October 22, 2010

To whom it may concern:

Company Name : TOHO HOLDINGS CO., LTD.
Representative : Norio Hamada / President andRepresentative Director(Securities Code: 8129 / Tokyo Stock Exchange)
Contact : Mamoru Ishii, Corporate Officer andGeneral Manager of Corporate Planning Office(TEL: 03-5259-9500)

Notice Regarding SHOUEI CO., LTD. Becoming a Wholly Owned Subsidiary ofTOHO HOLDINGS CO., LTD. through a Simplified Stock Swap
As published on April 8, 2010, TOHO HOLDINGS CO., LTD. has been in negotiations with SHOUEI CO.,LTD. (hereinafter “SHOUEI”) toward a business merger. TOHO HOLDINGS CO., LTD. (hereinafter “TOHOHOLDINGS”) is pleased to announce that at the meeting of its Board of Directors held today, it was resolvedthat TOHO HOLDINGS should execute the stock swap with the objective of making TOHO HOLDINGS theparent company and SHOUEI the wholly-owned subsidiary (hereinafter “this stock swap”) and TOHOHOLDINGS entered into a stock swap agreement with SHOUEI, as detailed below.
In addition, in the “Notice regarding the Commencement of Consultations toward a Business Merger
between TOHO HOLDINGS CO., LTD. and SHOUEI CO., LTD.,” dated April 8, 2010, it was announced
that SHOUEI was scheduled to become a wholly owned subsidiary of TOHO PHARMACEUTICAL CO.,LTD. on April 1, 2011. However, as a result of consultations between both parties, it was decided thatSHOUEI should be a wholly owned subsidiary of TOHO HOLDINGS for the time being after the stock swap
and the TOHO HOLDINGS’ group system would be discussed later.
1. Purpose behind establishing the wholly owned subsidiary through a stock swap
The Kyoso Mirai Group, with TOHO HOLDINGS as its core company, is a corporate group engaged in
the distribution of pharmaceutical and other medical products. It has been working toward maximizing
its group synergy through active use of managerial resources of all member companies under the groupslogan, “Total Commitment to Good Health.”
SHOUEI operates pharmaceutical wholesaling businesses in the two prefectures (Aomori and Iwate)of the Tohoku region. It formed a business alliance with TOHO HOLDINGS in October 1999 to becomea member of the Kyoso Mirai Group so that it could benefit from the Group’s cooperative purchasing,marketing tie-ups, and joint use of computers.
TOHO HOLDINGS has decided to integrate businesses with SHOUEI through a stock swap,
considering that the effective use of the Kyoso Mirai Group’s managerial resources in the SHOUEI’soperating bases will be able to further intensify the Group’s marketing capacity and to optimize itsvalue.
Through this business merger, the two companies intend to benefit from synergy effects mainly in theareas of purchasing, distribution, and marketing activities.
2. Outlines of the Stock Swap
(1) Schedule of stock swap
BOD to resolve the commencement of consultations
toward a business merger between TOHO HOLDINGS
and SHOUEI. (TOHO HOLDINGS)
BOD to approve the conclusion of the stock swap
agreement (TOHO HOLDINGS and SHOUEI)
Conclusion of the agreement regarding the stock swap
(TOHO HOLDINGS and SHOUEI)
Date of the public announcement of the record date forvoting rights at a shareholders’ meeting (SHOUEI)
Record date for voting rights at a shareholders’ meeting(SHOUEI)
Special shareholders’ meeting to approve the stock swap
(at SHOUEI)
Stock swap date (proposed effective date)

April 8, 2010 (Thursday)October 22, 2010 (Friday)
October 22, 2010 (Friday)
November 1, 2010 (Monday) (Planned)
November 16, 2010 (Tuesday) (Planned)
December 6, 2010 (Monday) (Planned)
April 1, 2010 (Friday) (Planned)(Note) This stock swap, as it concerns TOHO HOLDINGS is scheduled to adopt a simplified processthat is exempted, under Article 796, Paragraph 3 of the Corporations Law, from obtaining
approval of its shareholders’ meeting.
- 1 -(2) Method of business reorganization
A stock swap pursuant to which TOHO HOLDINGS will become a parent company and SHOUEI will
become a wholly owned subsidiary.
(3) Stock swap ratio

Stock swap ratio

TOHO HOLDIGNS CO., LTD.
(Parent company)

SHOUEI CO., LTD.
(Wholly-owned subsidiary)

