[Translation] October 9, 2019 to Whom It May Concern: Company Name: SOTSU CO., LTD. Representative: Hideyuki Nanba, Representati
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[Translation] October 9, 2019 To whom it may concern: Company Name: SOTSU CO., LTD. Representative: Hideyuki Nanba, Representative Director and President (Code No.:3711, JASDAQ) Inquiries: Yoshinori Nemoto, Director and General Manager of Administration Department Telephone: 03-6386-0311 Announcement concerning Implementation of the Tender Offer of Our Shares by BANDAI NAMCO Holdings Inc. and Recommendation for Tender Offer SOTSU CO., LTD. (the “Company”) hereby announces that at a board of directors meeting held as of the date hereof, it has resolved to express an opinion supporting the tender offer (the “Tender Offer”) by BANDAI NAMCO Holdings Inc. (the “Tender Offeror”) for the Company’s common stock (the “Company’s Common Stock”) and to recommend all the shareholders of the Company to tender their shares in the Tender Offer. The decision of the board of directors has been made on the premises that the Tender Offeror intends to make the Company a wholly-owned subsidiary of the Tender Offeror through the Tender Offer and subsequent transactions and that the Company’s Common Stock will be delisted. 1. Overview of the Tender Offeror (i) Name BANDAI NAMCO Holdings Inc. (ii) Address 37-8 Shiba 5 Cho-me, Minato-ku, Tokyo (iii) Name and title of Mitsuaki Taguchi, Representative Director and President representative Planning and execution of the BANDAI NAMCO Group’s medium- to long-term management plan; supporting its affiliated (iv) Businesses companies regarding their execution of business strategies and management of business activities (v) Amount of capital JPY 10,000,000,000 1 (vi) Date of incorporation September 29, 2005 The Master Trust Bank of Japan, Ltd. (trust 6.71% account) Japan Trustee Services Bank, Ltd. (trust account) 6.67% Kyoko Nakamura 2.82% GILLES CO., LTD. 2.73% The Nomura Trust and Banking Co., Ltd. (retirement benefit trust account of Bank of 2.09% Tokyo-Mitsubishi UFJ, Ltd.) Major shareholders mal Ltd. 2.00% and shareholding ratio Japan Trustee Services Bank, Ltd. (trust account 5) 1.84% (vii) (as of March 31, 2019) Nintendo Co., Ltd 1.75% (Note) STATE STREET BANK AND TRUST COMPANY 505001 1.44% (standing proxy: Mizuho Bank, Ltd. settlement sales department) STATE STREET BANK WEST CLIENT-TREATY 505234 1.43% (standing proxy: Mizuho Bank, Ltd. settlement sales department) (viii) Relationship between the Company and the Tender Offeror The Tender Offeror owns 3,340,000 shares (shareholding ratio: 22.79%) of the Company’s Common Stock. Capital Ties The Company owns 260,000 shares (shareholding ratio: 0.12%) of the Tender Offeror’s Common Stock as of today. Personal Ties Not applicable. The Company and the Tender Offeror have transactions in the media business and rights business, such as, paying and receiving Copyrights (It means the right to allow others to commercialize Transactions the production and characters that are components of the production or to use them in other ways based on copyrights, trademark rights, etc.; hereinafter the same)or advertising expenses. Applicability as a The Company is an equity-method affiliate of the Tender Offeror related party and falls within its related party. 2 (Note) The shareholding ratio is quoted from the Securities Reports for the 14th Fiscal Year submitted by the Tender Offeror on June 24, 2019. 2. Purchase Price JPY 3,100 per share of the Company’s Common Stock (the “Tender Offer Price”) 3. Opinion regarding the Tender Offer, and Basis and Reasons thereof (1) Opinion regarding the Tender Offer As of the date hereof, the board of directors of the Company resolved to express an opinion supporting the Tender Offer and to recommend the shareholders who own the Company’s Common Stock to tender their shares in the Tender Offer, according to the basis and reasons stated in “(2) Basis and Reasons of the Opinion regarding the Tender Offer” below. The decision of the board of directors above has been made in accordance with such procedures provided under “e. Unanimous Approval by All Non-interested Directors and No Dissenting Opinion of All Non-interested Statutory Auditors at the Company” in “(6) Measures to Ensure the Fairness for the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” below. (2) Basis and Reasons of the Opinion regarding the Tender Offer The statement regarding the Tender Offeror in this section, it is mentioned based on the explanation received from the Tender Offeror. (i) Overview of the Tender Offer As of today, the Tender Offeror holds 3,340,000 shares of common stock of the Company (the “Company’s Common Stock”) (shareholding ratio: 22.79% (Note)) which are listed on JASDAQ Standard Market (the “JASDAQ Standard Market”) established by the Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”), and the Company is an affiliate of the Company to which the equity-method is applicable. The Tender Offeror resolved at the meeting of its board of directors held on today, to implement the Tender Offer as part of transactions (the “Transactions”) for the purpose of acquiring all of the Company’s Common Stock (excluding the Company’s Common Stock held by the Tender Offeror and the treasury shares held by the Company; hereinafter the same shall apply) and making the Company a wholly-owned subsidiary of the Tender Offeror. 