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October 15, 2012

Notice of Intragroup Company Split (Conclusion of Absorption-type Company Split Agreements) for Establishment of New Domestic Integrated Beverage Company

Kirin Holdings Company, Limited (president and CEO: Senji Miyake; hereafter: “KH”) announced the establishment of a new domestic integrated beverage company, Kirin Company, Limited on August 3 2012. At a KH board meeting today a decision was made to approve an absorption-type company split agreement with Kirin Group Office Company, Limited (whose name is planned to be changed to Kirin Company, Limited on January 1, 2013; hereafter: “the succeeding company”). This agreement stipulates that the succeeding company, the wholly-owned subsidiary of KH, will assume management of certain business areas of KH related to administrative functions and specialist service provision functions for the domestic integrated beverage business, as well as receive all the stock of KH’s wholly-owned subsidiaries Kirin Brewery Company, Limited, Kirin Beverage Company, Limited, and Mercian Corporation. On the same day, this agreement was concluded with the succeeding company and a notice of this follows (hereafter: “the split”). In addition, certain information is omitted from this announcement, since the split is one in which KH’s wholly-owned subsidiary will assume management of certain business areas of KH.

Also, Kirin Brewery Company, Limited, Kirin Beverage Company, Limited, and Mercian Corporation (hereafter collectively referred to as “the split subsidiaries”), which will be made wholly-owned subsidiaries of the succeeding company by the split, respectively concluded absorption-type company split agreements today with the succeeding company. The succeeding company will assume management of certain business areas of the split subsidiaries related to headquarter functions including planning and PR for the alcohol and non-alcohol beverage business conducted by the split subsidiaries, as well as that related to research and development functions. For these company splits (hereafter: “the subsidiary splits”) as well, some information is disclosed in this announcement in order to clarify the overall state of the establishment of this new domestic integrated beverage company.

Provisions

1.Purpose of the Split and the Subsidiary Splits

The long-term Kirin Group Vision (KV2015) has promoted an integrated beverage business strategy thus far, calling for “stronger tie-ups along the entire alcoholic and soft drink value chains and creation of value that responds to expectations from our customers and communities.” This has yielded a certain amount of success. However, severe conditions are expected to continue in both the alcoholic and soft drink markets. In order to achieve further growth in the domestic integrated beverage business, we must transcend the category-based framework to gain a broad perspective on the market, and also select and concentrate brands. Conscious of these challenges, we have decided to establish Kirin Company, Limited to promote domestic brand-centered management in a speedy and efficient manner.
Through a wide range of business activities under a new structure, we aim to create shared value with customers and communities, strengthening core brands and pursuing innovation by selectively allocating strategic resources within and across alcohol and soft drink businesses. We will also support a strong competitive position through structural measures such as improving the efficiency of overlapping functions and reducing costs. We will also apply the knowledge and experience gained in both alcohol and soft drink operations to develop new categories and business models that can drive growth.

2.Summary of the Split and the Subsidiary Splits

  • 1)Schedule of Company Splits
  • Date of board resolutions:
    (KH, the split subsidiaries, and the succeeding company)
    October 15, 2012
    Date of conclusion of the company split agreements:
    October 15, 2012
    Date of general shareholder meeting resolutions:
    (split subsidiaries and the succeeding company only)*
    December 11, 2012 (scheduled)
    Effective date of the split and the subsidiary splits:
    January 1, 2013 (scheduled)
    • * Since the split corresponds to a small-scale split as stipulated in Article 784, Paragraph 3 of the Japanese Companies Act, KH will implement the split without a resolution at a general shareholders’ meeting.
  • 2)Method of Company Splits
  • The following absorption-type company splits will be implemented on the same day.
    The split:
    Between KH (as the company implementing the split) and KH’s wholly-owned subsidiary Kirin Group Office Company, Limited (as the succeeding company)
    The subsidiary splits:
    Between Kirin Brewery Company, Limited, Kirin Beverage Company, Limited, and Mercian Corporation (as the respective companies implementing the splits) and Kirin Group Office Company, Limited (as the succeeding company)
  • 3)Details of Share Allocation in the Split
  • For the split, the succeeding company will issue 50,000 shares of common stock, and the total number will be allocated and transferred to KH.
  • 4)Treatment of Stock Acquisition Rights and Corporate Bonds with Stock Acquisition Rights of the Companies implementing Company Splits
  • Neither KH nor the split subsidiaries have issued stock acquisition rights or corporate bonds with stock acquisition rights.
  • 5)Capital Increase or Decrease caused by Company Splits
  • There will be no increase or decrease in KH’s capital caused by the split, and no increases or decreases to the capital of the split subsidiaries caused by the subsidiary splits.
  • 6)Rights and Obligations to be assumed by the Succeeding Company
  • a)After the split, the succeeding company will assume certain business areas of KH related to administrative functions and specialist service provision functions for the domestic integrated beverage business. (This excludes areas stipulated as not to be assumed in the absorption-type company split agreement.)
  • b)After the subsidiary splits, the succeeding company will assume certain business areas of the split subsidiaries related to headquarter functions including planning and PR for the alcohol and non-alcohol beverage business, as well as that related to research and development functions. (This excludes areas stipulated as not to be assumed in the absorption-type company split agreements.)
    • * In addition, the liabilities to be assumed by the succeeding company will be dealt with under the method of noncumulative taking of obligation.
  • 7)Expectations regarding Ability to Perform Liability Obligations
  • KH, the split subsidiaries and the succeeding company expect that the company splits will not have a material impact on the ability of each party to fulfill performance of its liability obligations which become due after the effective date of the company splits.