1110(Note) 1) Stock allocation
TOHO HOLDINGS will allocate and distribute 110 shares to 1 share of SHOUEI. However,no allocation of shares based on this stock swap will be executed for the 4,260 commonshares of SHOUEI owned by TOHO HOLDINGS.
If a fraction that is less than one share arises as a share allocation number, we are to sellshares that are equivalent to the total of the fractions in accordance with Article 234 of theCorporation Law (If the total number contains a fraction that is less than 1, the fraction is tobe disregarded.), and distribute the proceeds to the relevant shareholders in response to thefractions.
2) Number of shares to be distributed as part of the stock swap
TOHO HOLDINGS is scheduled to issue 3,687,640 new common shares for the allocation ofcommon shares based on this stock swap.
(4) Grounds for calculating the stock swap rate1) Basis of the calculation
In order to ensure fairness in the calculation of the stock swap ratios to be applied to this stockswap, TOHO HOLDINGS appointed Nomura Securities Co., Ltd. (hereinafter “Nomura Securities”),a third-party institution, and SHOUEI selected YAMADA FAS Co., Ltd. (hereinafter “YAMADAFAS”), and each party requested these third-party calculation agents to calculate the stock exchange
ratios.
Prior to the Board of Directors’ Meeting to approve the conclusion of the stock swap agreement
concerning this stock swap, TOHO HOLDINGS received a calculation report containing the following
results of the calculation from Nomura Securities.
Nomura Securities calculated the fair value of common shares of TOHO HOLDINGS as a listedcompany using the average market value method due to the existence of market stock prices for these,
and with respect to SHOUEI’s common shares, Nomura Securities adopted the comparable peer
company analysis method and the discounted cash flow method (hereinafter “DCF method”) since it
was an unlisted company.
A summary of the results of the calculations by Nomura Securities is as follows:
Evaluation method
Range of the calculation of the stock swap ratio
Comparable peer company
1 : 43.1～110.9
analysis method
DCF method
1 : 124.4～203.8
In addition, the average market value method assumed that October 19, 2010, would be thestandard date for calculation by taking into consideration recent movements of the market
transactions for TOHO HOLDINGS’ shares in the market, and adopted the closing prices for thestandard date and average closing price of one week, one month, three months and six months prior
to the standard date.
When calculating the stock swap ratio, Nomura Securities adopted data and information provided
or publicly disclosed by TOHO HOLDINGS and SHOUEI as they were, and calculated ratios on theassumption that data and information were correct and complete, without individually verifying thecorrectness and the completeness of data and information. Additionally, Nomura Securities did notcarry out its independent evaluation, appraisal and assessment of values, including its own analysis
and revaluation, of individual non-consolidated assets and liabilities including contingent liability ofboth companies and their affiliated companies, and did not request an appraisal or assessment ofvalues to a third-party institution. Furthermore, for the calculations, Nomura Securities assumed
that both companies’ information for financial forecasts was prepared reasonably based on the best
forecasts and judgment by both companies’ management available as of the time of preparation.
Consequently, Nomura Securities’ calculation of the stock swap ratio is based on information andeconomic conditions as of October 19, 2010.

