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In connection with the implementation of pure holding company system by Kirin Brewery Company, Limited (the Company or the Transferor Company) in July 2007 as already announced on May 11, 2006, the Company's Board of Directors resolved, at the meeting of the Board of Directors held on February 7, 2007, to implement a corporate split (the Corporate Split) of its domestic alcoholic beverage business, pharmaceutical business and common support functions business effective as of July 1, 2007 and to transfer such businesses to its wholly owned subsidiaries, Kirin Holdings Company, Limited (Kirin Holdings) (the corporate name of Kirin Holdings Company, Limited is expected to change to Kirin Brewery Company, Limited as of July 1, 2007), Kirin Pharma Company, Limited (Kirin Pharma) and Kirin Business Expert Company, Limited (Kirin Business Expert), respectively, as the succeeding companies (together, the Succeeding Companies). The Company plans to hold a general meeting of shareholders on March 28, 2007 and will submit the foregoing resolution for approval, and in connection therewith, we would like to provide the following notice.
Following the Corporate Split, the Company will be structured into a pure holding company that holds all of the Succeeding Companies' shares of common stock, and the Company's corporate name is expected to change to Kirin Holdings Company, Limited as of July 1, 2007. The change of the corporate name is conditioned on the approval by a general meeting of shareholders planned to be held on March 28, 2007 to amend appropriate parts of the Company's Articles of Incorporation.
1. Purpose of Corporate Split
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 and competitive, and to realize a dramatic allocation of resources to growth areas, expansion of synergistic effects inherent in the Kirin Group (the Group), and enhancement of the autonomy, mobility and flexibility of each business, the Company determined that it is appropriate to implement a pure holding company system.
The Company plans to implement the Corporate Split of its domestic alcoholic beverage business, pharmaceutical business and common support function business and transfer such businesses to, and integrate such businesses into, each of the Succeeding Companies, with the following goals for each of the Succeeding Companies. With respect to the domestic alcoholic beverage business and pharmaceutical business, Kirin Holdings and Kirin Pharma aim to improve their ability to respond to market conditions and changes in the environment in order to promote further growth based on their autonomous management. With respect to the common support functions business, Kirin Business Expert will seek to rationalize group-wide common support functions, including accounting and personnel functions.
The Company will continue to make efforts to further enhance the Group's corporate value and will commit itself, as a pure holding company, to (i) promote Group-wide management strategies, promote investment decisions and financial strategies that are ideal for the Group and the Group-wide use of technologies resulting from R&D activities and intellectual property, (ii) create and expand new businesses and (iii) strengthen the synergies between businesses.
2. Outline of Corporate Split
(1) Schedule of Corporate Split
| Meeting of the Board of Directors for Approval of Corporate Split |
Wednesday, February 7, 2007 |
| Execution of the Corporate Split Agreements |
Wednesday, February 7, 2007 |
| General Meetings of Shareholders of the Succeeding Companies for Approval of Corporate Split |
Tuesday, March 27, 2007 (planned) |
| General Meetings of Shareholders of the Company for Approval of Corporate Split |
Wednesday, March 28, 2007 (planned) |
| Effective Date of Corporate Split |
Sunday, July 1, 2007 (planned) |
(2) Method of Corporate Split
The Company, as the Transferor Company, will physically transfer ( Butteki Bunkatsu ) certain of its businesses to Kirin Holdings, Kirin Pharma and Kirin Business Expert, as the Succeeding Companies.
(3) Number of shares to be allotted
The Company will receive an allotment of 200 shares of Kirin Holdings, 10,000 shares of Kirin Pharma and 40,000 shares of Kirin Business Expert, respectively.
(4) Basis for calculation of number of shares to be allotted
a. Basis and background of calculation
As the Succeeding Companies are the Company's wholly owned subsidiaries, and the Corporate Split will be implemented pursuant to a Butteki Bunkatsu, the Company and each of the Succeeding Companies have discussed and determined the number of shares to be allocated from the Succeeding Companies to the Company based on the amount of net assets per share, among other factors.
b. Relationship with Appraiser
No appraisal by a third party financial institution has been conducted regarding the fairness of such share allotments since this corporate split scheme is a split ( Kyushu Bunkatsu and Butteki Bunkatsu ) in which the Company's wholly owned subsidiaries succeed the Company's businesses.
(5) Reduction of capital due to Corporate Split
None.
