October 25, 2022
Denka Company Limited

Notice Regarding Transfer of Cement Sales Business to a Wholly Owned Subsidiarythrough Company Split (Simplified Absorption-Type Company Split), Transfer of Shares inthe Wholly Owned Subsidiary (Changes in Subsidiaries) and Withdrawal from CementBusiness
Denka Company Limited (hereinafter "Denka") announces that at a meeting of the Board of Directors held
today, it has decided to transfer its cement sales business to a wholly owned subsidiary that Denka will newly
establish (hereinafter the "New Company") by means of an absorption-type company split (hereinafter the"Absorption-type Company Split) and then transfer shares in the New Company to Taiheiyo Cement
Corporation (hereinafter "Taiheiyo Cement") (hereinafter the "Share Transfer", and the Absorption-typeCompany Split and the Share Transfer are collectively called the "Transaction"), and concluded a sharetransfer agreement with Taiheiyo Cement today. In addition, at the same meeting, the Company has decided towithdraw completely from the in-house limestone mining and cement manufacturing businesses by around thefirst half of 2025.

The Share Transfer is subject to the completion of obtaining necessary permits and approvals from therelevant authorities in accordance with the Antimonopoly Act and other laws and regulations.

The Absorption-type Company Split, which is part of the Transaction, is a simplified absorption-type company
split in which the wholly owned subsidiary that Denka will newly establish becomes the successor company.
Therefore, some disclosure items and the details thereof have been omitted from this disclosure.
1.

PurposeDenka entered into the cement business in 1954 and has since been manufacturing and selling cement at its
Omi Plant in Itoigawa City, Niigata by making effective use of stones of a purity and size that cannot be used
for calcium carbide, from among the abundant limestone resources of the adjacent Mt. Kurohime. In addition,by accepting by-products generated during the manufacturing of other finished products in the plant, such as
calcium carbide and chloroprene rubber, and effectively utilizing them as raw fuel for cement, Denka hasestablished a unique calcium carbide chain(*). This has helped the Company improve the competitiveness ofits other products and pursue zero emissions in its plants, while also contributing to resource recycling in thelocal society by accepting waste from outside the Company.
In recent years, however, Denka's cement business has been facing severe situations where demand for cement
has remained sluggish in Japan including the Hokushinetsu region, its main sales destination, and wheresubstantial investments will be inevitable to replace aging facilities and become carbon neutrality. For thosereasons, Denka has been considering structural reforms by positioning the cement business as commodity
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business that needs business restructuring in its management plan Denka Value-Up. Recently, however, wehave come to the conclusion that it will be difficult to maintain and grow the cement business in the futurewith our operation alone.
Myojo Cement Co., Ltd. (hereinafter "Myojo Cement"), a wholly owned subsidiary of Taiheiyo Cement, has acement plant in Itoigawa City, the same place where Denka operates the Omi Plant. Therefore, Taiheiyo
Cement will collaborate with Myojo Cement, and the two companies will undertake the task of supplying
limestone and making effective use of by-products in the Denka calcium carbide chain after Denka's
withdrawal from the in-house limestone mining and cement businesses.
In addition, Denka has been working on a joint project with Taiheiyo Cement and Myojo Cement to develop
limestone mines in Mt. Kurohime, building mutual trust in the course of discussions. As a consequence, it has
agreed to the Transaction.
As part of the portfolio reforms in the Denka Value-Up management plan, Denka has been actively investing
its management resources in priority fields such as Environment and Energy, Healthcare, and High Valueadded Infrastructure. Further, looking ahead to the next management plan for FY2023-FY2030, Denka will
pursue a growth strategy through M&A, investment in facility capacity expansion, and the early creation ofnew businesses for the purpose of solving social issues, with the aim of achieving sustainable corporate
growth.

2. Overview of the Company Split（1） Outline of the Company Spliti.

Schedule of the Company Split
Board resolution for approval of absorption-type

Fourth quarter of FY2022 (plan)company split agreement
Conclusion of absorption-type company split

Same as above

agreement
Effective date of the absorption-type splitMarch 31, 2023 (plan)(Note) The Absorption-type Company Split to be conducted by Denka (the splitting company) satisfies
the requirements for a simplified absorption-type company split defined in the paragraph 2 of Article 784
in the Companies Act. It will therefore be carried out without obtaining the approval of a general meetingof Denka's shareholders.
ii.