- 2 -Prior to the Board of Directors’ Meeting to approve the conclusion of the stock swap agreement
concerning this stock swap, SHOUEI received the calculation report for the stock swap ratio
containing the following results of calculation from YAMADA FAS.
YAMADA FAS computed a fair value for the common shares of TOHO HOLDINGS, a listedcompany using the average market value method, and, regarding SHOUEI, it was evaluated as anunlisted company by using the comparable peer company analysis method and the DCF method.
A summary of results of the calculations by YAMADA FAS is as follows:
Evaluation method
Range of the calculation of the stock swap ratio
Comparable peer company
1 ： 93～115
analysis methodDCF method
1 : 107～119
In addition, the average market value method assumed that October 19, 2010, would be thestandard date for calculation by taking into consideration recent movements of the market
transactions for TOHO HOLDINGS’ shares in the market, and adopted the closing prices for thestandard date and average closing price of one week, one month, three months and six months prior
to the standard date.
When calculating the stock swap ratio, YAMADA FAS adopted data and information provided or
publicly disclosed by TOHO HOLDINGS and SHOUEI as they were, and calculated ratios on theassumption that data and information were correct and complete, without individually verifying thecorrectness and the completeness of data and information. Additionally, YAMADA FAS did not carryout its independent evaluation, appraisal and assessment of values, including its own analysis andrevaluation, of individual non-consolidated assets and liabilities including contingent liabilities ofboth companies and their affiliated companies, and did not request appraisal or assessment ofvalues to a third-party institution. Furthermore, for calculations, YAMADA FAS assumed that bothcompanies’ information for financial forecasts was prepared reasonably based on the best forecasts
and judgment by both companies’ management available as of the time of preparation.
Consequently, YAMADA FAS’ calculation of the stock swap ratio is based on information andeconomic conditions as of October 19, 2010.
In addition, profit planning by SHOUEI for the future periods that was used as thepresupposition for the calculation based on the DCF method by Nomura Securities and YAMADA
FAS includes a few fiscal years in which SHOUEI expects a significant increase in earnings.
Pharmaceutical wholesale companies in Japan posted sharp decreases in earnings for the fiscal
year ended March 2009, hit by excessive competition, while SHOUEI suffered negative effects fromthis until its fiscal year ended March 2010, and net income for the term fell to ¥63 million against¥200 million for the fiscal year ended March 2008. TOHO HOLDINGS’ net income for the fiscal
year ended March 2010 recovered to the level of the fiscal year ended March 2008. On the otherhand, from this fiscal year on, SHOUEI still expects recovery of its business performance with theexpansion of sales through further business efforts and cost reductions with a review of its pricing
policy, and expects operating results of ¥45,700 million for net sales and ¥163 million for net income
for the fiscal year ending March 2011 and ¥47,100 million for net sales and ¥189 million for net
income for the fiscal year ending March 2012, and ¥48,500 million of net sales and ¥237 million ofnet income for the fiscal year ending March 2013.
2) Background of the calculation
TOHO HOLDINGS and SHOUEI went through several cautious consultations by referring to thecalculation results of stock swap ratio concluded by each third-party calculation agent and bycomprehensively taking account of the factors for both parties, including their financial positions,and the details of their assets and future prospects. As a result, both parties came to the conclusionthat the stock swap ratio mentioned above was reasonable, and agreed to and decided on the ratio.If
there are significant changes affecting the conditions of the calculation base, the share swap ratio
may be revised through consultations between the two companies.
3) Relationship with the calculation agents
The third-party institutions, Nomura Securities and YAMADA FAS, are not considered to berelated parties of TOHO HOLDINGS and SHOUEI, and have no material interest to be describedin relation to this stock exchange.
4) Measures to guarantee fairness
In order to guarantee fairness in this stock swap, TOHO HOLDINGS and SHOUEI requested
their respective third-party calculation agents to calculate the stock swap ratios as described initem (4)-1) above, and both companies continued to carefully negotiate and consult by referring tothe calculation results of this stock swap presented by both institutions. As a result, both companies
decided to carry out this stock swap based on the agreed stock swap ratio.
- 3 -In addition, neither of these parties acquired any opinion on this stock swap (so-called “FairnessOpinions”) from third-party calculation agents.
5) Measures to avoid a conflict of interest
Of the SHOUEI directors, Takaaki Matsutani is serving concurrently as the representative
director and the chairman of TOHO HOLDINGS. Accordingly, Mr. Takaaki Matsutani did notparticipate in the deliberations and the resolution of the agenda concerning this stock swap at themeeting of the Board of Directors of SHOUEI in order to avoid a conflict of interest, nor did heparticipate in the consultations and negotiations with TOHO HOLDINGS from the position ofSHOUEI.
(5)Share warrant and corporate bonds with share warrant of the wholly owned subsidiary established through the stockswap
There are no applicable items.
3. Outlines of parties involved in the share exchange (as of March 31, 2010)
Parent company(1)Company name(2)Principal place ofbusinessCorporate
representative(3)

Wholly-owned subsidiary

TOHO HOLDINGS CO., LTD.

SHOUEI CO., LTD.

