wasevaluated to a certain extent in the proposed Tender Offer Price of 2,800 yen andthat the price was a market level compared to similar transactions in terms of thepremium level to the current market share price of the Company, it was concernedthat the intrinsic value of the Company might not be evaluated to the maximum
extent. Therefore, the Company explained its recognition of the Company’s intrinsic
value and requested an explanation of Mr. Mori’s and Blackstone’s recognition of
the Company’s intrinsic value, as well as requesting proposals on any other mattersthat have not yet been proposed. In response to such request from the Company, on
May 10, 2024, Mr. Mori and Blackstone explained to the Company their thoughts
on how they see each segment of the Company’s business plan, and stated that it
would be difficult to raise the proposed price further and that although the Tender
Offer requires the completion of obtaining the Clearance, as it is expected to take acertain period of time to complete the procedures and responses related to theClearance, they plan to conduct the Tender Offer promptly after the completion ofobtaining the Clearance.
Subsequently, on May 10, 2024, Blackstone received a written response from theCompany stating that in the opinion of the Company as of the time of such response,
the Tender Offer Price of 2,800 yen was acceptable, subject to the final decision
being made through a resolution of the Company’s board of directors after
considering the report of the Special Committee.
After the above discussion and negotiation, on May 13, 2024, the Tender Offeror
decided to conduct the Tender Offer with the Tender Offer Price of 2,800 yen as
part of the Transaction, subject to the fulfillment (or waiver by the Offeror ) of theConditions Precedent, including the completion of obtaining the Clearance.
b. Management policy after the Tender Offer

The Transaction is a so-called management buyout (MBO), and Mr. Mori’s AssetManagement Company intends to acquire a part of the Tender Offeror’s Parent
Company Shares through the Reinvestment and Mr. Mori plans to continue
managing the Company’s Group after the completion of the Tender Offer. He
intends to promote the management measures described in “ a. Background, purposeand decision-making process of the Tender Offer” above. Although the details of
the management framework, including executive composit ion of the Company, after
the Tender Offer will be determined after the completion of the Transaction throughdiscussions with BX Fund, Mr. Mori and Mr. Mori’s Asset Management Company
entered into a shareholders agreement dated as of May 13, 2024 (“ Shareholders
Agreement”), which includes details concerning the management of the Tender
Offeror’s Parent Company, the Tender Offeror and the Company after theTransaction and the handling of the Tender Offeror’s Parent Company Shares, andagreed that the number of directors of the Company after the completion of theTransaction will be five (5) (two (2) for the representative director and president),of which BX Fund shall appoint three (3) persons, including one (1) representative
director and president, and Mr. Mori and Mr. Mori’s Asset Management Company
shall appoint two (2) persons, including one (1) representative director andpresident.
For the details of the Shareholders Agreement, please refer to the section titled “ ②
The Shareholders Agreement” in “ 4. Matters concerning material agreements
between the Tender Offeror and the shareholders of the Company regarding tending
shares in the Tender Offer” below.
While the Tender Offeror intends to carry out the Merger after the implementationof the Transaction and the Reinvestment, the timing of the Merger has not been
determined as of the date hereof. The Tender Offeror’s policy is to maintain thecurrent management framework, including the officers of the Company, and it isplanned that they will continue to perform his/her duties after the Transaction.
However, the Tender Offeror and the officers of the Company other than Mr. Mori
have not agreed on the appointment of the officers after the Transaction and on thetreatment of the officers after the Transacti on, and the specific treatment of theofficers after the Transaction has not been determined as of the date hereof.
Blackstone plans to combine Blackstone’s domestic and overseas healthcare
network and various management support resources to support the gr owth of theCompany’s Group.
③

Background to the decision of the Company to support the Tender Offerand reasons therefor

As described in “a. Background, purpose and decision -making process of the Tender
Offer” in “② Background, Purpose and Decision -Making Process of the Tender
Offer, and Management Policy After the Tender Offer ” above, on February 27, 2024,
the Company received a request for discussion and negotiation with respect to theTransaction from Blackstone and the Initial Proposal. The Company responded on
the same day that it would be open to discussion and negotiation for the Transaction
and cooperate with due diligence. As described in the section titled “(6) Measuresto secure the fairness of the Tender Offer, such as measures to secure the fai rnessof the Tender Offer Price and measures to avoid conflicts of interest ” below, giventhat the Initial Proposal mentioned the possibility of the Tender Offer being
conducted as the Transaction for a so-called management buyout (MBO) in which
Mr. Mori would be the tender offeor in addition to Blackstone and there exists
structural conflicts of interest, on March 11, 2024, the Company appointed CityYuwa Partners as a legal advisor independent of the Tender Offer -Related Parties
and the Company, and KPMG as a financial advisor and a third -party valuation
institution independent of the Tender Offer -Related Parties in order to ensure thefairness of the Transaction.
In addition, given the existence of a structural conflicts of interest between Mr.
Mori and the Company or general shareholders of the Company, on March 11, 2024,
the Company established a special committee (the “ Special Committee”) to review
the proposal for the Transacti on as described in the Initial Proposal from theperspective of ensuring the fairness throughout the process in which the merits of
the Transaction and the appropriateness of its terms are reviewed and judged. For
the composition of the members of the Spec ial Committee, the powers granted to it,
and its specific activities, please refer to the section titled “ ③ The Company’s
Establishment of an Independent Special Committee and Procurement of a Reportfrom such Special Committee” in “(6) Measures to secure the fairness of the Tender
Offer, such as measures to secure the fairness of the Tender Offer Price andmeasures to avoid conflicts of interest ” below.
Under the aforementioned system, taking into account the outline of the Tender
Offer including the purpose of the Transaction as set forth in the Initial Proposal,
the impact of the Transaction on the Company, the details of the management policy
after the Transaction and the current share price trend, as well as consulting andreviewing the negotiation policy with the Special Committee in advance, theCompany has considered the appropriateness of the Transaction after multiple
rounds of discussions with Mr. Mori and Blackstone, with receiving opinions,
instructions, requests, etc. by the Special Committee a t important stages ofnegotiations, such as receiving opinions and instructions regarding the specificproposed amount and reasons for the proposal when receiving a proposal from theTender Offeror regarding the terms of the Transaction, as well as receivi ng advice
from City-Yuwa Partners and KPMG.
Specifically, after receiving a proposal from Mr. Mori and Blackstone on April 17,
2024, to the effect that the Tender Offer Price shall be 2,400 yen per share, on April
19, 2024, based on the opinions of the Special Committee, as well as the advice ofCity-Yuwa Partners and KPMG, the Company requested to Mr. Mori and Blackstone
the increase in the Tender Offer Price as well as the majority -of-minority conditionon the grounds that the proposed Tender Offer Price of 2,400 yen was insufficient
in relation to the intrinsic value of the Company as considered based on its businessand financial information, and that the Tender Offer Price was below the premium
level in other recent MBO cases. Subsequently, on May 1, 2024, Mr. Mori andBlackstone made a proposal to the Company to set the Tender Offer Price at 2,700
yen per share. In addition, Blackstone responded that it does not plan to set theminimum number of shares to be purchased in the Tender Offer to the number ofshares subject to the majority-of-minority condition, and that it is assumed that
dividends (including the year-end dividend for the fiscal year ending March 31,2024) with a record date before the settlement commencement date of the Tender
Offer will not be implemented, based on the grounds that the majority -of-minority
condition may make the consummation of the Tender Offer unstable and may not bein the interests of the minority shareholders of the Company who wish to tendertheir shares in the Tender Offer, and that they believe that sufficient consideration
has been given to the interests of minority shareholders through the implementationof sufficient other measures to ensure fairness, including the establishment of a
special committee and the establishment of a tender offer period of at least thirty(30) business days, which is longer than the twenty (20) business days required bylaw. On May 2, 2024, based on the content of the report received from KPMG on
the results of the trial calculation concerning the value of the Company Shares andthe opinion of the Special Committee, the Company requested that Mr. Mori andBlackstone raise the Tender Offer Price on the grounds that the proposed Tender
Offer Price of 2,700 yen cannot be evaluated as sufficient for the Company’s
minority shareholders, and that in the event that the majority -of-minority condition
is not set, offering the terms of the transaction, including a higher Tender Offer
Price, to the minority shareholders of the Company will ensure the stability of theclosing of the Tender Offer. In response to such request from the Company, on May
7, 2024, Mr. Mori and Blackstone proposed to the Company that the Tender Offer
Price shall be 2,800 yen, and responded that it is difficult to raise the Tender Offer
Price further as a result of the final review. Subsequently, on May 9, 2024, basedon advice from City-Yuwa Partners and KPMG and the opinion of the Special
Committee, Company responded to Mr. Mori and Blackstone that while theCompany recognized that the intrinsic value of the Company was evaluated to acertain extent in the proposed Tender Offer Price of 2,800 yen and that the price
was at market level compared to similar transactions in terms of the premium levelto the current market share price of the Company, it was concerned that the intrinsic
value of the Company might not be evaluated to th e maximum extent. Therefore,
the Company explained its recognition of the Company’s intrinsic value andrequested an explanation of Mr. Mori’s and Blackstone’s recognition of theCompany’s intrinsic value, as well as requesting proposals on any other matte rs thathave not yet been proposed. In response to such request from the Company, on May
10, 2024, Mr. Mori and Blackstone explained to the Company their thoughts on how
they see each segment of the Company’s business plan, and stated that since there
is no doubt about the future potential of the Company and the growth potential ofits business, and it is difficult to further increase the offer price, and that given thatthe proposal is based on an understanding of the Company’s recognition of its
intrinsic value as explained by the Company on May 9, 2024, they would maintainthe Tender Offer Price at 2,800 yen, and that although the Tender Offer requires thecompletion of obtaining the Clearance, as it is expected to take a certain period oftime to complete the procedures and responses related to the Clearance, they plan
to conduct the Tender Offer promptly after the completion of obtaining theClearance. Subsequently, on May 10, 2024, the Company responded that in theopinion of the Company as of the time of such response, the Tender Offer Price of
2,800 yen is acceptable, subject to the final decision being made through a
resolution of the Company’s board of directors after considering the report of theSpecial Committee.