(6) The Company's treatment of stock acquisition rights and bonds with stock acquisition rights
The Company has not issued any stock acquisition rights or bonds with stock acquisition rights.
(7) Rights and obligations to be transferred to the Succeeding Company
Except as otherwise provided in the Corporate Split Agreement entered into between the Company and Kirin Holdings dated as of February 7, 2007, Kirin Holdings will assume, as of the effective date of the Corporate Split, all assets and rights that the Company then holds for the operation of its domestic alcoholic beverage business, liabilities and obligations incidental thereto and other rights and obligations with regard to the above.
Except as otherwise provided in the Corporate Split Agreement entered into between the Company and Kirin Pharma dated as of February 7, 2007, Kirin Pharma will assume, as of the effective date of the Corporate Split, all assets and rights that the Company then holds for the operation of its pharmaceutical business, liabilities and obligations incidental thereto and other rights and obligations with regard to the above.
Except as otherwise provided in the Corporate Split Agreement entered into between the Company and Kirin Business Expert dated as of February 7, 2007, Kirin Business Expert will assume, as of the effective date of the Corporate Split, all assets and rights that the Company then holds for the operation of its common functions business, liabilities and obligations incidental thereto and other rights and obligations with regard to the above.
(8) Prospect of performance of obligations
The Company took into account the assets and liabilities of the Company and each of the Succeeding Companies stated in their balance sheet for their respective most recently ended fiscal years in order to account for the amount of assets and liabilities to be succeeded by each of the Succeeding Companies. The Company also considered the post-Corporate Split assets and liabilities as well as the revenue outlook for the Company and each of the Succeeding Companies. As a result, the Company determined that, after the Corporate Split, all obligations to be incurred by the Company and the Succeeding Companies are likely to be fully performed, because the Company does not presently foresee any difficulties which potentially prevent the performance of such obligations. As a result of the obligations and responsibilities being transferred to the Succeeding Companies, the Company shall be released from such obligations and responsibilities.
3. Outline of the parties
(1) Transferor Company
| (1) |
Trade name |
Kirin Brewery Company, Limited
(The Company's name is expected to be changed to Kirin Holdings, Co., Ltd. as of July 1, 2007.) |
| (2) |
Main business |
Manufacturing and sales of beer, pharmaceutical products, etc. |
| (3) |
Date of incorporation |
February 23, 1907 |
| (4) |
Address of head office |
10-1, Shinkawa 2-chome, Chuo-ku, Tokyo |
| (5) |
Name and title of representative |
Kazuyasu Kato, President and Representative Director |
| (6) |
Common stock |
102,045 million yen (as of December 31, 2006) |
| (7) |
Outstanding shares |
984,508,387 shares (as of December 31, 2006) |
| (8) |
Net assets |
1,043,724 million yen (consolidated)
(as of December 31, 2006) |
| (9) |
Total assets |
1,963,586 million yen (consolidated)
(as of December 31, 2006) |
| (10) |
Fiscal year end |
December 31 |
| (11) |
Number of employees |
23,332 (consolidated) (as of December 31, 2006) |
| (12) |
Main business partners |
Domestic and overseas alcoholic beverage wholesalers and distributors, domestic and overseas alcoholic beverage manufactures |
| (13) |
Composition of major shareholders and shareholding ratios (as of December 31, 2006) |
Moxley & Co. (5.07%)
Meiji Yasuda Life Insurance Company (4.44%)
Japan Trustee Service Bank Ltd. (Trust account) (3.91%) |
| (14) |
Main financing banks |
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
The Norinchukin Bank |
| (15) |
Relationship between the parties concerned |
Capital relationship |
The Succeeding Companies are wholly owned subsidiaries of the Transferor Company. |
| Personnel relationship |
Certain employees of the Transferor Company have been seconded as officers of the Succeeding Companies. |
| Transaction relationship |
