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May 11, 2006
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Notification with Respect to Implementation of
Pure Holding Company System and Commencement of the Tender Offer |
At the meeting of the Board of Directors held on May 11, 2006, the Board resolved to implement a pure holding company system in July 2007, to acquire the shares of Kirin Beverage Corporation (Stock Code: 2595, the First Section of the Tokyo Stock Exchange) (“Kirin Beverage Corporation”) through a tender offer (the “Tender Offer”), and to apply for the approval of the relevant authorities for its business restructuring plan under the Law on Special Measures for Industrial Revitalization (the “Industrial Revitalization Law”) after the Tender Offer. In connection with such resolutions, we would like to provide notice of the following.
The introduction of a pure holding company system will be implemented subject to the approval of the Company’s Shareholders at the ordinary general meeting of the shareholders to be held in March 2007 and the approval of relevant government ministries and agencies where appropriate.
The Company intends to make Kirin Beverage Corporation its wholly owned subsidiary, and Kirin Beverage Corporation is likely to be delisted as a result of the Tender Offer and series of subsequent procedures. The Company will apply for the approval of the relevant authorities of the business restructuring plan under the Industrial Revitalization Law. Upon receiving such approval, the Company plans to effect an exchange of shares (kabushiki kokan) for cash consideration pursuant to Article 12-9 of the Law on Special Measures for Industrial Revitalization prior to the revision under Article 449 of the Law Concerning Developments of Related Laws in Enforcement of the Company Law, which remains effective by virtue of the provisions of Article 450, Paragraph 7 of the same law (the “Former Law on Industrial Revitalization”).
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I. Implementation of pure holding company system
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1.
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Background and objectives for the implementation of a pure holding company system
The business environment has been changing rapidly as consumer needs have been diversifying, the structure of markets and distribution systems have changed, competition among companies has intensified and globalization has advanced. Amid this environment, in order to make the Group management more dynamic with a competitive edge, the Company will implement a pure holding company system in July 2007. The Company’s objective is to enhance the corporate value of the Group through a dramatic allocation of resources to growth areas, expansion of synergistic effects inherent in the Group, and enhancement of the autonomy, mobility and flexibility of each business.
The Company will implement a pure holding company system in July 2007 and develop an organizational structure suitable for the implementation of growth strategies in which companies in the domestic alcoholic beverage business, the soft drinks business, and the pharmaceutical business will be aligned in parallel. In order to implement the pure holding company system, the Company plans to make Kirin Beverage Corporation, a company of the soft drinks businesses, its wholly owned subsidiary through the Tender Offer and subsequent procedures, and to spin off the domestic alcoholic beverage business and pharmaceutical business by divesture. Also, the Company will integrate support functions such as accounting and human resources and then spin off the newly integrated division in order to enhance the efficiency of the support functions of the Group as a whole. The name of the new company and share capital will be considered in due course. For an overview of the pure holding company system (as of July 2007), please see the Attachment hereto. |
| 2. Outline of corporate divesture |
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(1) |
Schedule for corporate divesture
February 2007 (expected): Approval by the Board of Director of the Business Divestiture Agreement
March 2007 (expected): General meeting of shareholders of the Company (approval of the Business Divestiture Agreement)
July 1, 2007 (expected): Effective date of the divesture |
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| (2) |
Business subject to the divesture and the method thereof
The Company, as the divesting company, plans to implement the divesture of business to three domestic wholly owned subsidiaries, which will succeed to the domestic alcoholic beverage business, pharmaceutical businesses and common support function business.
The Company plans to become a pure holding company after the divesture of these businesses, and the Company’s name is expected to be changed (tentatively, to Kirin Holdings, Co., Ltd.). |
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| (3) |
Others
With respect to other matters, the Company will provide notice when the Company makes decisions. |
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II.Commencement of Tender Offer
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| 1. |
Purpose of Tender Offer
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The Kirin Group will implement a pure holding company system in July 2007 in order to enhance corporate value by implementing growth strategies. As part of the Company’s business restructuring plans, the Company has decided to make Kirin Beverage Corporation, a company of the soft drinks businesses, a wholly owned subsidiary. The Company’s aim is to achieve a dramatic allocation of resources to the soft drinks business and enhance intra-group synergistic effects.