After the above discussion and negotiation, on May 13, 2024, the Tender Offeror
decided to conduct the Tender Offer with the Tender Offer Price of 2,800 yen as
part of the Transaction, subject to the fulfillment (or waiver by the Offeror) of theConditions Precedent, including the compl etion of obtaining the Clearance.
Furthermore, the Company has received from City-Yuwa Partners, its legal advisor,
necessary legal advice on the method and process of decision -making by theCompany’s board of directors, including various procedures regar ding theTransaction, and other points to be noted, as well as a report dated May 10, 2024
from the Special Committee (the “Report”). For the summary of the Report andspecific activities of the Special Committee, please refer to the section titled “ ③
The Company’s Establishment of an Independent Special Committee andProcurement of a Report from such Special Committee ” in “(6) Measures to secure
the fairness of the Tender Offer, such as measures to secure the fairness of theTender Offer Price and measures to avoid conflicts of interest” below.
Based on the legal advice received from City -Yuwa Partners and the Share
Valuation Report (defined below) obtained from KPMG on May 10, 2024, theCompany carefully discussed and considered whether the Company’s corporate
value can be improved through the Transaction, while fully respecting the content
of the Report submitted by the Special Committee, and whether the terms andconditions of the Transaction, including the Tender Offer Price, are appropriate. As
explained in this “a. Background, purpose and decision -making process of theTender Offer” in “ ② Background, Purpose and Decision -Making Process of theTender Offer, and Management Policy After the Tender Offer” , the Company
recognizes that the business environment surrounding the Company’s Group ischanging on a daily basis, that the needs for clinical trials are diversifying due tothe increase in and the globalization of development of new technologies such as
regenerative medicine, the shortening of development periods, and changes indevelopment methods, that issues such as “drug lag” and “drug loss” are becoming
more apparent, and that it is required to respond promptly and appropriately tosolutions of issues in the pharmaceutical development environment in Japan and to
drastic changes in the environment. In this business environment, specifically, theCompany’s Group has identified the following management issues and are working
on measures to address each management is sue.
a) Improvement of profitability
The Company’s Group is focusing on in -house development, contract manufacturing,and development support in the field of advanced medicine, such as gene therapy
and regenerative medicine, in order to contribute to the development of newpharmaceuticals and medical technology. However, it will take a considerable
amount of time to secure stable earnings in the advanced medicine business anddrug discovery business, and the Company’s Group believes that improving
profitability in the SMO Business, CRO Business and medical support business is achallenge. In the SMO Business, the Company’s Group is striving to acquire
projects targeting areas with high development needs, and to improve revenues andprofits by setting appropriate contract unit prices and allocating human resources

appropriately according to the nature of the support provided. In the CRO Business,
the Company’s Group is working to expand contracts for early -stage clinical trials
overseas and in Japan, and is stepping up efforts to expand contracts for new clinical
trials in academia and for regenerative medicine and other products. In the medical
support business, the Company’s Group is working to improve the profitability of
the facilities it operates in the clinic mall business. In the advanced medical
business, in addition to securing earnings by selling iPS Cell Production Kits andpromoting the licensing business related to patent licensing of the technology for
producing iPS cells, the Company’s Group is working to expand earnings and profits
through the EC business, which sells cosmetics using iPS cell culture supernatantsolution as an ingredient and over -the-counter drugs and quasi -drugs. Furthermore,
the Company’s Group is striving to create new pharma ceuticals and regenerative
medicine products, such as gene therapeutic drugs and gene editing technologies,
using the Company’s Group’s superior gene transfer technology, and is aiming forearly out-licensing of its main pipeline products.
b) Financing
The Company’s Group is making ongoing investments in human resources, researchand development, and other areas. The Company’s Group believes that theseinvestments are necessary for its future growth, and is considering the possibilityof securing development funds through joint research with pharmaceuticalcompanies, etc. and raising funds through financial institutions and capital markets,
etc., as necessary.
c) Development of internal control system
The Company’s Group has long been working to enhance corporate governance bystrengthening the supervisory function of directors and improving managementtransparency, and has been improving its internal control system to increase thetransparency and speed of decision making. The Company’s Group is expanding its
business through M&A and other means, and the Company’s Group believes that it
is important to share its philosophy, vision, etc. with the newly grouped affiliatedcompanies, etc., and to achieve substantial ma nagement integration, including
integration of human resources, organization, infrastructure, etc., as soon as
possible. Under such circumstances, the Company’s Group has established theAffiliated Company Management Regulations to ensure the appropriatene ss ofoperations of affiliated companies, etc. In addition, the Company’s Group is striving
to maintain an internal environment to accurately understand and manage themanagement of affiliated companies by regularly requesting reports on operations,business performance, and other important matters, and by ensuring a system that
requires prior approval from the Company for matters that may have a significant
impact on operations or business performance.
d) Securing quality of work
The Company’s Group believes that the environment surrounding drug development
is changing rapidly, and that the needs for clinical trials are diversifying due to theincreasing development of new technologies such as regenerative medicine,

globalization of development, shortenin g of development periods, and changes indevelopment methods, and that, along with such changes, related laws andregulations concerning quality such as ethics, science, and reliability are also
becoming more complex and strict. Since its establishment, th e Company’s Grouphas been emphasizing the construction and management of processes to ensure
quality. By visualizing processes, constantly verifying and improving them, andunifying work procedures within the group, the Company ’s Group is striving tostandardize quality at a high level and to support prompt implementation of tests.
e) Securing human resources
It is necessary to secure human resources suitable for the growth of each business,such as CRC/SMA (Note 21) in the SMO Business, CRA (Note 22) and DM (Note23) in the CRO Business, and personnel for research and development, vector
manufacturing, cell culture processing, etc. in the advanced medical business, andthe Company’s Group considers recruitment and human resources development asimportant issues and is addressing them.
(Note 21)

“SMA” is an abbreviation for “Site Management Associate” andrefers to staff who provide full administrative support for clinical
trials at SMOs.

(Note 22)

“CRA” is an abbreviation of “Clinical Research Associate” and refers
to staff who monitor whether clinical trials and clinical research for
drug development are being conducted appropriately at CROs.

(Note 23)

“DM” is an abbreviation of “Data Manager” and refers to staff who
perform data quality control duties for clinical trials and clinicalresearch at CROs.

As explained in “a. Background, purpose and decision-making process of the Tender
Offer” in “② Background, Purpose and Decision -Making Process of the Tender
Offer, and Management Policy After the Tender Offer” above, in the process of
discussions and negotiations, the Tender Offeror recognizes that in order for theCompany to realize the increase of its corporate value over the medium to long term,
it is necessary to establish a competitive global framewo rk through various
measures, including expansion of overseas business and discontinuous growththrough M&A. Based on this recognition, the Tender Offeror communicated to theCompany that the Tender Offeror believed that by utilizing Blackstone’s knowledge
and network to promote management reform, the Company’s Group can further
expand the SMO Business through optimal resource allocation and advanced sales
strategies and expand the CRO contracting opportunities by utilizing Blackstone’s
network, achieve new growth that the Company’s Group could not achieve on its
own, and evolve into a healthcare service platform with a larger scale of business.
The Company also recognizes that these measures are those that it should actively
promote to further increase its c orporate value over the medium to long term.

