REG - Toyota Motor Corpn - Repurchase of Shares Through Tender Offer

TOYOTA MOTORAnnouncement

23/07/2024 08:15

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RNS Number : 4311X  Toyota Motor Corporation  23 July 2024

This press release may not be published, distributed or diffused in the United
States of America.

This press release is not an extension into the United States of the tender
offer mentioned herein. Please see the important notice at the end of this
press release.

 

(Reference Translation)

 

July 23, 2024

 

Company name:  TOYOTA MOTOR CORPORATION

Representative:    Koji Sato, President

(Code number: 7203; TSE Prime/NSE Premier)

Inquiries:             Yoshihide Moriyama, General Manager,
Capital Strategy & Affiliated Companies Finance Div.

(Telephone: 0565-28-2121)

 

Notice Concerning Repurchase of Shares Through Tender Offer

 

TOYOTA MOTOR CORPORATION (the "Company") hereby announces that, by way of a
written resolution dated July 23, 2024 in lieu of a resolution of the board of
directors pursuant to Article 370 of the Companies Act (Act No. 86 of 2005, as
amended; the "Companies Act") and its articles of incorporation, it has
resolved to acquire its treasury shares and to conduct a tender offer as a
specific method of acquiring such shares (the "Tender Offer"), in each case
pursuant to Article 156, Paragraph 1 of the Companies Act, which is applicable
in accordance with Article 165, Paragraph 3 of the Companies Act, and its
articles of incorporation.

 

 

1. Purpose of purchase, etc.

The Company regards the enhancement of shareholders' interests as one of its
important management policies, and is committed to improving its corporate
structure and increasing its corporate value in order to achieve sustainable
growth. With regard to dividends, the Company strives to increase its dividend
payments in a stable and continuous manner.

In order to survive fierce competition and to transform itself into a mobility
company, the Company uses retained earnings to invest in next-generation
growth drivers, including environmental technologies to realize a
carbon-neutral society and safety technologies for the safety and security of
customers, and to create benefits for all stakeholders, including employees,
business partners and local communities.

The Company's basic policy is to pay interim and year-end dividends as
dividends of surplus (jouyokin no haitou) twice a year, and the Company
resolves to pay these dividends pursuant to the articles of incorporation at a
meeting of the board of directors.

In the fiscal year ended March 31, 2024, the Company paid an interim dividend
of 30 yen per share and a year-end dividend of 45 yen per share, with a payout
ratio (consolidated) of 20.4%.

The Company's articles of incorporation provide that the Company may, pursuant
to Article 165, Paragraph 2 of the Companies Act, repurchase its treasury
shares by a resolution of the board of directors without a resolution of the
general meeting of shareholders. The purpose of this provision is to implement
a flexible capital policy in response to the business environment. During the
past 10 years ending July 23, 2024, the Company repurchased its treasury
shares through market purchases on the Tokyo Stock Exchange (the "TSE") as
shown in the table below:

 

 Date of Resolution                                             Cumulative Acquisition Period          Cumulative Number of Shares Acquired (Note 1)  Cumulative Total Acquisition Price
 June 17, 2014                                                  July 1, 2014 -                         55,521,900 shares                              359,994,187,054 yen

 (at the meeting of the board of directors held on that date)   December 11, 2014                      (277,609,500 shares)
 April 28, 2015                                                 August 10, 2015 -                      47,100,000 shares                              348,212,313,403 yen

 (at the meeting of the board of directors held on that date)   October 29, 2015                       (235,500,000 shares)
 May 8, 2015                                                    November 16, 2015 -                    39,942,900 shares                              293,369,559,900 yen

 (at the meeting of the board of directors held on that date)   January 28, 2016                       (199,714,500 shares)
 November 5, 2015                                               February 8, 2016 -                     23,000,000 shares                              139,306,482,600 yen

 (at the meeting of the board of directors held on that date)   March 9, 2016                          (115,000,000 shares)
 May 11, 2016                                                   May 18, 2016 -                         87,522,700 shares                              499,984,872,900 yen

 (at the meeting of the board of directors held on that date)   September 2, 2016                      (437,613,500 shares)
 November 8, 2016                                               November 15, 2016 -                    29,033,000 shares                              199,984,654,400 yen