There are no significant transactions. |
| Status of relationships with related parties |
The Transferor Company is a 100% parent company of each Succeeding Company. |
(16) Business results for the three most recent fiscal years
(millions of yen)
| |
Kirin Brewery Company, Limited
(consolidated) |
| Fiscal year end |
Fiscal Year ended
December 2004 |
Fiscal Year ended
December 2005 |
Fiscal Year ended
December 2006 |
| Net sales |
1,654,886 |
1,632,249 |
1,665,946 |
| Operating income |
109,392 |
111,708 |
116,358 |
| Ordinary income |
106,562 |
114,881 |
120,865 |
| Net income |
49,099 |
51,263 |
53,512 |
| Net income per share (yen) |
50.58 |
53.23 |
55.98 |
| Dividend per share (yen) |
13.50 |
14.50 |
17.00 |
| Net assets per share (yen) |
888.65 |
1,016.74 |
1,040.44 |
(2) Succeeding Companies
| (1) |
Trade name |
Kirin Holdings Company, Limited (The Company's name is expected to be changed to Kirin Brewery, Co., Ltd. as of July 1, 2007.) |
Kirin Pharma Company, Limited |
Kirin Business Expert Company, Limited |
| (2) |
Main business |
No business has been conducted before the Corporate Split. |
No business has been conducted before the Corporate Split. |
No business has been conducted before the Corporate Split. |
| (3) |
Date of incorporation |
March 2, 1998 |
April 25, 1958 |
August 14, 1980 |
| (4) |
Address of head office |
10-1, Shinkawa 2-chome, Chuo-ku, Tokyo |
26-1, Jingumae 6-chome, Shibuya-ku, Tokyo |
26-1, Jingumae 6-chome, Shibuya-ku, Tokyo |
| (5) |
Name and title of representative |
Senji Miyake ,
President and Representative Director |
Katsuhiko Asano,
President and Representative Director |
Mamoru Yokomatsu,
President and Representative Director |
| (6) |
Common stock |
10 million yen
(as of December 31, 2006) |
10 million yen
(as of December 31, 2006) |
80 million yen
(as of December 31, 2006) |
| (7) |
Outstanding shares |
200 shares
(as of December 31, 2006) |
20,000 shares
(as of December 31, 2006) |
160,000 shares
(as of December 31, 2006) |
| (8) |
Net assets |
18 million yen
(non-consolidated) (as of December 31, 2006) |
467 million yen (non-consolidated)
(as of December 31, 2006) |
-8 million yen (non-consolidated)
(as of December 31, 2006) |
| (9) |
Total assets |
18 million yen (non-consolidated)
(as of December 31, 2006) |
467 million yen (non-consolidated)
(as of December 31, 2006) |
49 million yen (non-consolidated)
(as of December 31, 2006) |
| (10) |
Fiscal year end |
December 31 |
December 31 |
December 31 |
| (11) |
Number of employees |
0 (non-consolidated)
(as of December 31, 2006) |
0 (non-consolidated)
(as of December 31, 2006) |
0 (non-consolidated)
(as of December 31, 2006) |
| (12) |
Major business partners |
None |
None |
None |
| ( 13) |
Major shareholders and shareholding ratios (as of December 31, 2006) |
Kirin Brewery Company, Limited 100% |
Kirin Brewery holds all 10,000 outstanding shares (excluding 10,000 treasury shares owned by Kirin Pharma) |
Kirin Brewery Company, Limited 100% |
| (14) |
Main financing banks |
The Bank of Tokyo-Mitsubishi UFJ, Ltd. |
The Bank of Tokyo-Mitsubishi UFJ, Ltd. |
The Bank of Tokyo-Mitsubishi UFJ, Ltd. |
| (15) |
Relationship between the parties concerned |
Capital relationship |
The Succeeding Company is a wholly owned subsidiary of the Transferor Company. |
The Succeeding Company is a wholly owned subsidiary of the Transferor Company. |
The Succeeding Company is a wholly owned subsidiary of the Transferor Company. |
| Personnel relationship |
Certain employees of the Transferor Company have been seconded as officers of the Succeeding Company. |
Certain employees of the Transferor Company have been seconded as officers of the Succeeding Company. |
Certain employees of the Transferor Company have been seconded as officers of the Succeeding Company. |
| Transaction relationship |
There are no significant transactions. |
There are no significant transactions. |
There are no significant transactions. |
| Status of relationships with related parties |
The Succeeding Company is a wholly owned subsidiary of the Transferor Company. |
The Succeeding Company is a wholly owned subsidiary of the Transferor Company. |
The Succeeding Company is a wholly owned subsidiary of the Transferor Company. |
(16) Business results for the most recent three fiscal years
(millions of yen)
| |