Based on the above, the Company has determined that the Transaction willcontribute to the enhancement of the medium to long term corporate value of theCompany’s Group.
If the Company is privatized, it will no longer be able to raise funds through equity
financing from the capital markets. In addition, it is considered that this may havean impact on recruiting outstanding human resources and expanding the number ofbusiness partners by improving the social credibility and reputation enjoyed by theCompany as a listed company. However, in light of the current financial conditionsof the Company and the recent low interest rate environment in indirect financing,
the need for large-scale financing through the use of equity financing is not expectedin the next few years. Furthermore, the Company believes that the disadvantages ofprivatization are limited due to the following reasons: recruiting outstanding humanresources and expanding the number of business partners by improving the social
credibility and reputation of the Company are some of the benefits to be gained
through business activities; while it is conceivable that the privatization of theCompany could have an impact on recruit ing human resources, such impact is notexpected to be such big due to the brand power and reputation that the Company has
built up to date; and listing maintenance costs, which continued to increase in order
to comply with the Corporate Governance Code, e tc., resources and expenses related
to disclosure under the Act and audit compliance and management resources related
to shareholder relations will be able to be allocated to resolve other management
issues.
For this reason, the Company determined at its board of directors’ meeting on May
13, 2024 that the merits of privatization exceeded its disadvantages.
During these discussions and considerations, the Company determined that theTender Offer Price is a reasonable price that ensures the benefits to be enjoyed by
the general shareholders of the Company, and the Tender Offer provides the generalshareholders of the Company with a reasonable opportunity to sell their shares at a
price with an appropriate premium, based on the reasons that (a) the Tender Of fer
Price exceeds the maximum price in the rage of the results of the calculation basedon the market share price average method and is within the range of the results ofthe calculation based on the discounted cash flow method (the “ DCF Method”) in
the results of KPMG’s calculation of the Company Shares as described in the section
titled “(3) Matters concerning calculation” below, (b) the Tender Offer Price can beevaluated as a comparable and reasonable premium, because a premium of 51.35%
on 1,850 yen, which is the closing price of the Company Shares on the Tokyo Stock
Exchange Prime Market on May 10, 2024, the business day immediately preceding
the announcement of the Tender Offer, a premium of 54.61% on 1,811 yen, whichis the simple average of the closing price of the Company Shares for the past one(1) month, a premium of 52.42% on 1,837 yen, which is the simple average of theclosing price of the Company Shares for the past three (3) months, and a premiumof 46.44% on 1,912 yen, which is the simple av erage of the closing price of theCompany Shares for the past six (6) months, are respectively added, and thesepremium standards exceed the median price of the premium standards in the other
MBO deals in recent years with respect to a premium on the closing price on thebusiness day immediately preceding the announcement, a premium on the simple

average of the closing price for the past one (1) month up to the business day
immediately preceding the announcement and a premium on the simple average ofthe closing price for the past three (3) months up to the business day immediately
preceding the announcement (fifty-six (56) MBO deals for the purpose ofprivatization for which tender offers were completed by April 15, 2024 and whichwere announced after June 28, 2019, when the Ministry of Economy, Trade andIndustry published its “Guidelines on Fair M&A Practices - Toward Enhancing
Corporate Value and Securing Shareholder Benefits”, excluding deals where atender offer was not implemented or not completed and where the Company neither
supported nor recommended the tender), which consist of a premium of 42.44% on
the closing price on the business day immediately preceding the announcement, apremium of 45.18% on the simple average of the closing price for the pa st one (1)month up to the business day immediately preceding the announcement, a premiumof 45.52% on the simple average of the closing price for the past three (3) months
up to the business day immediately preceding the announcement, and a premium of
48.57% on the simple average of the closing price for the past six (6) months up to
the business day immediately preceding the announcement (rounded to two decimal
places), (c) it is conceivable that the interests of general shareholders are taken into
consideration, such as measures taken to eliminate conflicts of interest as describedin the section titled “(6) Measures to secure the fairness of the Tender Offer, suchas measures to secure the fairness of the Tender Offer Price and measures to avoid
conflicts of interest” below, (d) the Tender Offer Price was determined after
multiple rounds of discussions and negotiations between the Company and Mr. Mori
and Blackstone, equivalent to discussions and negotiations in an arm’s lengthtransaction, after measures were taken to eliminate the aforementioned conflicts ofinterest, and more specifically, based on the content of the results of KPMG’s
calculation regarding the value of the Company Shares and legal advice from City Yuwa Partners on the method and process of decision -making regarding theTransaction and other points to be noted, as well as the opinions, instructions,requests, etc. by the Special Committee, and after in-good-faith and continuous
discussions and negotiations with Mr. Mori and Blackstone, the Tender Offer Pricehas been increased by 400 yen (16.7%) (rounded to two decimal places) per shareover the initially proposed price (2,400 yen per share ), and (e) as explained in thesection titled “ ③ The Company’s Establishment of an Independent Special
Committee and Procurement of a Report from such Special Committee” in “(6)Measures to secure the fairness of the Tender Offer, such as measures to secur e thefairness of the Tender Offer Price and measures to avoid conflicts of interest” below,
the Tender Offer Price has been determined to be reasonable in the Report obtained
from the Special Committee.
Based on the above, the Company has determined that the Transaction contributes
to improving the corporate value of the Company and that the terms and conditions
pertaining to the Transaction, including the Tender Offer Price, are reasonable.
Therefore, at its board of directors’ meeting on the date hereof, in the opinion of
the Company as of the same date, if the Tender Offer is commenced, to express theopinion in favor of the Tender Offer and recommend its shareholders to apply for
the Tender Offer.

As stated above, the Tender Offeror intends to prompt ly implement the Tender Offer
upon fulfillment (or waiver by the Tender Offeror) of the Conditions Precedent. Asof the date hereof, the Tender Offeror aims to commence the Tender Offer by around
mid-June 2024. However, as it is difficult to accurately for ecast the time required
for the procedures, etc. at the Australian authorities that have jurisdiction over the
Clearance, the Tender Offeror will announce the details of the Tender Offerschedule as soon as they are determined. In addition, if the expected timing of thecommencement of the Tender Offer is changed, the Tender Offeror will promptly
announce such change.
For this reason, the Company’s board of directors also resolved that, at the time theTender Offer commences, the Company shall request the Special Committee
established by the Company to consider whether there is any change in the opinionof the Special Committee in the Report submitted by the Special Committee to theboard of directors of the Company dated May 10, 2024, and if there is no ch ange inthe previous opinion, to state that opinion to the Company’s board of directors, andif there is a change, to state the opinion after the change, and that based on such
opinion, the Company will reiterate its opinion on the Tender Offer at the time ofits commencement.
For details of the resolution of the Company’s board of directors’ meeting, pleaserefer to the section titled “④ Unanimous Approval by All of the Non -Interested
Directors (including directors who are Audit & Supervisory Committee members)of the Company” in “(6) Measures to secure the fairness of the Tender Offer, suchas measures to secure the fairness of the Tender Offer Price and measures to avoid
conflicts of interest” below.
Since Mr. Mori plans to continue to manage the Company after the completion of
the Tender Offer and is considering making a direct or indirect investment in theTender Offeror, he did not participate in any deliberations or resolutions at theabove board of directors’ meeting as a special interested director, nor did heparticipate in any discussions or negotiations with the Tender Offeror on behalf of
the Company, because there is a conflict of interest with the Company regarding theTransaction.
(3) Matters concerning calculation①

Names of valuation institution and its relationship with the Company and theTender Offeror

The Company, in expressing its opinion on the Transaction, including the Tender
Offer, requested KPMG, the financial advisor of the Company, to calculate the valueof the Company Shares as a third-party valuation institution independent from theTender Offer-Related Parties, in order to secure the fairness of the Transaction,
including the Tender Offer, such as fairness of the Tender Offer Price. The Company
obtained a share valuation report (hereinafter referred to as the “ Share Valuation
Report”) as of May 10, 2024. KPMG does not fall under the category of a related
party of the Tender Offer-Related Parties and does not have a material interest in
the Tender Offer while the fees to be paid to KPMG in connection with theTransaction includes a contingent fee payable upo n the conclusion of theTransaction, etc. Taking into consideration the general practices in similartransactions and the pros and cons of the fee system which would incur a reasonable
monetary burden to the Company in the event of a failure of consummatin g theTransaction, the Company determined that independence will not denied due to theinclusion of the contingent fee to be paid on the conditions of conclusion of theTransaction, and the Company decided to appoint KPMG as its financial advisor
and its third-party valuation institution with the fee system described above.
The Special Committee confirmed at its first Special Committee meeting that since
the financial advisor and the third -party valuation institution appointed by theCompany does not have issues in independence and expertise, the Special
Committee approved them as the Company’s financial advisor and third -party
valuation institution, and that the Special Committee may receive expert advice asnecessary from them.
②