 (at the meeting of the board of directors held on that date)   January 26, 2017                       (145,165,000 shares)
 May 10, 2017                                                   May 17, 2017 -                         40,335,500 shares                              249,984,863,600 yen

 (at the meeting of the board of directors held on that date)   August 22, 2017                        (201,677,500 shares)
 November 7, 2017                                               November 14, 2017 - February 21, 2018  33,372,900 shares                              249,984,504,300 yen

 (at the meeting of the board of directors held on that date)                                          (166,864,500 shares)
 May 9, 2018                                                    May 16, 2018 -                         40,808,800 shares                              299,981,727,100 yen

 (at the meeting of the board of directors held on that date)   August 2, 2018                         (204,044,000 shares)
 November 6, 2018                                               November 13, 2018 - January 28, 2019   36,813,900 shares                              249,981,516,800 yen

 (at the meeting of the board of directors held on that date)                                          (184,069,500 shares)
 May 8, 2019                                                    May 15, 2019 - September 20, 2019      43,347,500 shares                              299,999,971,300 yen

 (at the meeting of the board of directors held on that date)                                          (216,737,500 shares)
 November 7, 2019                                               November 11, 2019 - March 3, 2020      26,185,400 shares                              199,999,343,174 yen

 (at the meeting of the board of directors held on that date)                                          (130,927,000 shares)
 May 12, 2021                                                   June 18, 2021 - September 22, 2021     25,841,400 shares                              249,999,938,600 yen

 (at the meeting of the board of directors held on that date)                                          (129,207,000 shares)
 November 4, 2021                                               November 5, 2021 - March 7, 2022       70,355,500 shares                              149,999,840,600 yen

 (at the meeting of the board of directors held on that date)
 March 23, 2022                                                 March 24, 2022 -                       46,225,900 shares                              99,999,829,781 yen

 (at the meeting of the board of directors held on that date)   May 10, 2022
 May 11, 2022                                                   June 17, 2022 -                        90,270,600 shares                              185,684,676,616 yen

 (at the meeting of the board of directors held on that date)   November 1, 2022
 November 1, 2022                                               November 2, 2022 -                     79,158,400 shares                              149,999,952,100 yen

 (at the meeting of the board of directors held on that date)   March 16, 2023
 May 10, 2023                                                   May 18, 2023 -                         64,590,700 shares                              149,999,927,050 yen

 (at the meeting of the board of directors held on that date)   October 30, 2023
 November 1, 2023                                               November 2, 2023 -                     32,097,200 shares                              99,999,796,450 yen

 (at the meeting of the board of directors held on that date)   April 24, 2024

(Note 1) The Company conducted a five-for-one stock split of the Company's
common stock effective October 1, 2021. The numbers in parentheses in the
table above reflect the effect of the stock split.

 

The Company has been continuously acquiring its treasury shares as shown in
the table above, and following discussions from mid-January 2024 to late April
2024 on increasing the acquisition price of its treasury shares to further
enhance returns to shareholders, the Company resolved, at the meeting of the
board of directors held on May 8, 2024, to acquire up to 410 million of its
treasury shares for a total acquisition price of up to 1 trillion yen during
the period from May 9, 2024 to April 30, 2025 (the "Acquisition of Treasury
Shares Pursuant to the Resolution of May 8, 2024").

Meanwhile, on January 17, 2024, MS&AD Insurance Group Holdings, Inc.
("MS&AD") informed the Company that Mitsui Sumitomo Insurance Company,
Limited, a subsidiary of MS&AD and a shareholder of the Company
(shareholder ranking as of September30, 2023: 9th) ("Mitsui Sumitomo
Insurance"), intended to sell a portion of the 284,071,835 shares of the
Company's common stock held by it (shareholding ratio as of December 31, 2023
(Note 2): 2.11%), and that Aioi Nissay Dowa Insurance Co., Ltd. ("Aioi Nissay
Dowa") intended to sell a portion of the 15,475,420 shares of the Company's
common stock held by it (shareholding ratio as of December 31, 2023: 0.11%),
each from the perspective of reducing cross-shareholdings. On January 25,
2024, Tokio Marine & Nichido Fire Insurance Co., Ltd., a shareholder of
the Company (shareholder ranking as of September30, 2023: 10th) ("Tokio Marine
& Nichido"; together with Mitsui Sumitomo Insurance and Aioi Nissay Dowa,
the "Prospective Tendering Shareholders (Nonlife Insurance Companies)"),
informed the Company that it intended to sell a portion of the 255,323,570
shares of the Company's common stock held by it (shareholding ratio as of
December 31, 2023: 1.89%) from the perspective of reducing
cross-shareholdings.

