REG-Mitsui & Co Ltd Notice concerning the conclusion of a basic agreement on the merger of Mitsui Bussan I-Fashion Ltd. with the textiles business of Nippon Steel Trading Corporation, an agreement concerning an absorption-type split, and shareholders’ agreement
25/08/2021 08:15
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Notice concerning the conclusion of a basic agreement on the merger of Mitsui
Bussan I-Fashion Ltd. with the textiles business of Nippon Steel Trading
Corporation, an agreement concerning an absorption-type split, and
shareholders’ agreement
This announcement is for our U.S.$5,000,000,000 Euro Medium Term Note
Programme.
August 25, 2021
For Immediate Release
To whom it may concern
Mitsui & Co., Ltd.
Mitsui & Co., Ltd. (“Mitsui”, Head Office: Tokyo, President & CEO:
Kenichi Hori) is pleased to announce that Mitsui, Mitsui Bussan I-Fashion Ltd.
(“MIF”, Head Office: Tokyo), which is Mitsui’s core business company in
the fashion and textiles business, and Nippon Steel Trading Corporation
(“NST”, Head Office: Tokyo, President and Representative Director:
Yasumitsu Saeki) will conclude a basic merger agreement (the “Merger
Agreement”) regarding the merger between MIF and NST’s textile businesses
(the “Merger”) and a shareholders’ agreement, and that MIF and NST will
conclude an absorption-type split agreement (the “Split Agreement”) under
which MIF will succeed NST’s textile business (the “Split”).
Details
1. Purpose of the Merger
The pace of change in the domestic and overseas business environment for the
textiles business is accelerating. In particular, the Japanese apparel OEM
market (OEM: original equipment manufacturers, contract manufacturers of
products under other parties’ brands) has been shrinking, and combined with
the impact of the COVID-19 pandemic, the business environment is expected to
become increasingly severe. Under such circumstances, the policies of Mitsui
and NST, both of which have been exploring opportunities to strengthen their
respective textiles business platforms and pursuing sustainable growth and
development, aligned with each other, and on February 3, 2021, the two
companies concluded a basic agreement regarding the commencement of
discussions on the Merger. After engaging in specific negotiations on and
examinations of the Merger, both companies finally agreed to conclude the
above agreements regarding the Merger.
We will work to enhance the corporate value of the merged company through the
following measures.
(1) Reinforcement of the platform for the core OEM business
MIF and NST aim to improve competitiveness and build a robust business base by
maximizing the synergy benefits resulting from the combination and
complementation of marketing capabilities, customer networks, and their
respective areas of strength in terms of products and services, and by using
the increased scale resulting from the Merger to enhance efficiency and
strengthen functions, especially in relation to procurement.
(2) Creation of business opportunities in new growth areas
Mitsui and NST will make optimal use of their business resources across their
entire supply chains from upstream to downstream areas to expand business in
overseas markets with growth potential. They will also work to achieve
sustainable growth through the use of digital technology to provide new
services, as well as the creation of new business opportunities focusing on
sustainability, such as the utilization of recyclable materials, and the
establishment of a product recycling system.
(3) Deepening of value provided to customers
Mitsui and NST aim to help customers to achieve innovation (such as cost
reduction, business process digitalization, and sustainability response)
through new initiatives based on the application of digital technology to
functional processes, such as planning, production, and logistics, using
textiles business knowledge that they have accumulated over many years,
together with their integrated strengths and procurement networks.
2. Outline of the Merger
(1) Schedule for the Merger and the Split
Date of conclusion of agreements August 25, 2021 (today)
General Meeting of Shareholders (MIF) (Approval for the Split Agreement) August 25, 2021 (today)
Effective date of the Merger January 1, 2022 (tentative)
Note: This Merger will be carried out only after obtaining, from relevant
authorities, the permits and approvals that are necessary to execute the
Merger in accordance with the antitrust laws of Japan and the other countries
concerned, and after completing all other necessary procedures. The
above-mentioned dates are a planned schedule at present, and in the case where
there is a change in this schedule for reasons related to the acquisition of
permits and approvals from relevant authorities or other such reasons during
the procedures in accordance with the Merger, such a change will be promptly
announced.
(2) Method for the Split
The absorption-type split will be implemented with NST as the splitting
company and MIF as the succeeding company.
(3) Allocations relating to the Split
MIF will issue and allocate 4,133 new shares of MIF to NST as compensation for
the Split. As a result, Mitsui and NST will each hold a 50% stake in the
succeeding company as of the effective date of the Split after the completion
of the Split. MIF will no longer be Mitsui’s consolidated subsidiary but
Mitsui’s equity method affiliate.
It is to be noted that by the date prior to the effective date of the Split,
Mitsui will make an in-kind contribution, including its owned assets related
to the textile business, to MIF, and will subscribe for new shares to be
issued by MIF, and as a result, the number of common shares of MIF owned by
Mitsui will be 4,133 (the number of common shares of MIF that are owned by
Mitsui as of August 25, 2021, is 4,132).
(4) Handling of share options and bonds with share options arising from the
Split
There are no applicable items.
(5) Changes in capital due to the Split
At present, the capital of the succeeding company after the Split has not been
determined.
(6) Rights and obligations inherited by the succeeding company
The rights and obligations that MIF will inherit from NST are those stipulated
in the Split Agreement regarding the rights and obligations NST owns in
relation to its textile business.