Overview of calculation of the Company Shares

KPMG examined the calculation method to be adopted in calculating the share value of
the Company Shares from several methods for calculating the share value. Since there isa market share price as the Company’s Shares are listed on the Tokyo Stock Exchange
Prime Market, the share value was calculated using the market share price average method
and the DCF method to reflect the status of future business activities. The Company
received the Share Valuation Report from KPMG on May 10, 2024. The Company has not
obtained a written opinion (fairness opinion) on the validity of the Tender Offer Pricefrom KPMG because the Tender Offeror and the Company have taken measures to secure
the fairness of the Tender Offer Price and measures to avoid conflicts of interest. The
scope of the value per Company Share calculated by each of the above methods is asfollows.
Market share price average method: 1,811 yen to 1,912 yen
DCF method:
2,506 yen to 3,339 yen
According to the market share price average method, the scope of the value per Company
Share is calculated from 1,811 yen to 1,912 yen. The reference date is May 10, 2024,
which is the business day immediately prior to the resolution of the board of direct ors of
the Company regarding the Tender Offer. The calculation is based on 1,850 yen as theclosing price on the reference date of the Company Shares in the Tokyo Stock Exchange
Prime Market, 1,811 yen as the simple average of the closing prices for the most recent
one (1) month up to the reference date, 1,837 yen as the simple average of the closing
prices for the most recent three (3) months up to the reference date, and 1,912 yen as thesimple average of the closing price for the most recent six (6) months up to the reference
date.
Under the DCF method, the value of shares per Company Share is calculated to be in therange of 2,506 yen to 3,339 yen. The share value of the Company is calculated bydiscounting the free cash flow that the Company is expected to generate in the future fromthe fiscal year ending March 31, 2025 based on revenue and investment plans in the
Company’s business plan for the five (5) fiscal years from the fiscal year ending March31, 2025 to the fiscal year ending March 31, 2029 (hereinafter referred to as the “BusinessPlan”; please note that Mr. Mori is not involved at all in preparing the Business Plan) andinformation disclosed to the public, at an appropriate discount rate that takes into accountbusiness risks. Weighted average cost of capital (Weighted Average Cost of Capital:
WACC) is used for the discount rate. The weighted average cost of capital is calculated
by weighting the cost of capital estimated using the capital asset pricing model (Capital
Asset Pricing Model: CAPM) and the cost of debt estimated using the expected funding
rate after deduction of tax shields, by the equity composition ratio estimated using theCompany and comparable publicly traded companies’ information. The Company uses
8.5 % to 9.5 % as weighted average cost of capital. In addition, the perpetual growth rate
method is used to calculate the terminal value, and under the perpetual growth rate method
the growth rate of 0.4 % to 1.4 % is used.
The financial forecast based on the Business Plan, which KPMG assumed in thecalculation by the DCF method, is as follows.
The Business Plan includes a fiscal year in which we expect a significant increase inprofits compared with the previous fiscal year. Specifically, in the fiscal year ending
March 31, 2025, the Company expects a significant increase in operating income and free
cash flow because some large orders in the SMO business, which were expected in thefiscal year ending March 31, 2024, have been pushed back to the fiscal year ending March
31, 2025. In the fiscal year ending March 31, 2027, the Company plans to make large
capital investments in manufacturing facilities and other equipment in the advanced
medical business, rather than only maintenance and renewal investments in existing
facilities until the fiscal year ending March 31, 2026, while from the fiscal year ending
March 31, 2027 onward, the Company plans to make mainly maintenance and renewal
investments in existing facilities, and thus expects a significant increase in free cash flow
due to a decrease in capital expenditures. Therefore, the Company expects a significant
increase in free cash flow due to a decrease in capital expenditures. Furthermore, in thefiscal year ending March 31, 2028, the Company expects a significant increase inoperating income and free cash flow due to the expansion of the pipeline with thecompletion of development and launch of new products in the drug discovery business.
The synergies expected to be realized from the consummation of the Transaction are notincluded in the financial forecast because it is difficult to estimate them specifically at thepresent time.

Item
Revenue
Operating
IncomeEBITDAFree Cash
Flow

FY03/2025
20,7652,669

FY03/2026
22,1973,429

FY03/2027
24,436
3,598

FY03/2028
27,282
5,254(Millions of yen)
FY03/2029
29,042
6,208

3,903
1,093

4,700
1,234

4,923
2,511

6,579
3,885

7,533
4,801

KPMG states that in calculating the share value of the Company Shares, theinformation provided by the Company and the information disclosed to the public is
adopted as is in principle, and that all such materials and information are assumed
to be accurate and complete, and that the accuracy and completeness of suchmaterials and information have not been independently verified. In addition, KPMG

also states that it has not independently evaluated or assessed assets and liabilities(including off-balance-sheet assets and liabilities, and other contingent liabilities)of the Company, and has not requested an appraisal or valuation by a third party. In
addition, it is assumed that information concerning the Company's financial forecast
has been reasonably prepared based on the best forecast and judgment currently
available to the Company's management, excluding Mr. Mori. However, KPMG
conducted question-and-answer sessions with the Company several times regarding
the business plan of the Company on which the calculation is based, ascertain ed theprocess of preparation and the current status of the Company, and checked therationality of the business plan of the Company from the viewpoint of whether there
are any unreasonable points. In addition, the Special Committee checked thereasonableness of the content, important assumptions, and the process of preparationof the business plan.
(4) Likelihood of Delisting and the Grounds therefor
The Company Shares are listed on the Tokyo Stock Exchange Prime Market as oftoday. As the Tender Offeror does not set the maximum number of shares to bepurchased in the Tender Offer, depending on the results of the Tender Offer, theCompany Shares may be delisted after certain procedures in accordance with thedelisting standards of the Tokyo Stock Exchange. Even if the standards are not met
at the time of the conclusion of the Tender Offer, the Tender Offeror intends toimplement the Squeeze-Out Procedures as described in “(5) Policy on Organizational
Restructuring after the Tender Offer (Matters concerning so -called Two-Step
Acquisition)” below after the conclusion of the Tender Offer. In such case, theCompany Shares will be delisted through the procedure in accordance with thedelisting standards of the Tokyo Stock Exchange. After d elisting, the Company
Shares cannot be traded on the Tokyo Stock Exchange Prime Market.
(5) Policy on Organizational Restructuring after the Tender Offer (Matters concerning
so-called Two-Step Acquisition)
As described in “① Overview of the Tender Offer” in “(2) Basis and reason for
opinion” above, in the event that the Tender Offeror is unable to acquire all of theCompany Shares (excluding the treasury shares owned by the Company and the NonTendered Agreed Shares) in the Tender Offer , the Tender Offeror intends toimplement the Squeeze-Out Procedure by the following methods after the conclusionof the Tender Offer.
Promptly after the completion of the settlement of the Tender Offer , the Tender
Offeror intends to request holding an extraordinary shareholders’ meeting(hereinafter referred to as the “ Extraordinary Shareholders’ Meeting ”) that
includes the resolution of implementation of the Share Consolidation and partial
amendment of the articles of incorporation to the effect that the number of shares
per unit shall be abolished on the condition that the Share Consolidation takes effect.
The Tender Offeror considers it desirable to hold th e Extraordinary Shareholders’Meeting as soon as possible from the viewpoint of enhancing the corp orate value of
the Company. Therefore, the Tender Offeror intends to request the Company to makea public notice of establishment of record date during the Tender Offer Period sothat a date soon after the commencement of the settlement of the Tender Offer will
become the record date of the Extraordinary Shareholders’ Meeting. The date of theExtraordinary Shareholders’ Meeting has not been determined. The Tender Offeror
and Mr. Mori are going to vote in favor of the above resolutions at the Extraordinary
Shareholders’ Meeting.
In the event that the resolution of the Share Consolidation is approved at theExtraordinary Shareholders’ Meeting, the shareholders of the Company will have thenumber of shares of the Company according to the ratio of the Share Consolidation
approved at the Extraordinary Shareholders’ Meeting as of the date when the Share
Consolidation becomes effective. If a fraction of less than one (1) share is generated
in the number of shares as a result of the Share Consolidation, money will bedelivered to the shareholders of the Company for whom a fraction of less than one(1) share is generated, by selling to the Company or the Tender Offeror the Company
Shares equivalent to the total of such fraction (in the case of a fracti on of less thanone (1) share in the total, such fraction shall be rounded off; the same shall apply
hereinafter) in accordance with Article 235 of the Companies Act and otherprocedures set forth in relevant laws and regulations. With respect to the sale priceof the Company Shares equivalent to the total number of such fractions, the Tender
Offeror intends to request the Company to apply to the court for permission of private
sale after setting the amount of money to be delivered to the shareholders of theCompany who did not tender their shares in the Tender Offer (excluding the Tender
Offeror and Mr. Mori) as a result of such sale to be the same as the price obtainedby multiplying the Tender Offer Price by the number of the Company Shares held by
each such shareholder.
Although the Share Consolidation ratio has not yet been determined as of today, theTender Offeror is planning to request that the number of shares held by theshareholders of the Company who did not tender their shares in the Tender Offer(excluding the Tender Offeror and Mr. Mori) be a fraction of less than one (1) shareso that only the Tender Offeror and Mr. Mori will own all of the Company Shares(excluding the treasury shares held by the Company). Specific procedures for the
Share Consolidation will be announced promptly by the Company upon decision afterdue consultation between the Tender Offeror and the Company.
As for the provisions that intend to protect the rights of the general shareholders of
the Company in relation to the Share Consolidation, the Companies Act stipulates
that if the Share Consolidation is made and it results in a fraction of less than one(1) share, the shareholders of the Company who did not tender their shares in theTender Offer (excluding Tender Offeror, Mr. Mori, and the Company) may request
the Company to purchase at a fair price all of the ir shares which are less than one(1) share, and may file a petition for the court to determine the price of the Company
Shares, in accordance with the provisions of Article 182 -4 and Article 182-5 of theCompanies Act and other relevant laws and regulations.
As mentioned above, as a result of the Share Consolidation , the number of shares
held by the shareholders of the Company who did not tender their shares in theTender Offer (excluding the Tender Offeror, Mr. Mori and the subject parties) is
expected to be a fraction of less than one (1) share. Therefore, the shareholders of