 

(Note 2) The "shareholding ratio as of December 31, 2023" is the ratio
(rounded to the second decimal place) to the number of shares (13,485,850,867
shares) calculated by deducting the number of treasury shares held by the
Company as of December 31, 2023 (2,829,136,593 shares) from the total number
of issued shares (16,314,987,460 shares) as of that day as described in the
"Share Buyback Report" filed by the Company on January 12, 2024. The same
applies hereinafter.

 

In response to MS&AD's and Tokio Marine & Nichido's notice of
intention to sell, on February23, 2024, the Company replied to MS&AD and
Tokio Marine & Nichido that it would accept the sale and that it would
like to discuss the method and volume of the sale in the future, as it
believed that reducing the ratio of the Company's common stock held by
cross-shareholders would contribute to the creation of corporate value from
the perspective of strengthening discipline in the Company's corporate
management.

Then, on April 5, 2024, MS&AD proposed that the Company conduct a tender
offer to repurchase its treasury shares and that Mitsui Sumitomo Insurance and
Aioi Nissay Dowa tender a portion of the Company's common stock in the tender
offer as a method of selling such common stock held by Mitsui Sumitomo
Insurance and Aioi Nissay Dowa. On April 5, 2024, the Company began to
consider whether to repurchase such stock as treasury shares and the method of
acquiring such stock in order to provide Mitsui Sumitomo Insurance and Aioi
Nissay Dowa with an opportunity to sell the Company's common stock in a smooth
manner in accordance with MS&AD's intention, while giving full
consideration to the impact on the market price of the Company's common stock
if more than a certain number of the Company's common stock are sold in the
market in an intermittent manner within a certain period of time, and the
ideas of improving the Company's capital efficiency and returning profits to
its shareholders. In addition, on April12, 2024, the Company requested Tokio
Marine & Nichido to consider whether to tender a portion of the Company's
common stock held by Tokio Marine & Nichido as a method of selling such
common stock if the Company decides to conduct a tender offer to repurchase
its treasury shares.

After reviewing MS&AD's proposal, the Company concluded that the Company's
acquisition of such common stock as part of the Acquisition of Own Shares
Pursuant to the Resolution of May 8, 2024 would result in a return of profits
to shareholders because, if MS&AD sells the Company's common stock in the
market, a certain number of the Company's common stock would be released into
the market, causing a temporary deterioration in the supply and demand for the
Company's common stock and a possible negative impact on the stock price, and
if the Company repurchases such common stock as treasury shares, it would
contribute to the improvement of the Company's capital efficiency, including
net income per share (EPS) and return on equity (ROE). With regard to the
specific method of acquiring its treasury shares, the Company carefully
considered the acquisition of a certain number of its treasury shares from the
perspective of the Company's capital policy, taking into consideration the
transparency of transactions and the status of transactions in the market. As
a result, in late April 2024, the Company concluded that it is appropriate to
repurchase its treasury shares by way of a tender offer for the following
reasons: (1) a tender offer will provide shareholders other than the
Prospective Tendering Shareholders (Nonlife Insurance Companies) with a
certain period of time to consider, and will also give them the opportunity to
decide, based on market price trends, whether to accept the Company's
acquisition of its treasury shares; (2) purchases made through statutory
tender offer procedures will ensure the transparency of transactions; (3) a
tender offer is an off-market transaction with relatively little impact on the
liquidity of the Company's common stock in the market; and (4) the acquisition
of treasury shares through a market purchase or after-hours trading requires
that the purchase price be set at the market price, does not permit a purchase
at a certain discount from the market price, and is therefore not a superior
option to a tender offer. On April 22, 2024, the Company replied to MS&AD
that it would conduct a tender offer to repurchase its treasury shares and
that it would repurchase its common stock held by Mitsui Sumitomo Insurance
and Aioi Nissay Dowa. On April 24, 2024, the Company received a response from
Tokio Marine & Nichido stating that if the Company conducts a tender
offer, Tokio Marine & Nichido would tender the Company's common stock held
by it in the tender offer. In addition, the Company discussed the sales volume
with MS&AD and Tokio Marine & Nichido, taking into consideration the
impact on the Company's finances and, on April 22, 2024, the Company agreed
with MS&AD that Mitsui Sumitomo Insurance would tender 94,690,635 shares
of the Company's common stock (shareholding ratio as of March 31, 2024:
0.70%), which is a portion of the 284,071,835 shares of the Company's common
stock held by it (shareholding ratio as of March 31, 2024 (Note 3): 2.11%),
and that Aioi Nissay Dowa would tender 5,158,520 shares of the Company's
common stock (shareholding ratio as of March 31, 2024: 0.04%), which is a
portion of the 15,475,420 shares of the Company's common stock held by it
(shareholding ratio as of March 31, 2024: 0.11%). On April 24, 2024, the
Company agreed with Tokio Marine & Nichido that Tokio Marine & Nichido
would tender 85,107,800 shares of the Company's common stock (shareholding
ratio as of March 31, 2024: 0.63%), which is a portion of the 255,323,570
shares of the Company's common stock held by it (shareholding ratio as of
March 31, 2024: 1. 89%). On May 3, 2024, the Company proposed to MS&AD and
Tokio Marine & Nichido that the commencement date of the Tender Offer be
July 24, 2024, in view of the time required to prepare for internal approval
procedures for the Tender Offer. On May 7, 2024, the Company received a
response from MS&AD and Tokio Marine & Nichido stating that they would
accept the proposal.

