June 9, 2015
Company Name: | GMO Internet, Inc. |
(TSE First Section, Code: 9449) | |
Address: | 26-1 Sakuragaoka-cho Shibuya-ku Tokyo JAPAN |
Representative: | Masatoshi Kumagai, CEO and Founder |
Contact: | Masashi Yasuda, Chief Financial Officer |
Telephone: | +81 3 5456 2555 |
URL: | http://www.gmo.jp/en |
The GMO Internet Inc. board of directors today convened a meeting in which the following was resolved;
i. To execute a four-party business and capital partnership agreement ("the Agreement") with consolidated subsidiary GMO Payment Gateway, Inc. (TSE:3769), Sumitomo Mitsui Financial Group and Sumitomo Mitsui Banking Corporation, under which GMO Payment Gateway and Sumitomo Mitsui Banking Corporation will establish a joint venture payment business company.
ii. To subscribe to shares issued by GMO Payment Gateway in a capital increase through private placement. For further details regarding the partnership, please refer to the GMO Payment Gateway, disclosure of today, Notice of Capital and Business Partnership and Private Placement of New Shares.
1.Objectives of the Partnership and Capital Increase through Private Placement
(1) GMO Payment Gateway shared vision, and business and capital relationship
Under the corporate tagline, Internet for Everyone GMO Internet Group focuses resources on high-growth areas in the Internet market.
In the Group's Internet Infrastructure business segment, GMO Payment Gateway operates online credit card payment and other payment services. Since becoming a public company, GMO Payment Gateway has continued to grow revenue and profits as the ecommerce and credit card markets have expanded. Going forward, the company expects to see sustained growth in the mid-to-long term as expansion of the market remains strong. However, the company also recognizes that it must take measures to seize growth opportunities at a deeper level in the domestic market and to maximize opportunities in the global market.
Specifically, GMO Payment Gateway believes that it is important to diversify payment business opportunities
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by bringing together finance technology and Internet technology, and to broaden relationships with
large-scale businesses in order to drive ecommerce penetration (a representation of ecommerce transactions as a percentage of all retail transactions) in Japan, a rate that is expected to reach 10% in the not-to-distant future.
Further, in the global market it is critical that the company respond to the global expansion of European and North American financial and payment companies. It can be expected that European and North American financial and payment companies will enter the Asian market, an important global growth center, intensifying competition. In light of this trend, the company believes it is necessary to partner with a financial institution and build a firm relationship ahead of its competitors.
GMO Payment Gateway sought a business partner that would be a strong partner for a payment business, with a clear understanding of the company's business operations and future vision as well as a common outlook. It was decided to form a business and capital partnership with Sumitomo Mitsui Banking Corporation, a company with a strong business platform and customer base both domestically and globally.
The companies' respective parent companies GMO Internet and Sumitomo Mitsui Finance Group will also participate in the business and capital partnership. The parent companies bring to the partnership broad business networks, and will enhance operations, contributing to future expansion of the business partnership. The four companies aim to build a long term partnership that GMO Payment Gateway considers will contribute to future business growth and shareholder value.
(2) GMO Internet initiatives under the business and capital partnership
Under the corporate tagline, Internet for Everyone GMO Internet Group focuses resources on high-growth areas in the Internet market. For GMO Internet Group, GMO Payment Gateway online credit card payment processing services are positioned as a key growth area. Enhancing the relationship between GMO Internet and GMO Payment Gateway, members of the GMO Internet board serve as external directors on the GMO Payment Gateway board, and Issei Ainoura, Chief Executive Officer of GMO Payment Gateway, serves as an external director on the GMO Internet board, and the two companies have a close cooperative partnership. GMO Internet considers that subscribing to new shares issued in the private placement will strengthen the financial position of GMO Payment Gateway and contribute to further growth of its payment services business, and impact consolidated earnings. GMO Internet held discussions with Sumitomo Mitsui Banking Corporation in regard to joint participation in the subscription. GMO Internet expects the partnership to bring about further growth in payment services, enhancing synergies throughout the GMO Internet Group Internet Infrastructure business segment and contributing to GMO Internet consolidated earnings. For this reasons it was resolved
to participate in the private placement on an equal level with Sumitomo Mitsui Banking Corporation and to execute a four-party partnership with GMO Payment Gateway, Sumitomo Mitsui Financial Group and
Sumitomo Mitsui Banking Corporation.