the Company who oppose to the Share Consolidation are expected to be able to filethe above petition. In the event the above petition is filed, the purchase price shallbe finally determined by the court.
The above procedures would depend on the status of revisions, enforcement, andinterpretation of relevant laws and regulations, and implementation of the procedures
may take time or the method of implementation may change. Provided, however, thateven in such case, if the Tender Offer is successful, a method that would delivermoney to the shareholders of the Company who did not tender their shares in theTender Offer (excluding the Tender Offeror, Mr. Mori, and the Company) would be
adopted. In such case, the amount of money to be delivered to such shareholders of
the Company will be calculated to be the same as the price obtained by multiplying
the Tender Offer Price by the number of the Company Shares held by suchshareholders of the Company.
After consultation with the Tender Offeror, the Company will promptly announce thespecific procedures and the timing of implementation of the above procedures.
The Tender Offer does not solicit the approval of the shareholders of the Company
at the Extraordinary Shareholders’ Meeting. In addition, the shareholders of theCompany should consult with tax experts on their own responsibility with regard totendering shares in the Tender Offer or the tax treatment in each of the above
procedures.
(6) Measures to secure the fairness of the Tender Offer, such as measures to secure
the fairness of the Tender Offer Price and measures to avoid conflicts of interest
The Tender Offer is to be made as part of the Transaction which falls under the socalled management buyout (MBO) and in light of the existence of structural conflictsof interest, etc., the following measures ① to ⑥ are taken in order to secure
fairness of the Transaction, including the Tender Offer, from the perspective of
eliminating arbitrariness and avoiding conflicts of interest in the decision -making
process that leads to the decision to implement the Tender Offer .
The Company believes that setting a minimum number of shares to be purchased that
corresponds to the so-called "Majority of Minority" may make the Tender Offer
unstable and may not contribute to the interests of minority shareholders who wish
to tender their shares in the Tender Offer. However, the Tender Offeror believes thatsufficient consideration has been given to the interests of the Company's minority
shareholders, given that the Tender Offeror and the Company have taken thefollowing measures The Tender Offeror believes that the interests of the Company's
minority shareholders have been adequately considered because the Tender Offeror
and the Company have taken the following measures.
Please note that the descriptions of the measures implemented by the Tender Offeror
among the following descriptions are based on the explanation received from theTender Offeror.

①Procurement by the Company of a Share Valuation Report from an Independent ThirdParty Valuation Institution

As stated in “(3) Matters concerning calculation”, in expressing its opinion on theTransaction, including the Tender Offer, the Company requested KPMG, the financial
advisor of the Company, to calculate the value of the Company Shares as a third-party
valuation institution independent from the Tender Offer-Related Parties, in order to secure
the fairness of the Transaction, including the Tender Offer, such as fairness of th e Tender
Offer Price. The Company obtained Share Valuation Report as of May 10, 2024. KPMG
does not fall under the category of a related party of the Tender Offer -Related Parties anddoes not have a material interest in the Tender Offer while the fees to b e paid to KPMG
in connection with the Transaction includes a contingent fee payable upon the conclusionof the Transaction, etc. Taking into consideration the general practices in similartransactions and the pros and cons of the fee system which would inc ur a reasonable
monetary burden to the Company in the event of a failure of consummating the Transaction,
the Company determined that independence will not denied due to the inclusion of thecontingent fee to be paid on the conditions of conclusion of the Transaction, and theCompany decided to appoint KPMG as its financial advisor and its third -party valuation
institution in accordance with the fee system described above. The Special Committee
confirmed at its first Special Committee meeting that since the financial advisor and thethird-party valuation institution appointed by the Company does not have issues inindependence and expertise, the Special Committee approved them as the Company’s
financial advisor and third-party valuation institution, and that the Special Committee may
receive expert advice as necessary from them.
②

Procurement by the Company of Advice from an Independent Law Firm

In order to secure the fairness of the Transaction, including the Tender Offer, such as thefairness of the Tender Offer Price, the Company has appointed a City-Yuwa Partners as alegal advisor independent of the Tender Offer-Related Parties and has received thenecessary legal advice from such law firm on the decision -making method, process, andother points of attention of the board of directors of the Company, including various
procedures concerning the Transaction. City-Yuwa Partners does not fall under the
category of a related party of the Tender Offer-Related Parties, and does not have amaterial interest in the Tender Offer. In addition, the fees for the City -Yuwa Partners will
be calculated by multiplying the number of times worked by the fee per ho ur regardlessof whether the Transaction is closed, and the contingent fee on the closing of th e
Transaction is not included. The Special Committee confirmed at its first Special
Committee meeting that the legal advisor appointed by the Company has no issue of
independence and expertise and that the Special Committee may receive expert advice
from it as necessary.
③

The Company’s Establishment of an Independent Special Committee and Procurementof a Report from such Special Committee(i) Background to the Establishment of the Special Committee
Since the Transaction, including the Tender Offer, falls under the so -called managementbuyout (MBO) and there are structural conflicts of interest, in order to protect the generalshareholders of the Company, as a part of measures to secure fairness of the Transaction
from the perspective of securing the fairness of the Tender Offer Price in the Transaction,
eliminating arbitrariness in the process of decision making for the implementation of theTransaction and conflicts of interest, the board of directors decided on March 11, 2024, toestablish the Special Committee consisting of four (4) members: Toyoji Maeda (outside
director of the Company), Minako Kogoma (outside director of the Company), Hidetsugu
Sasaki (outside director and audit and supervisory committee member of the Company),
and Soshi Takahashi (outside director and audit and supervisory committee member), who
are independent of the Tender Offer-Related Parties and have high level of insights. The
Company appointed these four (4) people as members of the Special Committee from the
beginning, and there is no fact that it has changed the members of the Special Committee.
In addition, the Company, in accordance with the resolution of the board of directors,sought advice from the Special Committee regarding: (a) the validity and reasonability ofthe purpose of the Transaction (including whether the Transaction contributes toenhancing the enterprise value of the Company); (b) the fairness and validity of the termsof the Transaction; (c) the fairness of the procedures relating to the Transaction; (d) the
merits of the board of directors to express their opinion of agreement to the Tender Offer
and to recommend the Company shareholders to tender their shares in the Tender Offer;and (e) whether the decision on the Transaction by the board of directors of the Company
is disadvantageous to the minority shareholders (hereinafter collectively referred to as the“Consulted Matters”) and requested the Special Committee to submit a proposal on thesepoints. In addition, the board of directors of the Company positions the Special Committee
as a council independent of the board of directors of the Company, and the board of
directors of the Company resolved that, in making decisions on the Transaction, the boardof directors of the Company shall respect the opinions of the Special Committee to thefullest extent possible, and if the Special Committee determines that the Company’s board
should not agree to the Tender Offer or should not recommend the Targe Company’s
shareholders to tender their shares, the board of directors of the Company shall not express
their opinion of agreement to the Tender Offer in accordance therewith in the former case,and shall not recommend the Company's shareholders to tender their shares in the lattercase. In addition, it is resolved that the Special Committee is entitled to: (i) negotiate withthe proposer on the terms of transaction, etc. (including indirect negotiatio ns through theCompany and its advisors) as necessary; (ii) appoint an advisor to the Special Committee
at the expense of the Company (including the authority of approving City-Yuwa Partners
as the Company’s legal advisor and KPMG as the Company’s financial advisor and thethird-party valuation institution, who have been ratified by the board of directors of theCompany); and (iii) receive the information required for the review and determination
regarding the Transaction from the Company’s officers and employees.
Fixed remuneration will be paid to each member of the Special Committee, and any
remuneration contingent on the announcement or conclusion of the Transaction is notincluded.
(ii) Background of the Special Committee's Deliberations
The Special Committee was held on a total of 8 occasions between March 14, 2024, andMay 10, 2024, deliberations and reviews were made on the Consulted Matters.

