Tokyo, August 28, 2014 - Mitsubishi Heavy Industries, Ltd. (MHI) received formal approval at a Board of Directors Meeting today to undertake an absorption-type split under which the company's operations in commercial aero engines will be taken over by a new group company, Mitsubishi Heavy Industries Aero Engines, Ltd., as earlier disclosed on March 31, 2014. As the matter involves a simple split to a wholly-owned group company, some items and contents are omitted from the disclosure particulars.
1. Aims of the Company SplitIn recent years the commercial aero engine market has seen a succession of new product developments spurred by brisk demand, and significant growth is expected to continue going forward. For MHI to respond to this challenge, improvements in production capacity and manufacturing technologies are needed in order to boost the company's competitiveness, and greater capital strength is demanded in order to continue participation in development programs in the field of commercial aero engines, an area in which joint international development forms the mainstream. To achieve those goals, MHI has taken the decision to carry out a simple absorption-type split, effective October 1, of its commercial aero engine operations, to be taken over by a newly established group company. In doing so, MHI looks to create a wholly integrated structure encompassing all aspects from sales and engineering to manufacture and repair, to set in place a structure enabling enhanced production capacity, and to promote greater capital strength through infusions of external funds.
2. Overview of the Company Split
(1) Schedule
Vote at Board of Directors Meeting: | August 28, 2014 |
Date of Agreement Signing: | August 29, 2014 (subject to change) |
Effective Date of Company Split: | October 1, 2014 (subject to change) |
*The company split will be a simple absorption-type split pursuant to Article 784, Paragraph 3 of the Companies Act of Japan. Approval at a general shareholders meeting as stipulated in Article 783, Paragraph 1 of that Act is therefore not required.
(2) Company Split MethodThis will be a simple absorption-type split, with MHI as the splitting company and Mitsubishi Heavy Industries Aero Engines as the successor company.
(3) Allocation Relating to Company Split
Coinciding with the company split, Mitsubishi Heavy Industries Aero Engines will issue 980 shares of common stock to be allocated in full to MHI.
(4) Handling of Stock Acquisition Rights and Bonds with Stock Acquisition Rights Accompanying the Company Split
Obligations based on the stock acquisition rights of MHI, the splitting company, will neither be transferred to nor succeeded to by Mitsubishi Heavy Industries Aero Engines, the successor company. MHI has not issued any bonds with stock acquisition rights.
(5) Changes in Amount of Capital Accompanying the Company Split
The company split will result in no decrease either in MHI's capital or in its capital reserve.
(6) Rights and Obligations Transferred to the Successor Company
1) The successor company will succeed to the intellectual properties and related assets, rights and obligations pertaining to the aero engine business of the splitting company (with the exception of anything stipulated as exempt in the split agreement).
2) Any and all liabilities or other obligations of the splitting company which the successor company succeeds to shall be succeeded cumulatively.
Any obligations which the splitting company and the successor company should bear as a result of the company split will be duly met.
3. Outline of the Companies Involved in the Company Split
Splitting Company (as of March 31, 2014) |
Successor Company (as of August 28, 2014) | |
(1)Name | Mitsubishi Heavy Industries, Ltd. | Mitsubishi Heavy Industries Aero Engines, Ltd. |
(2)Head Office | 16-5, Konan 2-chome, Minato-ku, Tokyo | 1200, Higashi-tanaka, Komaki, Aichi Prefecture (on premises of Nagoya Guidance & Propulsion Systems Works) |
(3)Representative |
Shunichi Miyanaga President and CEO | Katsuyuki Shimauchi President |
(4)Business | Manufacture, etc. of ships, marine engines, power systems, machinery, steel structures, aircraft, aerospace systems, industrial machinery, special vehicles, etc. |
1. Engineering, manufacture and repair of aero engines, their parts and components, and related equipment; marketing of parts and components 2. Engineering, manufacture and repair of gas turbines used for power generation and mechanical drive, and related equipment; marketing of parts and components 3. All business operations auxiliary to the foregoing |
(5)Capital | 265,608 million yen | 20 million yen |
(6)Establishment | January 11, 1950 | July 1, 2014 |
(7)Number of issued shares | 3,373,647,813 | 10 |
(8)Fiscal year end | March 31 | March 31 |
(9)Major shareholders and shareholdings | ・The Master Trust Bank of Japan, Ltd. (Trust Account) 4.7% ・Japan Trustee Services Bank, Ltd. (Trust Account) 3.9% ・The Nomura Trust and Banking Co., Ltd. (Retirement Allowance Trust, The Bank of Tokyo-Mitsubishi UFJ, Ltd Account) 3.7% ・J P Morgan Chase Bank 380072 2.3% ・Meiji Yasuda Life 2.3% | Mitsubishi Heavy Industries, Ltd. 100% |
Note: As described in our News Release dated March 31, 2014 ("MHI to Establish New Company for Commercial Aero Engine Operations"), discussions are under way to receive investment capital from IHI Corporation and the Development Bank of Japan.
(10) Fiscal Status and Earnings Results (Consolidated) of the Splitting Company during the Most Recently Completed Fiscal YearNet assets | 1,774,223 million yen |
Total assets | 4,886,035 million yen |
Net assets per share | 459.99 yen |
Revenues | 3,349,598 million yen |
Operating income | 206,118 million yen |
Ordinary income | 183,159 million yen |
Net income | 160,428 million yen |
Net income per share | 47.81 yen |
1) Development, engineering, manufacture, marketing and after-sale servicing of commercial aero engines
2) Business auxiliary to the foregoing products
Business being Split (a) | MHI total (consolidated) in FY ended March 2014 (b) | Percentage (a/b) | |
Revenues | 37,413 million yen | 3,349,598 million yen | 1.1% |
Assets | 116.2 billion yen |
Liabilities | 66.2 billion yen |
Name: | Mitsubishi Heavy Industries, Ltd. |
Head Office: | 16-5, Konan 2-chome, Minato-ku, Tokyo |
Representative: | Shunichi Miyanaga, President and CEO |
Business: | Manufacture, etc. of ships, marine engines, power systems, machinery, steel structures, aircraft, aerospace systems, industrial machinery, special vehicles, etc. |
Capital: | 265,608 million yen |
Fiscal year end: | March 31 |
Name: | Mitsubishi Heavy Industries Aero Engines, Ltd. |
Head Office: |
1200, Higashi-tanaka, Komaki, Aichi Prefecture, (on premises of Nagoya Guidance & Propulsion Systems Works) |
Representative: | Katsuyuki Shimauchi |
Business: |
1. Engineering, manufacture and repair of aero engines, their parts and components, and related equipment; marketing of parts and components 2. Engineering, manufacture and repair of gas turbines used for power generation and mechanical drive, and related equipment; marketing of parts and components 3. All business operations auxiliary to the foregoing |
Capital: | 500 million yen |
Fiscal year end: | March 31 |
Impact from the company split on MHI's earnings will be minimal, on both a consolidated and non-consolidated basis.
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