3 (Note) “Shareholding ratio” means the ratio to 14,654,255 shares which is equivalent to the total number of issued shares of the Company as of August 31, 2019 (i.e. 15,000,000 shares) set forth in the “Summary of Consolidated Financial Results for the Year Ended August 31, 2019 (Based on Japanese GAAP)” (the “Financial Results”), as announced by the Company on October 9, 2019, less the number of the treasury shares held by the Company as of the same date (i.e., 345,745 shares) (rounded to two decimal places; hereinafter the same shall apply unless otherwise provided with respect to the statement of the shareholding ratio). To make the Tender Offer, the Tender Offeror, on October 9, 2019, entered into a tender offer application agreement (the “Application Agreement”) with (i) Mr. Yuji Nasu, who is the founder of the Company and its largest shareholder among the major shareholders of the Company (number of shares owned: 4,290,000 shares; shareholding ratio: 29.27%; Mr. Nasu is hereinafter referred to as the “Founder Shareholder”) and (ii) NUSCO Co., Ltd., which is the asset management company of the Founder Shareholder and the third largest shareholder among the major shareholders of the Company (number of shares owned: 2,920,000 shares; shareholding ratio: 19.93%; NUSCO Co., Ltd. is hereinafter referred to as the “Asset Management Company,” and the Founder Shareholder and the Asset Management Company are collectively called “Prospective Tendering Shareholders”) to tender all of the Prospective Tendered Shares they respectively own (total number of shares: 7,210,000 shares; shareholding ratio: 49.20%, hereinafter referred to as the “Prospective Tendered Shares”) in the Tender Offer. For details of the Application Agreement, please refer to “4. Matters on the Material Agreement concerning the Acceptance of the Tender Offer between the Tender Offeror and the Company’s Shareholder” below. In the Tender Offer, the Tender Offeror has set 7,210,000 shares (shareholding ratio: 49.20%), which is equal to the number of the Prospective Tendered Shares, as the minimum number of the shares to be purchased, and, if the total number of the share certificates, etc., the sale of which is proposed in response to the Tender Offer (“Tendered Share Certificates, Etc.”), is less than such minimum number, the Tender Offeror will not purchase any of Tendered Share Certificates, Etc. However, the Tender Offeror intends to obtain all of the Company's Common Stock in the Tender Offer, and, therefore, has not set the maximum number of the shares to be purchased, and, if the total number of Tendered Share Certificates, Etc., is equal to or greater than the minimum number, the 4 Tender Offeror will purchase all of Tendered Share Certificates, Etc. As the Tender Offeror aims to make the Company its wholly-owned subsidiary, if the Tender Offeror fails to acquire all of the Company’s Common Stock through the Tender Offer, after completion of the Tender Offer, the Tender Offeror plans to acquire all of the Company’s Common Stock through implementing a series of procedures to make the Tender Offeror the sole shareholder of the Company as stated in “(5) Policy for Organizational Restructuring, Etc. after the Tender Offer (Matters Relating to So-called Two-step Acquisition)” below. (ii) Background, Purpose, and Decision-Making Process Leading to the Decision to Implement the Tender Offer and Management Policy after the Tender Offer Background, purpose, and decision-making process leading to the decision to implement the tender offer and management policy after the Tender Offer are as follows. (a) Background, Purpose, and Decision-Making Process Leading to the Decision to Implement the Tender Offer The Tender Offeror was founded in September 2005 when Bandai Co., Ltd. (“Bandai”) and NAMCO LIMITED (the current BANDAI NAMCO Entertainment Inc.) performed a management integration through a joint share transfer and became a company listed on the First Section of the Tokyo Stock Exchange in the same month. The Tender Offeror is a pure holding company which controls a group of companies (consisting of the Tender Offeror, 106 subsidiaries (as of March 31, 2019), and 12 affiliated companies (as of the same date); “BANDAI NAMCO Group”), with widely recognized IP (“powerful IP”. “IP” refers to intellectual property rights relating to characters, etc.; hereinafter the same), such as the Mobile Suit Gundam series, as their core strength, operating a variety of entertainment-related businesses, including toys, plastic models, network content, home video game software, amusement machines, visual and music content, amusement facilities, among others.