Kirin Holdings Company, Limited
(non-consolidated) |
Kirin Pharma Company, Limited
(non-consolidated) |
Kirin Business Expert Company, Limited
(non-consolidated) |
| Fiscal year end |
FY ended December 2004 |
FY ended December 2005 |
FY ended December 2006 |
FY ended December 2004 |
FY ended December 2005 |
FY ended December 2006 |
FY ended December 2004 |
FY ended December 2005 |
FY ended December 2006 |
| Net sales |
- |
- |
- |
6,945 |
3,083 |
- |
8,181 |
7,224 |
- |
| Operating income |
- 0 |
- 0 |
- 0 |
527 |
176 |
- 7 |
38 |
33 |
- 19 |
| Ordinary income |
- 0 |
- 0 |
- 0 |
669 |
318 |
1,494 |
38 |
33 |
- 25 |
| Net income |
- 0 |
- 0 |
- 0 |
534 |
498 |
1,797 |
24 |
- 71 |
- 25 |
| Net income per share (yen) |
- 1,864 |
- 548 |
- 1,893 |
26,708 |
24,943 |
179,745 |
153 |
- 444 |
- 159 |
| Dividend per share (yen) |
- |
- |
- |
16,500 |
- |
230,000 |
137.5 |
- |
- |
| Net assets per share (yen) |
93,070 |
92,522 |
90,628 |
175,711 |
184,848 |
46,741 |
688 |
107 |
- 52 |
(Note) Net income per share, dividend per share and net assets per share of Kirin Pharma are calculated by deducting 10,000 treasury shares from the aggregate number of outstanding shares.
4. Outline of businesses to be split and transferred
(1) Main businesses to be split and transferred
Alcoholic beverage business, pharmaceutical business, and common support function business
(2) Operating results of the businesses to be split and transferred
(hundred-million yen)
| |
Domestic alcoholic beverage business (a) |
Result at FY ended December 2006 (b) |
Ratio (a/b) |
| Net sales |
8,851 |
9,607 |
92.04% |
| Gross profit |
2,609 |
3,140 |
83.11% |
| Operating income |
545 |
599 |
90.99% |
| |
Pharmaceutical business (a) |
Result at FY ended December 2006 (b) |
Ratio (a/b) |
| Net sales |
618 |
9,607 |
6.44% |
| Gross profit |
513 |
3,140 |
16.34% |
| Operating income |
105 |
599 |
17.63% |
| |
Common support function business (a) |
Result at FY ended December 2006 (b) |
Ratio (a/b) |
| Net sales |
- |
9,607 |
- |
| Gross profit |
- |
3,140 |
- |
| Operating income |
- 48 |
599 |
- 8.09% |
(3) Line-items and value of assets and liabilities of the businesses to be split and transferred
The Company will disclose the recent line-items and book values of assets and liabilities to be transferred to Kirin Holdings, Kirin Pharma and Kirin Business Expert, respectively, upon the implementation of the Corporate Split, as soon as such line-items and book values are determined.
5. Post-Corporate Split status of the Company as a listed company
| (1) |
Trade name |
Kirin Brewery Company, Limited
(The Company's name is expected to be changed to Kirin Holdings, Co., Ltd. as of July 1, 2007.) |
| (2) |
Main business |
Pure holding company |
| (3) |
Address of head office |
10-1, Shinkawa 2-chome, Chuo-ku, Tokyo |
| (4) |
Name and title of representative |
Kazuyasu Kato, President and Representative Director |
| (5) |
Common stock |
102,045,793,357 yen |
| (6) |
Net assets |
There will be no changes in net assets (consolidated) due to the Corporate Split. |
| (7) |
Total assets |
There will be no changes in total assets (consolidated) due to the Corporate Split. |
| (8) |
Fiscal year end |
December 31 |
(9) Outline of accounting treatment
Because the Corporate Split will be implemented among the same group companies (as classified for the purpose of the corporate integral accounting), there will be no effect on the Company's profit and loss. Furthermore, there will be no goodwill of business to be produced due to the Corporate Split.
(10) Prospects of impact on business results due to Corporate Split
1) Prospects of consolidated business results after the Corporate Split
Because each of the Succeeding Company is a wholly owned subsidiary of the Company, impact of the Corporate Split on the Company's consolidated business result is expected to be insignificant.
2) Prospects of non-consolidated business results after the Corporate Split
Because the Company's main business will be transferred to the Succeeding Companies upon the implementation of the Corporate Split, the Company expects to record dividends income, among other things, from each of its group companies, and the Company, as the holding company, will bear certain of the operating costs.
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