3.Outline of Companies in the Split Transfer (information as of 15 October, 2012 unless otherwise indicated)

  The Company implementing the Split The Succeeding Company
(1) Trade name Kirin Holdings Company, Limited Kirin Group Office Company, Limited*
(2) Address 2-10-1 Shinkawa, Chuo-ku, Tokyo, Japan 2-10-1 Shinkawa, Chuo-ku, Tokyo, Japan
(3) Title and name of representative President and CEO, Senji Miyake President and CEO, Hiroshi Ogawa
(4) Business area Group strategy formulation, business management, specialist service provision Group accounting, human resources, general affairs, procurement, quality control and environmental management and IT system strategy formulation and promotion, as well as group corporate functions
(5) Capital 102,045 million yen 90 million yen
(6) Establishment date 23 February, 1907
(with change to group company holding structure on 1 July 2007, name changed from Kirin Brewery Company, Limited)
14 August, 1980
(with group reorganization effective 1 January 2011, name changed from Kirin Business Expert Company, Limited launched on 1 July, 2007)
(7) Outstanding shares 965,000,000 200,000
(8) Fiscal year ending 31 December 31 December
(9) Major shareholders and percentage of shares held (as of 30 June, 2012)
- The Master Trust Bank of Japan, Ltd. (trust a/c)
5.07%
- Japan Trustee Service Bank, Ltd. (trust a/c)
4.84%
- Meiji Yasuda Life Insurance Company
3.63%
- Isono Shokai, Limited
2.41%
- SSBT OD05 OMNIBUS ACCOUNT-TREATY CLIENTS
2.04%
- Kirin Holdings Company, Limited
100%

(10) Financial Data and Business Results for Latest Full Fiscal Year

  Kirin Holdings Company, Limited
Consolidated
Kirin Group Office Company, Limited*
Parent
Fiscal year 2011 2011
Net assets 1,047,895 million yen 1,540 million yen
Total assets 2,854,254 million yen 8,030 million yen
Net assets per share 886.86 yen 7,703.30 yen
Sales 2,071,774 million yen 10,765 million yen
Operating income 142,864 million yen 874 million yen
Ordinary income 136,818 million yen 824 million yen
Net income 7,407 million yen 420 million yen
Net income per share 7.70 yen 2,104.14 yen
  • * Trade name will be changed to Kirin Company, Limited on 1 January, 2013.

4.Outline of Business subject to the Split

  • 1)Business Areas
  • Business areas related to administrative functions and specialist service provision functions for the domestic integrated beverage business, and all the shares of KH’s 100%-owned subsidiaries (Kirin Brewery Company, Kirin Beverage Company, and Mercian Corporation)
  • 2)Fiscal 2011 Performance of Business Areas subject to the Split
  • Sales:
    77,461 million yen
    • *As a holding company, these consist of dividends and management fees received from the three subsidiaries indicated in 1).
  • 3)Asset and Liability Items and Amounts subject to the Split (as of 31 December, 2011)
  • Assets:
    123,950 million yen
    Liabilities:
    None
    • *Prior to the split date, adjustments will be made to the indicated figures.

5.Picture of KH following the Split (expected as of 1 January, 2013)

  The Company implementing the Split
(1) Trade name Kirin Holdings Company, Limited
(2) Address 2-10-1 Shinkawa, Chuo-ku, Tokyo, Japan
(3) Title and name of representative President and CEO, Senji Miyake
(4) Business area Group corporate strategy formulation, business administration
(5) Capital 102,045 million yen
(6) Fiscal year ending 31 December

6.Picture of the Succeeding Company following the Split (expected as of 1 January 2013)

  The Succeeding Company
(1) Trade name Kirin Company, Limited
*Trade name to be changed from current Kirin Group Office Company, Limited on 1 January, 2013
(2) Address 6-26-1 Jingumae, Shibuya-ku, Tokyo ,Japan
(3) Title and name of representative President and CEO, Yoshinori Isozaki
(4) Business area Administrative functions and specialist service provision functions for the domestic integrated beverage business
(5) Capital 500 million yen
(6) Fiscal year ending 31 December

7.Future Outlook

Influence on company performance from the split is expected to be very limited on both a parent and a consolidated basis.

(For Reference) Current Fiscal Year Consolidated Forecasts released on 3 August and Previous Fiscal Year Consolidated Results

(Million yen)

  Sales Operating income Ordinary income Net income
Fiscal Year 2012 Forecasts 2,220,000 155,000 134,000 48,000
Fiscal Year 2011 Results 2,071,774 142,864 136,818 7,407

(Additional Information)

Group Structure Outline


  • Kirin Holdings Inquiry Form: http://www.kirinholdings.co.jp/english/customer/
  • Kirin Holdings Web Site: http://www.kirinholdings.co.jp/english/

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