5-2-1 Daizawa, Setagaya Ward, Tokyo

1-6-2 Okuno, Aomori-shi, Aomori

Norio Hamada / President andRepresentative Director
Holding company’s function, namely
control and management of operatingcompanies

Muchio Nakazato / President(4)

Business contents(5)

Capital

10,649 million yen

42 million yen(6)

Establishment

September 17,1948

November 27, 1950

Number of sharesissued74,582,502 shares

42,600 sharesFiscal year end

March 31

March 31

Employees7,443 (consolidated)

216

(10)

Major business
partners

DAIICHI SANKYO COMPANY,LIMITED
Mitsubishi Tanabe Pharma Corporation
Astellas Pharma Inc(11)

Main Bank

Mizuho Bank , Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

(7)
(8)
(9)

(12)

(13)

Major
shareholders andequity holdings

Relationships
between Parties
Capitalrelationship
Personnel
relationships
Businessrelationships
Status applicableto the related party

SHIONOGI & CO., LTD: 9.45 %Mitsubishi Tanabe Pharma Corporation:
4.79 %DAIICHI SANKYO COMPANY, LIMITED:
3.66 %
Japan Trustee Service Bank, Ltd. (trustaccount): 3.56 %Astellas Pharma Inc: 2.68 %Pharmaceutical wholesaling business

Mitsubishi Tanabe Pharma
Corporation
Astellas Pharma Inc
DAIICHI SANKYO COMPANY,LIMITED
Michinoku Bank, Ltd.
Aomori Bank, Ltd.

Yoshie Hara: 21.48 %Yukichiro Hara: 15.03 %TOHO HOLDINGS CO., LTD.: 10.00 %Tsuneharu Hayami:6.60 %Sachiko Sato: 6.22 %TOHO HOLDINGS holds 10.0% of Shouei’s outstanding shares.
One of the directors of TOHO HOLDINGS is also a director of Shouei.
In addition, one of the directors of SHOUEI is also a director of TOHOPHARMACEUTICAL CO., LTD., the Company’s wholly-owned subsidiary.
TOHO PHARMACEUTICAL CO., LTD., the Company’s wholly-owned subsidiary,
has business deals with SHOUEI, such as sales of products to the latter.

TOHO HOLDINGS is a principal shareholder of SHOUEI, holding 10.0% of theshares of SHOUEI. On the other hand, no related persons from SHOUEI comeunder any related party of TOHO HOLDINGS.
- 4 -(14)Management results and financial conditions for the latest three fiscal years (Unit: million yen)
TOHO HOLDINGS (consolidated)
SHOUEI (non-consolidated)
Fiscal year

Net assets
Total assets

Net asset per share(Yen)
Net sales
Operating income
Ordinary income
Net income
Net income per share(Yen)Dividends per share(Yen)

FY2008FY2009FY2010FY2008FY2009FY201080,772387,273

77,605397,845

100,838
489,452

2,911
16,6082,993
17,9102,979
17,752

1,351.96

1,320.76

1,370.25

76,338.97

78,484.48

78,109.54

805,419
10,26913,901
8,381

838,903
3,021
6,525△2,471

1,002,122
10,93914,1338,263

41,040384
501
200

42,85829041715844,41347
20663

148.23△41.73125.695,250.77

4,145.50

1,660.85

16.00

20.00

16.00

2,000.00

2,000.00

1,200.00

4. Status after the stock swap (of the wholly owning parent company created as a result of the stock swap)(1) Company name
TOHO HOLDINGS CO., LTD.
(2) Business contents
Holding company’s function, namely control and management of operatingcompanies(3) Principal place of business
5-2-1 Daizawa, Setagaya Ward, Tokyo(4) Corporate representative
Norio Hamada / President and Representative Director(5) Capital
10,649 million yen(6) Net assetsCurrently not yet determined(7) Total assets
Currently not yet determined(8) Fiscal year end
March 31
5. Outline of accounting procedure
Accounting of the stock swap is expected to be based on the purchase method, since a stock swap comesunder the category of “acquisition” under accounting standards for business combinations.
In addition, the amount for goodwill has not yet been decided at the present point in time.
6. Performance outlook
As a member of the Kyoso Mirai Group, SHOUEI’s joint procurement (purchasing of pharmaceuticals via
TOHO PHARMACEUTICAL) has accounted for most of its procurement in the past. Consequently, theimpact of SHOUEI becoming a wholly owned subsidiary of TOHO HOLDINGS on its consolidated
business performance for the current fiscal year and the future is insignificant.
(Reference) Financial results forecasted for the fiscal year ending March 2011 (as published on May 12,2010) and the actual performance for the fiscal year ended March 2010
FY2011(forecast)
FY2010Net sales

Operating income

Ordinary income

Net income

1,060,000

12,00014,7008,300

1,002,122

10,93914,1338,263(Unit: million yen)

- 5 -