Specifically, on March 14, 2024, the Special Committee confirmed that KPMG as thefinancial advisor and the third-party valuation institution and City-Yuwa Partners as thelegal advisor had no issues of independence from the Tender Offer -Related Parties andexpertise, and approved the appointment of each of them as an advisor of the Company.
In addition, the Special Committee confirmed that it would obtain expert advice from theadvisors of the Company as necessary, and it would not independently appoint its advisors.
Furthermore, the Special Committee has confirmed that there are no issues with the systemfor considering the Transaction, which was established within the Company, from theviewpoint of independence, after receiving explanations from the Company.
On that basis, the Special Committee received an explanation from City -Yuwa Partners on
the background of the need for the establishment of the Special Committee, the role of theSpecial Committee, etc., and the Special Committee is considering measures to be taken
to ensure the fairness of the procedures for the Transactions, based on the legal advice on
the decision-making process, methods, and other matters to be considered when making
decisions on the Transactions.
In addition, the Special Committee checked the business environment and management
issues of the Company and the value and effectiveness of the Transaction and measures
proposed by Mr. Mori and Blackstone in response to these issues, and conducted question and-answer sessions. In addition, the Special Committee collected and consideredinformation and materials submitted by the Tender Offeror and the Company, and alsointerviewed Mr. Mori and Blackstone with KPMG and City-Yuwa Partners after
submitting written inquiries to Mr. Mori and Blackstone and receiving answers thereto.
Through these discussions, the Special Committee received an explan ation of theCompany’s business environment, management issues, and awareness of these issues by
Mr. Mori and Blackstone thereof, the details, background and significan ce of theTransaction, the details of the measures being considered to be taken after th e Transaction,
the impact of the Transaction and those measures on the enterprise value of the Company,
the background and reasonableness of the decision -making process of the Tender Offeror
and the Company, and other matters related to the Transaction. At the same time, theSpecial Committee asked questions and received answers regarding the purpose andbackground of the Transaction, the reason why the Company considers it necessary to
conduct the Transaction, the management system after the consummation o f theTransaction, and the measures to be implemented, etc.
In addition, the Special Committee approved the business plan of the Company after
confirming that the business plan was prepared by persons who are independent of theTender Offeror-Related Parties, receiving explanations from the Company on important
assumptions, and confirming the reasonableness of the contents of the final business plan,
important assumptions, and the process of preparation. Then, the Special Committee
received explanations from KPMG regarding the calculation of the Share Valuation Reporton the Company Shares and conducted a hearing survey on the assumptions for the
calculation of the value.
As stated in “(iii) Background to the decision of the Company to support the Tender Offerand reasons therefor” in “(2) Basis and reason for opinion” above, after receiving a
proposal from the Tender Offeror to set the Tender Offer Price at 2,400 yen per share on
April 17, 2024, the Special Committee has been actively involved in the negotiation

process with Blackstone with respect to the discussions and negoti ation between
Blackstone and the Company regarding the terms and conditions of the Transaction by,
for example, receiving reports from the Company on the progress and details of thenegotiation and deliberating on the Tender Offer Price and communicating t he negotiation
policy to the Company in light of the valuation results of the share value of the Company
Shares, advice based on the negotiation policy with the Tender Offeror, and the legal
advice on measures to ensure the fairness of the procedures in th e Transaction from theCity-Yuwa Partners.
Furthermore, the Special Committee confirmed that substantial information disclosure is
expected to be made by receiving explanations for multiple times from the City -Yuwa
Partners on the drafts of the press release and the statement of opinions pertaining to theTender Offer, which are to be announced or submitted by the Company, and the draft of
the Tender Offer Registration Statement pertaining to the Tender Offer, which is to beannounced or submitted by the Company.
(iii)

Determination by the Special Committee

As a result of careful discussions and deliberations on the Consulted Matters under thecircumstances described above, the Special Committee unanimously agreed to submit theReport with the following details to the directors of the Company on May 10, 2024.
(a)Content of the Report①

The Special Committee believes that the Transaction will contribute to theenhancement of the Company's enterprise value and that the purpose of theTransaction is justifiable and reasonable.

②

The Special Committee believes that the fairness and appropriateness of theterms and conditions of the Transaction, including the Tender Offer Price, aresecured.

③

In the Transaction, including the Tender Offer, the Special Committee
believes that the interests of the shareholders of the Company have been taken
into consideration through fair procedures.

④

In light of ① through ③ above, the Special Committee believes it isreasonable for the Company's board of directors to express its opinion in favorof the Tender Offer and to recommend that the shareholders of the Company
tender their shares in the Tender Offer.

⑤

In light of ① through ③ above, the Special Committee believes that it is notdisadvantageous to the minority shareholders of the Company for the board of
directors of the Company to pass a resolution to express its opinion in favorof the Tender Offer and recommend the shareholders of the Company to tendertheir shares in the Tender Offer. In addition, the Special Committee believes
that the decision to carry out a share consolidation for the purpose of making
the Company Shares go private, which is scheduled after the Tender Offer, will
not be disadvantageous to the minority shareholders of the Company.

(b)Reason for the Report

Based on the following points, the Special Committee came to the conclusion that
the Transaction will contribute to the enhancement of the Company's enterprisevalue and that the purpose of the Transaction, including the Tender Offer, isreasonable.
① As stated in “(ii) Background, purpose and decision-making process of theTender Offer” and “(iii) Background to the decision of the Company tosupport the Tender Offer and reasons therefor” in “(2) Basis and reason for
opinion” above, the Company Group has business challenges such as
improving profitability, raising funds, developing internal management
systems, ensuring operational quality, and securing human res ources. The
Company Group needs a competitive global structure through various
measures including overseas business expansion and discontinuous growththrough M&A in order to realize medium- to long-term improvement ofcorporate value. The purpose of the Transaction, is to develop the Company
Group to a bigger health care service platform by promoting management
reforms utilizing Blackstone's knowledge and network, expanding the SMO
business by optimizing resource allocation and upgradin g sales strategies, andexpanding opportunities for CRO contracts utilizing Blackstone's network,
which the Company Group cannot achieve on its own. The Special Committee
believes that there is no unreasonable point in the business environment andmanagement issues surrounding the Company as recognized by the Company,
and that the purpose of the Transaction is reasonable.
②

As stated in “(ii) Background, purpose and decision-making process of theTender Offer” and “(iii) Background to the decision of the C ompany tosupport the Tender Offer and reasons therefor ” in “(2) Basis and reason for
opinion” above, the Company, Black Stone and Mr. Mori have held several
discussions between them concerning measures to enhance enterprise value,such as support for the continued growth of the Company Group in connection
with the Transaction, search for discontinuous growth opportunities throughM&A and efforts to strengthen organizational capabilities. The Special
Committee received explanations from the director and vice president vicepresident of the Company Masaaki Matsushima, the director and vice presidentof the Company Kiyoshi Watanabe and the director of the Company Mr.
Shuichi Kojima regarding the improvement in enterprise value that will be
brought to the Company as a result of the Transaction, and the Special
Committee asked questions and received answers regarding the specific details,
effects, feasibility, etc. of the Transaction to the above persons and thecontents of such explanations were reasonable. Therefore, the Special
Committee believes that the measures for enhancing the enterprise value of
the Company that are expected by Mr. Mori and Blackstone based on thediscussions between are reasonable in content and the Special Committee
believes that the Transaction will enhance the enterprise value of the Company
to a certain extent.