The Company currently holds 59.37% of the shares outstanding (32,657,480 shares) of Kirin Beverage Corporation. To make Kirin Beverage Corporation its wholly owned subsidiary, the Company will implement the Tender Offer in accordance with Article 27-2 through Article 27-22 of the Securities and Exchange Law to acquire all the outstanding shares of Kirin Beverage Corporation (excluding shares of Kirin Beverage Corporation which the Company already holds and Kirin Beverage Corporation’s treasury shares). Since the Company has not set neither an upper nor lower limit on the number of shares which the Company will purchase through the Tender Offer, all the applying shares will be purchased by the Company.
With the Company’s implementation of a pure holding company system through the divesture of its businesses, Kirin Beverage Corporation, when it becomes a wholly owned subsidiary of the Company, will be aligned in parallel with other subsidiaries holding businesses such as the domestic alcoholic beverage businesses and the pharmaceutical business. With this system implemented, aggressive resources allocation to the soft drinks business will be facilitated. Moreover, the capability to adapt to the changing environment will be reinforced and the speed of growth will be accelerated. With respect to the expansion of synergistic effects within the Group through the collaboration of both companies, for the purpose of enhancing the corporate value, the Kirin Group is committed to developing strategies throughout the value chain, including research and development, for raw materials, packaging and manufacturing methods, and development of new products, to provide new value to customers, and to promote globalization through collaboration, taking advantage of the business bases built up by each company.
In order to achieve dynamic management of the Group with a more competitive edge, the Kirin Group will strive to enhance corporate value by making a dramatic allocation of resources to growth areas, expanding the synergistic effects within the Group and enhancing the autonomy, mobility and flexibility of each business.
If the Company fails to acquire all the outstanding shares of Kirin Beverage Corporation (excluding shares of Kirin Beverage Corporation already held by the Company and treasury shares held by Kirin Beverage Corporation) through the Tender Offer in order to make Kirin Beverage Corporation its wholly owned subsidiary, the Company plans to implement an exchange of shares (kabushiki kokan) for cash consideration for the shares of Kirin Beverage Corporation that the Company was unable to acquire through the Tender Offer. After the commencement of the Tender Offer, the Company will apply for an approval by the relevant authorities of the business restructuring plan under the Industrial Revitalization Law. After obtaining the approval and after the Tender Offer, the Company will implement an exchange of shares making the Company the parent company and Kirin Beverage Corporation its wholly owned subsidiary. Pursuant to Article 12-9 of the Former Law on Industrial Revitalization, the Company plans to deliver cash in lieu of shares of the Company, the parent company, to the shareholders of Kirin Beverage Corporation, its wholly owned subsidiary, at that time.
If the Company implements an exchange of shares, it will be implemented without obtaining approval of a general meeting of shareholders of the Company because it will qualify as a "simple organizational restructuring" provided for in Article 796, Paragraph 3 of the Company Law. In addition, it will be implemented without approval of a general meeting of shareholders of Kirin Beverage Corporation, because it will qualify as an informal organizational restructuring provided for in Article 784, Paragraph 1 of the Company Law (if the Company receives an approval for the business restructuring plan above, the requirements for qualification as an informal organizational restructuring will be changed under Article 12, Paragraph 1 of the Industrial Revitalization Law).
The amount of cash delivered for the exchange of shares will be calculated based on the purchase price of the Tender Offer and is expected to be a price similar to the purchase price for the Tender Offer. However, the amount may be different from the purchase price for the Tender Offer. In relation to an exchange of shares, shareholders of Kirin Beverage Corporation, a wholly owned subsidiary, may exercise appraisal rights to require the Company to purchase their shares pursuant to legal and regulatory procedures. In this case, the purchase price per share may be different from (a) the amount of cash delivered for an exchange of shares for a share which is held by the Company’s shareholder or (b) the purchase price for the Tender Offer. Regarding the tax treatment of the Tender Offer, the exchange of shares for cash consideration and exercise of appraisal rights in respect of the exchange of shares, please consult your tax advisor.