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2.Overview of GMO Payment Gateway, Inc. (as of March 31, 2015)
C o m p a n y N a m e | GMO Payment Gateway, Inc. | ||
Address | 1-14-6 Dogenzaka, Shibuya-ku, Tokyo | ||
CEO | Issei Ainoura | ||
Business Description | Credit card payment and other payment services and ancillary services. | ||
Capital | JPY 710 million | ||
Date Established | March 1995 | ||
Major Shareholders and Ownership Ratio | GMO Internet, Inc. 51.66% | ||
Capital | GMO Internet holds 17,849,600 common shares (51.66% of voting rights) in GMO Payment Gateway Two members of the GMO Internet board of directors serve concurrently on the GMO | ||
Reportable R Relationships | elated Party | Executive | Payment Gateway board of directors, and one GMO Internet board member serves on the GO Payment Gateway board of auditors. |
Transactional | Annual transactions of JPY108,843,000 (FYE12/2015) in payment services. | ||
Related Party Relationships | GMO Payment Gateway is a consolidated subsidiary of GMO Internet. | ||
Operating Results and Financial Condition in the Three most Recent Fiscal Terms | |||
Fiscal Term | FYE 9/2012 | FYE 9/2013 | FYE 9/2014 |
Net Assets | JPY 4,972 millions | JPY 5,633 | JPY 6,815 |
Total Assets | JPY 14,834 millions | JPY 21,298 millions | JPY 24,613 millions |
Net Assets per Share | JPY 144.24 | JPY 163.12 | JPY 197.15 |
Net Sales | JPY 4,708 millions | JPY 5,764 millions | JPY 7,205 millions |
Operating Profit | JPY 1,753 millions | JPY 2,048 millions | JPY 2,476 millions |
Ordinary Profit | JPY 1,764 millions | JPY 2,047 millions | JPY 2,527 millions |
Net Profit | JPY 960 millions | JPY 1,217 millions | JPY 1,515 millions |
Net Profit per Share | JPY 28.01 | JPY 35.38 | JPY 43.92 |
Dividend per Share | JPY 19.5 | JPY 24.5 | JPY 30.0 |
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3.Overview of the Capital Increase through Private Placement
Sumitomo Mitsui Banking Corporation and GMO Internet will subscribe to new shares issued by GMO Payment Gateway in a capital increase through private placement. A summary of the share issue follows.
(1) | Payment Date | June 25, 2015 |
(2) | No. of New Shares | 2,587,300 common shares |
(3) | Issue Price | JPY 3,092 per share |
(4) | Total Capital to be Raised | JPY 7,999,931,600 |
(5) | Method of allocation (Subscribers) | Private placement of new shares. 1,250,800 shares to be allocated to Sumitomo Mitsui Banking Corporation, 1,336,500 shares to be allocated to GMO Internet. |
(6) | Other | Under the Securities and Exchange Act, the above amount is contingent on the filing of the Securities Registration Statement. |
4. Shareholding Position Before and After Capital Increase through Private Placement
Number of Shares | Ownership Ratio | Majority Shareholder | |
Prior to Transaction | 17,849,600 | 51.66% | No. 1 |
After Transaction | 19,186,100 | 51.66% | No. 1 |
* The ration of voting rights held by GMO Internet will remain at 51.66% after the transaction.
5.Schedule
Board of Directors approval of Business and Capital Partnership and Subscription to Capital Increase through Private Placement: June 9, 2015
Agreements executed relating to the Business and Capital Partnership and Subscription to Capital
Increase through Private Placement: June 9, 2015
Payment Date (Capital Partnership): June 25, 2015 (tentative)
6.Outlook
GMO Internet considers that the partnership will contribute to building group, corporate and shareholder value; however, at this time it is not yet known what impact the transaction will have on consolidated results for FYE12/2015. Once the impact on results is clear, it will be promptly disclosed.
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