In addition, based on the following points, the Special Committee came to theconclusion that the fairness and appropriateness of the terms of the Transaction,
including the Tender Offer Price, are secured.
①

The average market price method and the DCF method, which are thecalculation methods used in the Share Valuation Report, are considered to begeneral and reasonable methods in light of current practices, no arbitrariness
was found in the selection of these methods, and in the DCF method, thecalculation details are also considered to be reasonable in light of current
practices. The Company's business plan, which was used as the basis for the
calculation under the DCF method, was explained by the Company regarding
its contents and the process of its preparation, and no particular unreas onable
points are found with regard to the purpose, procedure, and contents of its
preparation. The Tender Offer Price is considered to be at a reasonablepremium to the market price, and the Tender Offer Price is reasonable because
the Tender Offer Price is above the upper limit of the result of the calculation
by KPMG using the average market price method and within the range of theresult of the calculation using the DCF method.

②

Negotiations with Mr. Mori and Blackstone were conducted under thenegotiation policy determined by the Special Committee and in accordancewith its instructions, and such negotiations resulted in a price increase of
16.7% (400 yen) (rounded to two decimal places) from the initial proposal.

③

There is no unreasonable point found in the method of the Transaction.

Based on the following points, the Special Committee came to the conclusion thatsufficient consideration has been given to the interests of minority shareholders of
the Company through fair procedures in the Transaction.
①

The board of directors of the Company has established the Special Committee,
which is independent of the Tender Offeror, the Tender Offeror ’s Parent
Company, Blackstone, and Mr. Mori.

②

The Company has received advice from City-Yuwa Partners, a legal advisor,
and KPMG, a financial advisor and third-party valuation institution,
independent of the Tender Offeror, the Tender Offeror’s Parent Company,
Blackstone, and Mr. Mori,.

③

The Special Committee has received professional advice from the legal advisorand financial advisor and third-party valuation institution appointed by theCompany as they are independent and professional.

④

The Company has obtained the Share Valuation Report from KPMG.

⑤

As Mr. Mori has structural conflict of interests with the Target regarding theTransaction, he did not participate in any deliberation or resolution of theboard of directors meeting regarding the Transaction as a special interested

party, nor did he participate in any discussion or negotiation of the Transaction
in his capacity at the Company.
⑥

A system has been established to prevent our representative director andpresident Mr. Mori, who may have a conflict of interest, from being involvedin the process of discussion and negotiation regarding the terms and conditionsof the Transaction and the process of preparing the Company's business plan,
which is the basis for the calculation of the value of the Company Shares.

⑦ The Tender Offer Period is set longer (thirty (30) business days) than theminimum period required by law (twenty (20) business days), and theCompany has not made any agreement with the Tender Offeror to restr ict theCompany from contacting parties other than the Tender Offeror (opposing
takeover offerors) after the announcement of the Transaction, and it can besaid that so-called indirect market checks are being conducted.
⑧ The legality of the Squeeze-Out Procedures has been ensured, so as not to raise
the issue of coercion in relation to t the Transaction.
④

Unanimous Approval by All of the Non-Interested Directors (including directors who
are Audit & Supervisory Committee members) of the Company

The Company carefully considered the terms and conditions of the Transaction, taking
into account the Share Valuation Report obtained from KPMG and the legal advice
obtained from the City-Yuwa Partners, while fully respecting the Report submitted by theSpecial Committee (see “③ The Company’s Establishment of an Independent Special
Committee and Procurement of a Report from such Special Committee ” above).
As a result, as described in “(iii) Background to the decision of the Company to support
the Tender Offer and reasons therefor” in “(2) Basis and reason for opinion” above, theCompany resolved by unanimous approval of all the directors ( thirteen (13) directors,
except for Mr. Mori, among fourteen (14) directors) on the board of directors’ meeting on
May 13, 2024 that the Transaction, including the Tender Offer, would contribute toincrease in the enterprise value of the Company, that the terms and conditions of theTransaction, including the Tender Offer Price, are appropriate in light of the valuation
results in the Share Valuation Report, the level of premium of the Tender Offer Price, theprocess of negotiation with the Tender Offeror and the process of determining the Tender
Offer Price, and that the Company would express its opinion in favor of the Tender Offerand recommend the shareholders of the Company to tender their shares in the Tender Offer.
Since Mr. Mori, the President and Representative Director of the Company, has a special
interest in the Transaction as he is the largest shareholder of the Company and theReinvestment is planned and there is a possibility of a conflict of interest with theCompany, Mr. Mori has not participated in any deliberations or resolutions in the
resolutions regarding the consideration of the Transaction, and he has n ot participated inany discussions or negotiations with Blackstone as a role at the Company.
As stated above, the Tender Offeror intends to promptly implement the Tender Offer uponsatisfaction (or waiver by the Tender Offeror) of the Conditions Precedent. As of today,the Tender Offeror aims to commence the Tender Offer around mid -June 2024. However,since it is difficult to accurately predict the time required for the review procedures by theAustralian authorities responsible for the Clearance process, the Tender Offeror will
announce the detailed schedule of the Tender Offer once it has been determined. In theevent of any change in the expected timing of the commencement of the Tender Offer, theCompany will promptly announce such change.
For this reason, the Company's board of directors resolved in the above board of directors’
meeting that, at the time of the commencement of the Tender Offer, it will request theSpecial Committee established at the Company to examine whether or not there is any
change in the Report which the Special Committee submitted to the Company’s board of
directors on May 10, 2024, and to inform the board of directors of the Company to theeffect that if there is no change and its revised opinion if there are any changes, and that,based on such opinion, the Company's board of directors will express its opinion on theTender Offer at the time the commencement of the Tender Offer.
⑤

Establishment by the Company of an Independent Examination Framework

In order to eliminate structural conflicts of interest, the Company has established a system
within the Company to examine, negotiate, and make decisions regarding the Transaction
independently of the Tender Offer-Related Parties. Specifically, Mr. Mori has notparticipated in any deliberations or resolutions at the board of directors ’ meeting regarding
the Transaction because he has a structural conflict of interest with the Company inconnection with the Transaction and has not participated in any discuss ions or negotiations
with the Tender Offer-Related Parties as having a role at the Company. The system forconsideration, negotiation and determination regarding the Transaction consists only of
officers and employees who are independent of the Tender Offer-Related Parties, and thatsuch arrangement has continued up to date.
The business plan which is presented to the Tender Offeror and which is the basis of
KPMG’s valuation of the value of the Company Shares is prepared by a person who is
independent of the Tender Offeror, and the details, important assumptions, and thereasonableness of the process of preparation of the final business plan has been confirmedby and approved by the Special Committee.
Furthermore, the system of examining the Transaction th at is established within the
Company, specifically the scopes and roles (including roles that require a high degree of
independence, such as creation of a business plan that serves as the basis for the valuationof the Company Shares) of the officers and employees who are involved in the examination,negotiation, and determination of the Transaction, are based on the advice of the City Yuwa Partners, and it has been approved by the Special Committee that there are no issuesof independence.
⑥

Securing Objective Conditions to Ensure the Fairness of the Tender Offer

The Tender Offeror sets the period of purchase, etc. in the Tender Offer (hereinafterreferred to as the “Tender Offer Period”) as thirty (30) business days, which is a generally
accepted tender offer period in the so-called management buyout (MBO). Through this,the Company intends to secure opportunities for the Company’s shareholders to make

appropriate determination on tendering their shares in the Tender Offer, and to secure
opportunities for persons other than the Tender Offeror (hereinafter referred to as the“Competing Offerors”) to make competing tender offers and thereby secure theappropriateness of the Tender Offer Price.
Neither the Tender Offeror nor the Company has entered into an agreement that restricts
the Company's contact with the Competing Offerors, such as an agreement containing atransaction protection clause that prohibits the Company from contacting a Competing
Offeror. In this way, securing the fairness of the Tender Offer has been taken into account,by securing the opportunity for counter tender offers in conjunction with the establishmentof the Tender Offer Period.
4. Matters concerning material agreement s between the Tender Offeror and theshareholders of the Company regarding tending shares in the Tender Offer①