Method of the Company Split
The Absorption-type Company Split will be implemented with Denka and the New Company operating
as a splitting company and a successor company, respectively.

iii.

Allocation related to the Company SplitThere will be no allotment of shares or payment of cash or other financial considerations with respect tothe Absorption-type Company Split.
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iv.

Handling of share acquisition rights and bonds with share acquisition rights associated with theabsorption-type company split
Not applicable.

v.

Change in capital as a result of the Company Split
There will be no change in the Company’s capital as a result of the absorption-type company split.

vi.

Rights and obligations to be assumed by the successor company
The New Company will take over the assets, liabilities, contractual status / rights / obligations, etc.
associated with Denka's cement sales business that will be specified separately in the absorption-typecompany split agreement on the effective dated of the Absorption-type Company Split takes effect.

vii.

Prospect of fulfillment of debt obligations
Denka considers that there will be no problem in the possibility of fulfillment with respect to obligations
that the New Company should bear, either on and after the effective date of the Absorption-type
Company Split.

（2） Overview of the companies participating in the Company Split
Splitting company in an absorption-typecompany split(2) Address

representative25, 2022)

Denka Company Limited

TBD

1-1, Nihonbashi-Muromachi 2-chome, Chuoku, Tokyo 103-8338, Japan(3) Name and title of Toshio

Imai,

Representative

absorption-type company split(Not established yet as of October(as of March 31, 2022)(1) Name

Successor company in anDirector,

President

TBD
TBD

Manufacture and sales of organic materials,(4) Businessinorganic materials, electronic materials and Sales of cement and cement-related
functional and processed products, as well as products
sales of cement and cement-related products(5) Share capital

36,998 million yen

TBD(6) Establishment

May 1, 1915

TBD

88,555,840 shares

TBD(8) Fiscal year-end

March 31

March 31 (plan)(9) Large

The Master Trust Bank of Japan,

shareholders andLtd. (Trust account)

their shareholding

Custody Bank of Japan, Ltd.

ratios(Trust account)(7) Number of issued
shares18.15% Denka Company
Limited

100.00%

9.03%
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Mizuho Trust & Banking Co.,
Ltd., Retirement Benefit Trust(Mizuho Bank Account)Re-trust
Trustee: Custody Bank of Japan,Ltd.

3.73%

National Mutual Insurance
Federation of Agricultural

3.36%

Cooperatives, Taiju Life Insurance

2.76%

Company Limited(10) Financial position and consolidated operating results of the splitting company for the most recent threeyears
Denka Company Limited (Consolidated)
Fiscal year

Year ended

Year ended

Year ended

March 31, 2020

March 31, 2021

March 31, 2022

Consolidated net assets (million yen)

254,014270,036

292,094

Consolidated total assets (million yen)

501,448

526,035

557,646

Consolidated net assets per share (yen)2,906.95

3,101.92

3,345.34

Consolidated sales (million yen)

380,803354,391

384,849

Consolidated operating income (million yen)

31,58734,72940,123

Consolidated ordinary income (million yen)

30,03432,14336,47422,70322,78526,012262.62264.24301.67

Net income attributable to owners of parent(million yen)
Consolidated net income per share (yen)(Note) The New Company's fiscal year has not been finalized because the company was not established as ofOctober 25, 2022.
（3） Outline of the business division to be spliti.

Business contents of the segment to be split
Sales of cement and cement-related products.

ii.

Operating results of the division to be split (fiscal year ended March 31, 2022)
Million yen
Cement business (a)Consolidated results

Ratio (a/b)

(b)
Sales
iii.