 

(Note 3) The "shareholding ratio as of March 31, 2024" refers to the ratio
(rounded to the second decimal place) to the number of shares (13,474,172,027
shares) obtained by deducting the number of treasury shares held by the
Company as of March 31, 2024 (2,840,815,433 shares) from the total number of
issued shares as of the same day (16,314,987,460 shares) as described in the
"Share Buyback Report" filed by the Company on April 12, 2024. The same
applies hereinafter.

 

In addition, as corporate governance initiatives have gained momentum in
recent years, in order to consider appropriate measures to deal with the sale
of the Company's common stock by cross-shareholders, on April 30, 2024, the
Company asked Mitsubishi UFJ Financial Group, Inc. ("MUFG"), which is the
parent company of MUFJ Bank, Ltd. ("MUFG Bank") and Mitsubishi UFJ Trust and
Banking Corporation ("MUTB"), both of which are shareholders of the Company,
and Sumitomo Mitsui Financial Group, Inc. ("SMFG"), which is the parent
company of Sumitomo Mitsui Banking Corporation ("SMBC") and SMBC Nikko
Securities Inc. ("SMBC Nikko Securities"; together with MUFG Bank, MUTB and
SMBC, the "Prospective Tendering Shareholders (Banks and Securities Firm)")
(Prospective Tendering Shareholders (Nonlife Insurance Companies) and
Prospective Tendering Shareholders (Banks and Securities Firm) collectively
being the "Prospective Tendering Shareholders"), about the policies for
holding the Company's common stock held by the Prospective Tendering
Shareholders (Banks and Securities Firm) and their intention to sell the
Company's common stock, and confirmed that they have the intention to sell the
Company's common stock held by them. Therefore, on May 10, 2024, the Company
contacted MUFG and SMFG regarding their interest in the Tender Offer. Then, on
May 24, 2024, the Company received a response from MUFG stating that MUFG Bank
would tender 44,950,905 shares of the Company's common stock (shareholding
ratio as of April 30, 2024: 0.33%), which is a portion of the 214,430,905
shares of the Company's common stock held by it (shareholding ratio as of
April 30, 2024 (Note 4): 1.59%), and that MUTB would tender all of the
11,546,010 shares of the Company's common stock held by it (shareholding ratio
as of April 30, 2024: 0.09%). On May 31, 2024, the Company also received a
notice from SMFG that it would accept that SMBC and SMBC Nikko Securities
would tender all or a portion of the 194,672,475 shares of the Company's
common stock (shareholding ratio as of May 31, 2024: 1.45%), which is the
aggregate of the 188,057,475 shares of the Company's common stock held by SMBC
(shareholding ratio as of May 31, 2024 (Note 5): 1.40%) and the 6,615,000
shares of the Company's common stock held by SMBC Nikko Securities
(shareholding ratio as of May 31, 2024: 0.05%). Then, on June 7, 2024, the
Company received a response from SMFG stating that SMBC and SMBC Nikko
Securities would tender 48,668,475 shares of the Company's common stock
(shareholding ratio as of May 31, 2024: 0.36%), which is a portion of
194,672,475 shares (shareholding ratio as of May 31, 2024: 1.45%) aggregating
the 188,057,475 shares of the Company's common stock held by SMBC
(shareholding ratio as of May 31, 2024: 1.40%) and the 6,615,000 shares of the
Company's common stock held by SMBC Nikko Securities (shareholding ratio as of
May 31, 2024: 0.05%). On July 1, 2024, the Company received a notice from SMFG
that shares to be tendered would consist of 42,053,475 shares of the Company's
common stock (shareholding ratio as of June 30, 2024: 0.31%), which is a
portion of the 188,057,475 shares of the Company's common stock held by SMBC
(shareholding ratio as of June 30, 2024 (Note 6): 1.40%), and all of the
6,615,000 shares of the Company's common stock held by SMBC Nikko Securities
(shareholding ratio as of June 30, 2024: 0.05%).