The Company intends to make Kirin Beverage Corporation its wholly owned subsidiary through the Tender Offer and a series of subsequent procedures. Therefore, the Company has not limited the maximum number of shares which the Company will purchase through this Tender Offer. Accordingly, depending on the results of the Tender Offer, the shares of Kirin Beverage Corporation may be delisted through specified procedures pursuant to the delisting standards of the Tokyo Stock Exchange. If an exchange of shares making the Company the parent company and Kirin Beverage Corporation its wholly owned subsidiary is implemented after the Tender Offer, the shares of Kirin Beverage Corporation will be delisted. After the delisting, the shares of Kirin Beverage Corporation will not be able to be traded on the Tokyo Stock Exchange.
The purchase price of ¥3,350 per share for the Tender Offer represents an approximately 17.2% premium to the average share closing price of Kirin Beverage Corporation’s common stock on the First Section of the Tokyo Stock Exchange during the three months prior to May 10, 2006.
The Board of Directors of Kirin Beverage Corporation has approved the Tender Offer at a meeting of the Board of Directors held today. In addition, the Board of Directors of Kirin Beverage Corporation has, at a meeting of the Board of Directors held today, that the interim dividend with a record date as of the end of June 2006 shall not be distributed.
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| 2. |
Outline of the Tender Offer
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| (1) |
Description of the Target |
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| (i) |
Trade name: Kirin Beverage Corporation |
| (ii) |
Main business: Manufacture and sales of soft drinks |
| (iii) |
Date of incorporation: April 14, 1963 |
| (iv) |
Address of head office: 1, Kanda-Izumicho, Chiyoda-ku, Tokyo 101-8645, Japan |
| (v) |
Representative: President and Representative Director, Yoshikazu Arai |
| (vi) |
Amount of share capital: ¥8,416,500,000 (as of December 31, 2005) |
| (vii) |
Total number of the issued and outstanding shares: 55,002,370 shares (as of December 31, 2005) |
| (viii) |
Composition of major shareholders and shareholding ratios (as of December 31, 2005) |
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Kirin Brewery Co., Ltd.: 59.37%
Trust accounts, The Master Trust Bank of Japan, Ltd.: 3.63%
Trust accounts, Japan Trustee Services Bank Ltd.: 3.13%
Employees Stock Ownership Association of Kirin Beverage Corporation: 2.83%
T Zone, VI Fund Investment Association: 1.06%
State Street Bank & Trust Company: 0.99% |
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(Note) |
According to the amended substantial shareholding report filed on January 16, 2006 prepared under the joint and several names of seven companies other than Barclays Global Investors Trust Bank, Ltd., the Company recognizes that they hold the number of shares mentioned below as of December 31, 2005. However, the Company cannot verify the number of shares held by beneficial shareholders as of December 31, 2005, and so the Company has not considered them for the purpose of determining the major shareholders above. The contents of the amended substantial shareholding report are as follows: |
| Name or Trade Name |
Address |
Number of
shares owned
(000) |
Shareholding percentage of the
total shares
outstanding (%) |
Barclays Global Investors
Trust Bank, Ltd. and 7 other companies
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1-39, Hiroo
1-chome,
Shibuya-ku,
Tokyo |
2,113 |
3.84 |
| (ix) |
Relationship with the Company
Capital relationship: The Company owns 59.37% of the issued and outstanding shares of Kirin Beverage Corporation and is a parent company of Kirin Beverage Corporation.
Personnel relationship: The Company has seconded 1 director and 1 full time statutory corporate auditor.
Transaction relationship: The Company manufactures and sells products and merchandise of Kirin Beverage Corporation.
