Cosmo Energy Holdings Co., Ltd. (hereinafter, CEH) announced to determine a conversion of Maruzen Petrochemical Co., Ltd. (hereinafter, MPC) into a consolidated subsidiary today through acquisiting one of outstanding shares from its existing shareholders (hereinafter, Transaction) with respect to 'Submission of Notification to the Japan Fair Trade Commission in relation to the Intention of Share Acquisition of Maruzen Petrochemical Co., Ltd. (Incorporation to the consolidated accounts)' announced on January 7, 2016.

1. Reason of Share Acquisition

MPC owns and operates one of the most competitive naphtha crackers in Japan but the petrochemical industry faces increasing competition in the future for reasons such as the North American and Chinese competitors producing products from low cost feedstock, slowing demand growth in China and the declining domestic demand.

Under such business environment, this acquisition will allow CEH to optimize its petroleum and petrochemical business operations, further strengthening its cost competitiveness. Furthermore, the Transaction leads to the possibility of increasing the cost competitiveness for the whole industrial zone in the area (CEH - MPC - Petrochemical derivative producers).

2. Summary of MPC

(1) Company Name Maruzen Petrochemical Co., Ltd.
(2) Registered Address 1-1, Irifune 2-chome, Chuo-ku, Tokyo
(3) Name & Title of Representative Shun Fujii (Representative Director, President)
(4) Primary Business Petrochemical Business (Production, Sales, Etc.)
(5) Paid-in-Capital 10,000 MM JPY
(6) Date of Establishment October 10, 1959
(7) Major Shareholders and Shareholding Ratio
(as of March 11, 2016)

12.00%


Ube Industries Ltd.

10.00%


Cosmo Matsuyama Oil Co., Ltd.

4.00%


The Bank of Tokyo-Mitsubishi UFJ Ltd.

2.00%


KH Neochem Co., Ltd.

(9.00%)


(Treasury Shares)
(8) Relationship with Cosmo Capital Ties CEH owns 6,000,000 of MPC shares (30.00%) and is accounted for under the equity method. In addition, Cosmo Matsuyama Oil Co., Ltd., 100% subsidiary of Cosmo Oil Co., Ltd., own 2,000,000 shares (10.00%) of MPC.
Human Resources Keizo Morikawa, Representative Director & CEO of CEH and Hiroshi Kiriyama, Director of CEH are both also directors of MPC.
Business Cosmo Oil Co., Ltd. (100% subsidiary of CEH) and Cosmo Matsuyama Oil Co., Ltd. (100% subsidiary of Cosmo Oil Co., Ltd.) both market petrochemical feedstock and products to MPC
(9) Financials for the most recent 3 years
Fiscal Term End-March 2013 End-March 2014 End-March 2015
Consolidated Net Asset 91,673 MM JPY 98,592 MM JPY 103,228 MM JPY
Consolidated Total Asset 210,847 MM JPY 236,789 MM JPY 215,417 MM JPY
Consolidated Net asset per share 11,585 JPY 13,010 JPY 11,836 JPY
Consolidated Turnover 421,636 MM JPY 568,422 MM JPY 549,484 MM JPY
Consolidated Operating Profit -55 MM JPY 8,921 MM JPY 2,743 MM JPY
Consolidated Ordinary Profit 1,278 MM JPY 11,023 MM JPY 6,287 MM JPY
Net Income attributable to parent company shareholders 977 MM JPY 7,058 MM JPY 4,151 MM JPY
Net income per share 54 JPY 388 JPY 228 JPY
Cash dividends per share 33 JPY 108 JPY 58 JPY

3. Summary of Current Shareholder

(1) Company Name JNC CORPORATION
(2) Registered Address 2-2-1 Otemachi, Chiyoda-ku, Tokyo
(3) Name & Title of Representative Yasuyuki Gotoh (CEO & President)
(4) Primary Business Petrochemical Business (Production, Sales, Etc.)
(5) Paid-in-Capital 31,150 MM JPY
(6) Date of Establishment January 12, 2011
(7) Net assets 67,570 MM JPY
(8) Total assets 118,230 MM JPY
(9) Shareholders
(10) Relationship with Cosmo Capital Ties None
Human Resources None
Business None
Related Party Status None
(1) Company Name JNC PETROCHEMICAL CORPORATION
(One of shares held by JNC CORPORATION on the shareholder register has been confirmed that substantial shareholder is JNC PETROCHEMICAL CORPORATION under the agreement between JNC CORPORATION and JNC PETROCHEMICAL CORPORATION, and then JNC PETROCHEMICAL CORPORATION is scheduled to transfer one of the shares to CEH.)
(2) Registered Address 2-2-1 Otemachi, Chiyoda-ku, Tokyo
(3) Name & Title of Representative Tsukasa Taji (CEO & President)
(4) Primary Business Petrochemical Business (Production, Sales, Etc.)
(5) Paid-in-Capital 2,000 MM JPY
(6) Date of Establishment June 15, 1962
(7) Net assets 21,241 MM JPY
(8) Total assets 69,207 MM JPY
(9) Shareholders
(10) Relationship with Cosmo Capital Ties None
Human Resources None
Business None
Related Party Status None

*JNC CORPORATION is expected to maintain the present shareholding.

4. Number of Shares for Acquisition

(1) Number of Shares held by Cosmo prior to transfer 8,000,000 shares (including indirect holdings, 2,000,000 shares)
(Number of voting rights: 8,000,000units) (including indirect holdings, 2,000,000 units)
(Ownership ratio of voting rights: 43.9%)
(2) Number of Shares to be transferred 1,600,000 shares (JNC：800,000 shares, JNC Petrochemical: 800,000shares)
(Number of voting rights: 1,600,000 units, Ownership ratio of voting rights: 43.9%)
(3) Acquisition Price Based on the non-disclosure agreements with JNC CORPORATION, CEH refrains from providing any comments and answers to questions. Additionally, the acquisition price was determined in consideration of its performance, future prospect and ets., following deliberations between CEH and JNC CORPORATION.
(4) Number of Shares held by Cosmo after transfer 9,600,000 shares (including indirect holdings, 2,000,000 shares)
(Number of voting rights: 9,600,000 units) (including indirect holdings, 2,000,000 units)
(Ownership ratio of voting rights: 52.7%)

5. Schedule

(1) Share Transfer Agreement March 11, 2016
(2) Transfer of Shares Late March, 2016

6. Future Prospect

Although it is assumed that the share acquisition will result in negative goodwill, the impact of this Transaction on business performance announced on February 9, 2016 is considered to be insignificant.

End

Cosmo Oil Co. Ltd. issued this content on 11 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 11 March 2016 06:28:59 UTC

Original Document: http://ceh.cosmo-oil.co.jp/eng/press/160311/index.html