MITSUI & CO., LTD. To whom it may concern
March 22, 2017
Mitsui & Co., Ltd.
Commencement of discussions regarding transfer of a part of the iron & steel products business of the Mitsui & Co. group to NIPPON STEEL & SUMIKIN BUSSAN CORPORATION and additional acquisition of the shares in NIPPON STEEL & SUMIKIN BUSSAN CORPORATION
Mitsui & Co., Ltd. ("Mitsui"; Head Office: Tokyo; President and CEO: Tatsuo Yasunaga) has entered into a memorandum of understanding with NIPPON STEEL & SUMIKIN BUSSAN CORPORATION ("NSSB"; Head Office: Tokyo; President: Kenji Hiwatari), pursuant to which both parties will commence discussions (the "Discussions") regarding transferring a part of the iron and steel products business of the Mitsui & Co. group to NSSB (the "Business Transfer"), with the target date of the Business Transfer being April 2018, and regarding Mitsui's additional acquisition of shares in NSSB for the purpose of strengthening the capital relationship (the "Share Acquisition"; the "Transaction" together with the Business Transfer).
Background of the Discussions
Changes in the domestic and overseas business environment surrounding the steel industry have been accelerating, and it is expected that competition will be increasingly severe. In such situation, the intention of Mitsui, which has been considering strengthening its earnings base through reorganization of its business toward further growth of steel business, matched the steel products business policy of NSSB. NSSB, as the core trading company in the NIPPON STEEL & SUMITOMO METAL CORPORATION group, aims at further growth and development of its steel business. Mitsui and NSSB have agreed to commence the Discussions regarding transferring a part of the iron and steel products business of the Mitsui & Co. group to NSSB, as well as Mitsui's additional acquisition of shares in NSSB to raise the ratio of its voting rights and to strengthen the capital relationship of both companies and deepen their collaborative relationship. Both companies will pursue enhancement of corporate value through consummating the Transaction with the aim of expanding their respective business bases, strengthening their sales forces, and enhancing business efficiency by effective use of management resources.
Purpose of the transaction
Mitsui aims to realize the following respective items by deepening its collaborative relationship with NSSB through the Transaction.
Strengthening earnings base in steel business
Mitsui and NSSB will pursue constructing a firm earnings base by combining the sales network, manufacturing and processing bases, sales force, and customer base of both companies, as well as the products and services that each has strength in, and maximizing synergistic effects through mutual complementarity, thus enhancing business competitiveness.
New business development by exercising comprehensive business engineering capabilities
Mitsui and NSSB will pursue the creation and realization of new business opportunities by making the best use of the business assets and comprehensive business engineering capabilities of Mitsui, combining their respective proprietary sales force and business competitiveness, and providing a total solution satisfying the needs of various customers around the world.
Further enhancement of customer satisfaction
Mitsui and NSSB will pursue providing customers with better services by mutually utilizing the knowledge, comprehensive strength, and value chain in steel business developed over many years by both companies.
Method of the Transaction and related matters
The Business Transfer
Although the Mitsui & Co. group intends to transfer a part of its iron and steel products business to NSSB, the details of the scope, the method of the transfer, the conditions, including considerations, and related matters will be discussed between both companies going forward.
The Share Acquisition
Mitsui will pursue making NSSB an equity-method associated company by additionally acquiring shares in NSSB and raising the ratio of its voting rights up to 20%. In regard to the method of the Share Acquisition, a combination of a third-party allotment and acquisitions from existing shareholders via counterparty transactions outside of the stock market and transactions in the stock market is contemplated. Both companies plan to discuss the detailed conditions, including the method, the schedule, and the relevant consideration.
Both companies, however, plan to proceed with the Discussions on the premise that the number of shares to be allocated to Mitsui by third-party allotment is up to 2.5 million in consideration of matters, including the need for funding, the scale of dilution, the shareholder composition of NSSB, and other related matters.
Schedule
Mitsui will immediately commence the Discussions with NSSB and, once an agreement is reached, will conclude a definitive agreement, with the target date being September 2017. Pursuant to the definitive agreement, both companies plan to consummate the Business Transfer, with the target date being April 2018, after obtaining clearance and approvals from relevant domestic and overseas competition authorities and taking other required procedures.
March 22, 2017 (today) Execution of the memorandum of understanding regarding the Discussions
September, 2017 (target) Execution of a definitive agreement
April, 2018 (target) Effective date of the Business Transfer
Although the execution of third-party allotment of the Share Acquisition is envisaged for April, 2018, both companies plan to discuss the detailed schedule, together with the detailed method of the Share Acquisition.
Prospects
Both companies intend to discuss pending matters and will make a separate announcement once an agreement is reached.
There will be no adverse effect on Mitsui's financial performance for the current fiscal year. The effect on financial performance for subsequent fiscal years is unknown.
（Reference Material）Overview of NSSB (As of the end of March, 2016, except for special notes）
Trade Name
NIPPON STEEL & SUMIKIN BUSSAN CORPORATION
Head Office Location
5-27, Akasaka 8-chome, Minato-ku, Tokyo
Name and Title of the Representative
Kenji Hiwatari, President and Representative Director
Description of Business Activities
Steel
Industrial Supply and Infrastructure
Textiles
Foodstuffs
Capital
12.3 billion yen
Date of Establishment
August 2, 1977
Number of Outstanding Shares
309.578 million (note 1)
Date of Fiscal Year End
March 31
Number of Employees
Non-Consolidated: 1,468
Consolidated: 8,179
Main Banks
Sumitomo Mitsui Banking Corporation The Bank of Tokyo-Mitsubishi UFJ, Ltd Sumitomo Mitsui Trust Bank, Limited
Sales Bases
Domestic: Total of 31
Overseas: 18 Countries, 36 Cities
(As of September 30, 2016)
Consolidated Companies
Consolidated Subsidiaries: 94
Equity-method Associated Companies: 28 Total: 122
Main Shareholders and Ownership Percentage
(As of September 30, 2016)
Nippon Steel & Sumitomo Metal Corporation 35.9%
Mitsui & Co., Ltd. 10.9%
The Master Trust Bank of Japan, Ltd. 3.6%
Japan Trustee Services Bank, Ltd. 2.8%
Japan Trustee Services Bank, Ltd. 1.5%
Relationship between Party Company
Capital Ties (note 1)
As of September 30, 2016, Mitsui holds 33,831 thousand shares, representing 10.9% of NSSB's outstanding shares
Personnel Ties
A director of NSSB is a former employee of Mitsui
Business Ties
There is a business relationship
Status Applicable to the Related Parties
N/A
(JPY in billion)
Nippon Steel & Sumikin Bussan Corporation（Consolidated）
Fiscal Year
March, 2014
March, 2015
March 2016
Consolidated Net Assets
157.5
183.6
190.2
Consolidated Total Assets
642.3
692.8
660.6
Consolidated Net Assets per share (yen)
461.22
539.43
561.26
Consolidated Sales
1,443.8
2,104.6
1,930.8
Consolidated Net Income
22.7
17.4
17.3
Consolidated Net Income per Share (yen)
102.74
56.39
56.05
Dividend per share (yen)
11.00
12.00
15.00
1. NSSB implemented a reverse share split by making every 10 shares into 1 share, with the effective date of October 1, 2016. As such, the number of outstanding shares as of today is 30,957 thousand.
Mitsui & Co. Ltd. published this content on 22 March 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 22 March 2017 08:39:10 UTC.
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