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| (2) |
Description of shares to be purchased: common shares
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| (3) |
Tender offer period: Friday, May 12, 2006 to Thursday, June 15, 2006 (35 days)
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| (4) |
Purchase price per share: ¥3,350 per share
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| (5) |
Basis for calculation of purchase price
The purchase price proposed by the Company (¥3,350 per share) was determined by comprehensively taking into consideration various factors, including the market prices of the common shares of Kirin Beverage Corporation, financial conditions, future expected revenues and evaluation of the value of Kirin Beverage Corporation’s shares by Nomura Securities Co., Ltd., a third party appraiser. The purchase price of ¥3,350 per share represents an approximately 17.2% premium to the average share closing price of Kirin Beverage Corporation on the First Section of the Tokyo Stock Exchange during the past three months up to and including May 10, 2006. |
(6)
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Total number of shares planned to be purchased: 22,344,488 shares
| (Note 1) |
The Company will purchase all the shares so offered. |
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| (Note 2) |
There is no plan to acquire 402 shares of treasury stock owned by Kirin Beverage Corporation through the Tender Offer. |
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| (Note 3) |
Shares constituting less than a whole unit are also offered for purchase through the Tender Offer. For application, submission of the share certificates is necessary (if such share certificates are kept in custody by the Japan Securities Depository Center, Inc. through the Tender Offer Agent, there is no need for such submission.) |
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| (Note 4) |
The total number of 22,344,488 shares planned to be purchased is calculated by deducting from the total of 55,002,370 outstanding shares as of December 31, 2005 (described in the 43th Fiscal Year Annual Report filed by Kirin Beverage Corporation on March 30, 2006) the 32,657,480 shares that the Company holds and the 402 treasury shares that Kirin Beverage Corporation holds. |
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| (7) |
Changes in the number of shares owned by the Company due to the Tender Offer:
Number of shares owned prior to the Tender Offer: 32,657,480 shares (shareholding percentage of 59.37%)
Number of shares owned subsequent to the Tender Offer: 55,001,968 shares (shareholding percentage of 100%)
| (Note 1) |
The percentage of shares owned prior to the Tender Offer is calculated based on the total number of 55,002,370 outstanding shares of Kirin Beverage Corporation (as of December 31, 2005). |
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| (Note 2) |
The number of shares owned subsequent to the Tender Offer represents to the number of shares to be owned by the Company assuming the Company purchases the total number of 22,344,488 shares planned to be purchased. |
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| (Note 3) |
The percentage of shares owned subsequent to the Tender Offer is calculated based on 55,001,968 shares, which is calculated by deducting 402 treasury shares held by Kirin Beverage Corporation (as of December 31, 2005) from the total number of 55,002,370 outstanding shares of Kirin Beverage Corporation (as of December 31, 2005). |
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| (8) |
Date of public notification: Friday, May 12, 2006.
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On Saturday, May 13, 2006, a notice in the Nihon Keizai Shimbun will specify that an electronic public announcement has been made at the following web address:
http://info.edinet.go.jp/EdiHtml/main.htm |
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| (9) |
TOB agent: Nomura Securities Co., Ltd.
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| (10) |
Funds required for the Tender Offer: ¥75,174 million (expected)
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| (11) |
Commencement of account settlement: Thursday, June 22, 2006 |
| 3. |
Agreement with Kirin Beverage Corporation or its officers in respect of the Tender Offer
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The Company has obtained the approval of the Board of Directors of Kirin Beverage Corporation in respect of the Tender Offer.
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| 4. |
Prospects after the Tender Offer
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The Company will apply for the approval of the relevant authorities for its business restructuring plan under the Industrial Revitalization Law after the commencement of the Tender Offer.
The Company will disclose the effects of the Tender Offer on the forecast regarding the Company’s consolidated business results for the period ending on December 31, 2006 as soon as it is confirmed.
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This press release has been prepared only for the purpose of informing the public of the Tender Offer and other issues. This has not been prepared for soliciting sales or purchases. When conducting any sales, shareholders should make appropriate judgments after reviewing the tender offer explanatory statement for the Tender Offer prepared by the Company.
This press release describes business prospects based on the views of the management of the Company at the time the Company acquires the shares of Kirin Beverage Corporation. Actual results may deviate considerably from such descriptions due to various factors.
Neither press release nor any part hereof constitutes any document to subscribe for, to solicit the sales of, or solicit applications for purchase of, securities. Neither this press release (or a part thereof) nor its distribution shall be interpreted to be the basis of any agreement in relation to the Tender Offer, rely on this press release at the time of concluding any agreement.
Certain countries, regions and other jurisdictions may impose certain restrictions on the release, issue or distribution of press releases of this nature under their laws and regulations. In such cases, you are required to comply with such laws and regulations in such countries, regions and other jurisdictions in light of such restrictions. In jurisdictions where the implementation of the Tender Offer is illegal, even if you receive this press release, such receipt shall not constitute any solicitation for the application for the purchase or sale of share certificates in relation to this Tender Offer, and this press release shall be deemed as the distribution of information for reference only. |
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