The Tender Offer Agreement

The Tender Offeror, together with the Tender Offeror's Parent Company and the BX
Fund entered into the Tender Offer Agreement with Mr. Mori and Mr. Mori’s AssetManagement Company as of May 13, 2024, which contains the following (Note 1).
There is no agreement regarding the Tender Offer between the Tender Offeror , Mr.
Mori and Mr. Mori’s Asset Management Company except for the Tender Offer
Agreement and ② the Shareholders Agreement below, and there is no consideration
provided by the Tender Offeror to Mr. Mori and Mr. Mori’s Asset Management
Company in connection with the Tender Offer other than the money o btained bytendering their shares in the Tender Offer.
(i)Mr. Mori shall tender his shares in the Tender Offer in relation to the Tendered
Agreed Shares (3,124,250 shares, ownership ratio: 25.80%) among the Target
Shares held by him;(ii) Mr. Mori shall not tender his shares the Tender Offer for any of the NonTendered Agreed Shares (1,655,200 shares, ownership ratio: 13.67%) among
the Company Shares held by him;(iii) Mr. Mori shall make efforts to have his relatives, Ms. Toshie Mori (825,000
shares, ownership: 6.81%), and Mr. Ryusuke Mori (75,000 shares, ownership:
0.62%), tender their shares in the Tender Offer;(iv) After having the Target Shares become private b y implementing theTransaction which consists of the Tender Offer, the Reinvestment I, theSqueeze Out Procedures, the Share Transfer, and the Reinvestment II, theCompany shall become a wholly-owned subsidiary of the Tender Offeror’s
Parent Company and the Tender Offeror , and the BX Fund and Mr. Mori’s AssetManagement Company shall become the shareholders of the Tender Offeror’s
Parent Company at a voting rights ratio of 55.0 to 45.0 respectively ; and(v) Mr. Mori shall, by the day after the second business day of the commencementof settlement of the Tender Offer, fully repay the secured debt of the security

interest established on the Non -Tendered Agreed Shares and extinguish suchsecurity interest.
(Note 1) In the Tender Offer Agreement, the Tender Offeror, the Company andthe BX Fund have made representations and warrant ies on (i) lawful
incorporation, valid existence and legal capacity, (ii) full performanceof the execution and performance of the Tender Offer Agreement, (iii)
enforceability of the Tender Offer Agreement, (iv) no violations of laws
and regulations in the execution and performance of the Tender Offer
Agreement, (v) procurement and performance of the licenses and permits
for the execution and performance of the Shareholders Agreement, (vi)no causes for bankruptcy, and (vii) no relationships with antisocial
forces. Mr. Mori and Mr. Mori’s Asset Management Company ha ve maderepresentations and warranties on (i) having the right, authority andcapacity for the lawful and valid execution and performance of theTender Offer Agreement, (ii) enforceability of the Tender Offer
Agreement, (iii) no violations of laws and regulations in the execution
and performance of the Tender Offer Agreement, (iv) procurement andperformance of the licenses and permits that are necessary for the
execution and performance of the Tender Offer Agre ement, (v) Mr.
Mori’s and Mr. Mori’s relatives’ rights in the issued shares of Mr. Mori’s
Asset Management Company, (vi) no causes for bankruptcy, (vii)compliance with anti-corruption related laws, and (viii) no relationships
with antisocial forces. In addition, Mr. Mori and Mr. Mori’s AssetManagement Company have made representations and warranties on the
Company Group regarding (i) lawful incorporation, valid existence andlegal capacity, (ii) absence of violation of laws and regulations in theexecution and performance of the Tender Offer Agreement, (iii)
procurement and performance of the licenses and permits for the
execution and performance of the Tender Offer Agreement, (iv) nocauses for bankruptcy, (v) no relationships with antisocial forces, (vi)matters related to the rights to the Company Shares, (vii) subsidiaries
and affiliate companies that belong to the Company ’s Group, (viii)
absence of violations of laws and regulations and absence of litigations,(ix) no material non-public information and (x) compliance with anticorruption related laws.
②

The Shareholders Agreement

With respect to the management of the Tender Offeror ’s Parent Company, the Tender
Offeror and the Company, and treatment of the Tender Offeror ’s Parent Company’s
shares, the BX Fund entered into the Shareholders Agreement with Mr. Mori and Mr.
Mori’s Asset Management Company as of May 13, 2024, that contains the following
Note 2:(i)the number of directors of the Tender Offeror ’s Parent Company and the Tender
Offeror (excluding the Tender Offeror after the effective date of the Merger)
shall be 1, and the BX Fund shall appoint such directors;

(ii) the number of directors of the Company after the completion of the Transaction
shall be 5 (the number of president s and representative directors shall be 2)
and Mr. Mori and Mr. Mori’s Asset Management Company shall appoint 2
directors (including 1 president and representative director) and the BX Fundshall appoint 3 directors (including 1 president and representativ e director);(iii) the number of auditors of the Company after the completion of the Transaction
shall be 3 or less, and all of the auditors shall be appointed by the BX Fund;(iv) Mr. Mori’s Asset Management Company may not directly or indirectly transf er,
succeed, create a security interest in, or otherwise dispose of all or part of theTender Offer’s Parent Company Shares held by him without the prior writtenconsent of the BX Fund;(v) if the BX Fund intends to transfer to a third party (the “Share Transferee”) allor part of the Tender Offeror’s Parent Company Shares (but only in the case ofa transfer of shares that would result in the transfer of more than 10% of thetotal number of voting rights) , the BX Fund may request Mr. Mori’s AssetManagement Company to sell all or part of the Tender Offeror’s Parent
Company Shares held by Mr. Mori’s Asset Management Company to the Share
Transferee or to another third party designated by the BX Fund on the sameterms as those on which the BX Fund sells the Tender Offeror’s Parent
Company Shares; and(vi) if the BX Fund intends to transfer to the Share Transferee all or part of theTender Offeror’s Parent Company Shares, Mr. Mori’s Asset Management
Company may request the BX Fund to sell all or part of the Tender Offeror’s
Parent Company Shares held by Mr. Mori ’s Asset Management Company to the
Share Transferee on the same terms on which the BX Funds sells its Tender
Offeror’s Parent Company Shares to the Share Transferee.
(Note 2) In the Shareholders Agreement, the BX Fund has made representations
and warrants on (i) lawful incorporation, valid existence and legal
capacity, (ii) full performance of the execution and performance of the
Shareholders Agreement, (iii) enforceability of the Shareholders
Agreement, (iv) no violations of laws and regulations in the execution
and performance of the Shareholders Agreement, (v) procurement andperformance of the licenses and permits that are necessary for the
execution and performance of the Shareholders Agreement, (v i) nocauses for bankruptcy, and (vii) no relationships with antisocial forces.
Mr. Mori and Mr. Mori’s Asset Management Company ha ve maderepresentations and warranties on (i) lawful incorporation, valid
existence and legal capacity of Mr. Mori’s Asset Ma nagement Company,(ii) full performance of the execution and performance of the
Shareholders Agreement (as to Mr. Mori, right, authority and capacity
for the lawful and valid execution and performance of the Shareholders
Agreement), (iii) enforceability of the Shareholders Agreement, (iv) no
violations of laws and regulations in the execution and performance of
the Shareholders Agreement, (v) procurement and performance of thelicenses and permits that are necessary for the execution andperformance of the Shareholders Agreement, (vi) Mr. Mori’s and Mr.
Mori’s relatives’ rights in the issued shares of Mr. Mori’s AssetManagement Company, (vii) no causes for bankruptcy, (viii) compliancewith anti-corruption related laws, (ix) no relationships with antisocial
forces, and (x) no events of default for Mr. Mori, Mr. Mori’s AssetManagement Company, the Company, directors nominated by Mr. Mori,
directors of Mr. Mori’s Management Company or the Company,
shareholders or equity holders of Mr. Mori’s Asset Management
Company.
5. Description of provision of profit by tender offeror or its spec Hial interest parties
Not applicable
6. Policy to address basic policy concerning control of company
Not applicable
7. Inquiries to tender offeror
Not applicable
8. Request for extending tender offer period
Not applicable
9. Future outlook
Please refer to “② Background, Purpose and Decision -Making Process of the Tender
Offer, and Management Policy After the Tender Offer” and “③ Background to thedecision of the Company to support the Tender Offer and reasons therefor ” of “(2)Basis and reason for opinion,” “(4) Likelihood of Delisting and the Grounds therefor ”
and “(5) Policy on Organizational Restructuring after the Tender Offer (Mattersconcerning so-called Two-Step Acquisition)” in “3. Details of, and basis and reason
for the opinion regarding the Tender Offer.”
10. Others(1) Announcement of “Summary of Consolidated Financial Results for the Fiscal Year
Ended March 31, 2024 (Based on Japanese GAAP) ”
On May 13, 2024, the Company announced the “Summary of Consolidated Financial
Results for the Fiscal Year Ended March 31, 2024 (Based on Japanese GAAP). ” For
more information, please refer to such announcement.

(2) Announcement of “Notice of Differences Between Business F orecasts for the
Fiscal Year Ending March 31, 2024 and Actual Results ”
On May 13, 2024, the Company announced the “Notice of Differences Between
Business Forecasts for the Fiscal Year Ending March 31, 2024 and Actual Results. ”
For more information, please refer to such announcement.
(3) Announcement of “Notice of the Revision of Year-end Dividend Forecast for
Surplus for the Fiscal Year Ending March 31, 2024 (No Dividend) ”
The Company resolved at its board of directors ’ meeting on May 13, 2024 to revise
the dividend forecast for the fiscal year ending March 31, 2024 and not to distributeyear-end dividends for the fiscal year ending March 31, 2024. For more information,please refer to such announcement.
END