(7) Expectation of performance of liabilities
There is no expectation of problems concerning the performance of liabilities
payable by the succeeding company after the effective date of the Split.
3. Basis for Calculation of Allocations Pertaining to the Split
To ensure the fairness and appropriateness of the allocation of ordinary MIF
shares to NST as a result of the Split, Mitsui retained an external financial
advisor to carry out the calculation using the comparable company analysis and
discounted cash flow methods.
4. Profiles of Parties to the Split
(Unless stated otherwise, as of March 31, 2021)
Splitting Company Succeeding Company
1 Name Nippon Steel Trading Corporation Mitsui Bussan I-Fashion Ltd.
2 Address 5-27, Akasaka 8-chome, Minato-ku, Tokyo 6-12, Kita-Aoyama 3-chome, Minato-ku, Tokyo
3 Name and title of representative Yasumitsu Saeki, President and Representative Director Atsushi Imai, President & CEO
4 Business activities Marketing and import/export of steel, industrial supply and infrastructure, Procurement and sales of functional materials and textiles, industrial
textiles, foodstuffs and others materials, apparel, general clothing products, brand marketing, and other
business related to textiles and fashion
5 Capital ¥16,389 million ¥865 million
6 Established August 2, 1977 July 3, 1992
7 Shares issued 32,307,800 4,105
8 End of fiscal year March 31 March 31
9 Employees Non-Consolidated: 1,840 410
Consolidated: 9,028
10 Main banks Sumitomo Mitsui Banking Corporation Sumitomo Mitsui Banking Corporation
MUFG Bank, Ltd. Mizuho Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
11 Main shareholders and percentage of shares held (as of March 31, 2021) Nippon Steel Corporation 34.5% Mitsui & Co., Ltd. 100%
Mitsui & Co., Ltd. (standing proxy: Custody Bank of Japan, Ltd.) 19.9%
Custody Bank of Japan, Ltd. (trust accounts) 4.9%
The Master Trust Bank of Japan, Ltd. (trust accounts) 4.4%
Custody Bank of Japan, Ltd. (Trust Account 9) 1.6%
12 Relationship between the parties
Capital relationship None
Personal relationship None
Business relationship None
Applicability to related parties None
13 Financial results and financial position in each of the past three fiscal
years (unit: 100 million yen)
Fiscal year ended Nippon Steel Trading Corporation (Consolidated) Mitsui Bussan I-Fashion Ltd.
March 2019 March 2020 March 2021 March 2019 March 2020 March 2021
Net assets 2,493 2,548 2,782 48 64 90
Total assets 9,601 8,577 8,834 510 465 399
Net assets per share (yen) 7,150.13 7,329.73 7,922.37 1,186,248.17 1,575,474.42 2,209,458.81
Net sales 25,506 24,802 20,732 1,103 1,082 796
Operating profit 361 320 222 18 21 11
Ordinary profit 364 332 256 18 22 13
Net profit for the period 232 207 159 13 15 9
Net profit for the period per share (yen) 720.68 641.97 493.98 330,322.55 389,628.35 226,498.81
Dividend per share (yen) 220.00 200.00 160.00 - - -
5. Outline of the Business to be Succeeded
(1) Description of the business to be succeeded
The textiles business operated by NST’s Textiles Division
(2) Financial performance of the business to be succeeded
(Unit: 100 million yen)
FYE March 2019 FYE March 2020 FYE March 2021
Consolidated net sales 1,508 1,300 984
Consolidated ordinary profit 44 46 16
(3) Assets, liabilities and book value of the business to be succeeded (FYE
March 2021)
(Unit: 100 million yen)
Assets Liabilities
Trade receivables 39 Trade payables 106
Inventories 79 Others 41
Others 184
Total 303 Total 148
Note: The assets and liabilities to be succeeded were calculated using the
balance sheet as of March 31, 2021. The actual amounts of assets and
liabilities succeeded will be finalized after adjustment for changes in the
period to the effective date for the Split.
6. Situation after the Split
There will be no change in the name, location, name and title of the
representative, business activities, capital, and fiscal period of NST (the
splitting company) through the Split.
The name, location, name and title of the representative, capital, and fiscal
period of the succeeding company after the Split have not been determined yet.
Through the Split, there will be no change in the business activities of the
succeeding company described in the above “4. Profiles of Parties to the
Split”.
7. Outlook
Mitsui is expected to record a profit in line with the business restructuring
along with the Split, and the Forecast for the Year Ending March 31, 2022,
announced on August 3, 2021, has not factored in such a profit.
For further information, please contact:
Mitsui & Co., Ltd.
Investor Relations Division Tel: +81-3-3285-7657
Corporate Communications Division Tel: +81-80-5912-0321
Notice:
This announcement contains forward-looking statements. These forward-looking
statements are based on Mitsui's current assumptions, expectations and beliefs
in light of the information currently possessed by it and involve known and
unknown risks, uncertainties and other factors. Such risks, uncertainties and
other factors may cause Mitsui’s actual results, financial position or cash
flows to be materially different from any future results, financial position
or cash flows expressed or implied by these forward- looking statements. These
risks, uncertainties and other factors referred to above include, but are not
limited to, those contained in Mitsui's latest Annual Securities Report and
Quarterly Securities Report, and Mitsui undertakes no obligation to publicly
update or revise any forward-looking statements. This announcement is
published in order to publicly announce specific facts stated above, and does
not constitute a solicitation of investments or any similar act inside or
outside of Japan, regarding the shares, bonds or other securities issued by
us.
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