11,347

384,849

2.9％

Items and book value of assets and liabilities to be split (as of March 31, 2022)
AssetsItem

Liabilities
AmountItem

Current assets

519 million yen Current liabilities

Non-current assets

454 million yen Non-current liabilities

Total assets

973 million yen Total liabilities

Amount
519 million yen－519 million yen

4 / 7(Note) The above amounts have been calculated based on the balance sheet as of March 31, 2022. Actual
amounts of assets and obligations to be split will reflect an increase or decrease from the above
amounts that may arise by the effective date.
（4） Status after the Company Split
There will be no changes in the trade name, location of headquarters, representative, capital or accounting
periods of Denka. In addition, Denka will transfer all shares in the New Company to Taiheiyo Cement on
the execution date of the Share Transfer. Details are provided in 3. Overview of the Share Transfer.
3. Overview of the Share Transfer（1） Reason for transfer
Details are provided in 1. Purpose.

（2） Method of transfer
Denka will transfer its cement sales business to the New Company through an absorption-type company
split and then transfer all shares in the New Company that Denka holds to Taiheiyo Cement.

（3） Outline of subsidiary being transferred
Details are provided in the successor company section in the aforementioned "(2) Overview of thecompanies participating in the Company split".
（4） Overview of a party to which shares will transferred (as of March 31, 2022)(1) NameTaiheiyo Cement Corporation(2) Address

1-1-1 Koishikawa, Bunkyo-ku, Tokyo(3) Name and title of Masafumi Fushihara, President and Representative Director
representative(4) Business

Cement business, natural resource business, environmental business,
construction materials/construction, and civil engineeringbusinesses, etc.
(5) Share capital

86,174 million yen(6) Establishment

May 3, 1881(7) Consolidated net 544,799 million yen
assets(8) Consolidated total 1,103,007 million yen
assets(9) Large shareholders The Master Trust Bank of Japan, Ltd. (Trust Account)

16.17%and their shareholding Custody Bank of Japan, Ltd. (Trust account)

5.37%

ratios3.80%

JP MORGAN CHASE BANK 385632

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STATE STREET BANK AND TRUST CAMPANY

3.55%

505001

2.43%

GOLDMAN SACHS INTERNATIONAL(10)Relationship

Capital relationship

Not applicable.

between Denka and the Personal relationship

Not applicable.

relevant company

Denka has been purchasing

Business relationshipmaterials from the relevantcompany.
Status as related party

Not applicable.

（5） Number of shares to be transferred, transfer price and the number of shares held before and after transfer
Number of owned shares TBD (Percentage of voting rights: 100.0％)
before the share transfer
Number of shares to be All of shares to be issued
transferred
Amount of transfer

In light of confidentiality obligations covered by the sharetransfer agreement, Denka will refrain from making
disclosures. The amount of transfer has been determined bycomprehensively taking into account evaluations by
independent calculation agency (a third party).

Number of shares held after 0 shares (percentage of voting rights 0.00％)
the transfer（6） Schedule for the transfer of shares
Date of resolution by the Board of Directors

October 25, 2022

Date of share transfer agreement

October 25, 2022

Date of share transfer

March 31, 2023 (plan)

4. Overview of withdrawal from business(1) Reason for withdrawal from the business
Details are provided in 1. Purpose.

(2) Overview of cement business
Operating results for the most recent year (FY2022/03)
Million yen
Cement business (a)Sales

11,347

Consolidated results (b)384,849

Ratio (a/b)
2.9％

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(3) Future Plan
As described in the aforementioned "2. Overview of the Company Split" and "3. Overview of the Share
Transfer," Denka will transfer its cement sales business, including assets, liabilities, contractual status / rights/ obligations, etc., to the New Company through an absorption-type company split, and will then transfer all
shares in the New Company to Taiheiyo Cement by around March 2023.
Thereafter, Denka will terminate cement production and limestone mining by around the first half of 2025,
and withdraw from the cement business completely. Limestone that Denka uses for calcium carbide
production will be procured from Taiheiyo Cement, while by-products generated in the Denka calciumcarbide chain will be accepted by Myojo Cement and used effectively as raw fuel for cement.
5. Outlook
For the impact of the Absorption-type Company Split, Share Transfer and withdrawal from the cementbusiness, please refer to the "Notice Regarding Revisions to Consolidated Results Forecasts for the First Halfand the Full Year of the Fiscal Year ending March 31, 2023 and Posting of Extraordinary losses," which wasdisclosed simultaneously today.
If matters to be disclosed arise in the future, such matters will be promptly disclosed.

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