NGK SPARK PLUG : Conclusion of the Absorption-type Merger Agreement on the Structural Reform of Ceramic IC Package Business NEW

November 28, 2016

Company name: NGK SPARK PLUG CO., LTD. Representative: Shinichi Odo, Chairman, President and CEO Securities Code: 5334

Contact: Kenji Isobe, Corporate Officer, General Manager

Public Relations Department (phone:+81-52-872-5896)

On May 9, 2016, and on July 29, 2016, NGK SPARK PLUG CO., LTD. (hereafter the "Company") announced the structural reform of ceramic IC package business which is one of our main products.

Today, the Absorption-type Merger Agreement regarding the Merger was concluded between the Company and NTK CERAMIC CO., LTD. (hereafter Current N-CERA). We announce the details of what was agreed as below. This Company Merger is for the wholly owned subsidiary of the Company, therefore the disclosed matters and contents are partially omitted.

1．Purpose of the structural reform

Toward the revitalization of our ceramic IC package business, we will establish an independent subsidiary with manufacturing and sales functions consolidated from the subsidiary with manufacturing function only. With this reform, we shall clarify the responsibilities and authorities, visualize the financial management further, and achieve positive turnaround as early as possible.

From technical viewpoints, it is clear that required features which can be achieved only by ceramic will continue to exist in semiconductor package. Therefore, we believe that we can play an active role in this industry by utilizing our core technologies. Moreover, the technologies developed through the ceramic IC package business have been used in sensor business, which is one of our main products, as well as the products for semiconductor

manufacturing equipment and Solid Oxide Fuel Cells (SOFC), which are expected to grow. With these perspectives, we believe that there is meaning in continuing ceramic IC package business.

On the other hand, the ceramic IC package business has been operating at loss for the last five years under the intensified price competition. By this structural reform, we will establish an independent, self-supporting organization with clear responsibilities and authorities, and press forward with thorough financial management and better utilization of our technical advantages.

2．Outline of the structural reform

1. Establishment of the new subsidiaries

   a．New subsidiary for the Ceramic IC package business

   On July 1, 2016, NTK CERAMIC CO., LTD. (hereafter New N-CERA) was established as a wholly owned subsidiary of the Company. On October 1, 2016, the Ceramic IC package business was succeeded from the Company and Current N-CERA to New N-CERA through Absorption-type Company Split.

   b．New subsidiary for the Sensor business

   Similarly, on July 1, 2016, "CS Nakatsugawa CO., LTD" (hereafter CS Nakatsugawa) was established as a wholly owned subsidiary of the Company. On October 1, 2016, the sensor business in Current N-CERA was succeeded to CS Nakatsugawa through Absorption-type Company Split.

   c．Effective January 1, 2017, Current N-CERA is planned to be absorbed into the Company.

2. Scheme of the reorganization of subsidiaries

3．Summary of the Company Merger

1. Schedule

   November 28, 2016: Conclusion of Absorption-type Company Merger Agreement

   January 1, 2017 (Planned): Absorption-type Company Merger to Current N-CERA (Effective date).

   (Note)

   For the Company, this Company Merger is Simplified Absorption-type Company Merger specified in Article 796 (2) of the Companies Act, and for Current N-CERA, it is Summary Absorption-type Company Merger specified in Article 784 (1) of the Companies Act. Therefore, this Company Merger will be conducted without the approval by the resolution at each shareholders meeting.

2. Form

   Absorption-type merger, with the Company being the surviving company, and with Current N-CERA being the absorbed company.

3. Allotment of Shares

   Since the Company is absorbing and merging with its wholly-owned subsidiary, there is no delivery of Monies, etc. in exchange for the Current N-CERA stock. Also, there will be no issuance of new shares or increase in capital stock as a result of the merger.

4. Share Options and Bonds with Share Option Not applicable

4．Overview of the Companies associated with the Company Merger

(Note) The surviving company (NGK SPARK PLUG CO., LTD.) is a company which calculates the distributable amount on preparation of financial statements. (Article 158, paragraph (4) of the Ordinance on Company Accounting)

5．Post-Merger Status

There is no change in the Company's name and address, the title and name of the representative, the Company's business, capital and fiscal year end due to this merger.

6．Impact on business performance

Since the Company is absorbing and merging with its wholly-owned subsidiary, the impact on the consolidated results is expected to be minimal.