 

(Note 4) "Shareholding ratio as of April 30, 2024" refers to the ratio
(rounded to the second decimal place) to the number of shares (13,468,954,017
shares) obtained by deducting the number of treasury shares held by the
Company as of April 30, 2024 (2,846,033,443 shares) from the total number of
issued shares as of the same day (16,314,987,460 shares) as described in the
"Share Buyback Report" filed by the Company on May 13, 2024. The same applies
hereinafter.

(Note 5) "Shareholding ratio as of May 31, 2024" refers to the ratio (rounded
to the second decimal place) to the number of shares (13,468,953,395 shares)
obtained by deducting the number of treasury shares held by the Company as of
May 31, 2024 (2,326,034,065 shares) from the total number of issued shares as
of the same day (15,794,987,460 shares) as described in the "Share Buyback
Report" filed by the Company on June 13, 2024. The same applies hereinafter.

(Note 6) "Shareholding ratio as of June 30, 2024" refers to the ratio (rounded
to the second decimal place) to the number of shares (13,469,570,195 shares)
obtained by deducting the number of treasury shares held by the Company as of
June 30, 2024 (2,325,417,265 shares) from the total number of issued shares as
of the same day (15,794,987,460 shares) as described in the "Share Buyback
Report" filed by the Company on July 12, 2024. The same applies hereinafter.

 

In determining the purchase price of the Tender Offer (the "Tender Offer
Price"), the Company considered that it would be desirable to (i) use the
market price of the Company's common stock as a basis, from the perspective of
emphasizing the clarity and objectivity of the basis, and (ii) to repurchase
treasury shares at a price discounted to a certain extent from the market
price to prevent the outflow of assets from the Company to the extent
possible, from the perspective of respecting the interests of the shareholders
who will continue to hold the Company's common stock without tendering in the
Tender Offer. Based on the above, on June 25, 2024, the Company made a
proposal to MS&AD, Tokio Marine & Nichido, MUFG, and SMFG regarding
the tendering of 290,122,345 shares (shareholding ratio as of May 31, 2024:
2.15%), a portion of 975,520,215 shares of the Company's common stock
(shareholding ratio as of May 31, 2024: 7.24%), which is the sum of 94,690,635
shares (shareholding ratio as of May 31, 2024: 0.70%), a portion of the
Company's common stock held by Mitsui Sumitomo Insurance (284,071,835 shares)
(shareholding ratio as of May 31, 2024: 2.11%), 5,158,520 shares (shareholding
ratio as of May 31, 2024: 0.04%), a portion of the Company's common stock held
by Aioi Nissay Dowa (15,475,420 shares) (shareholding ratio as of May 31,
2024: 0.11%), 85,107,800 shares (shareholding ratio as of May 31, 2024:
0.63%), a portion of the Company's common stock held by Tokio Marine &
Nichido (255,323,570 shares) (shareholding ratio as of May 31, 2024: 1.90%),
44,950,905 shares (shareholding ratio as of May 31, 2024: 0.33%), a portion of
the Company's common stock held by MUFG Bank (214,430,905 shares)
(shareholding ratio as of May 31, 2024: 1.59%), all of the Company's common
stock held by MUTB (11,546,010 shares) (shareholding ratio as of May 31, 2024:
0.09%), and 48,668,475 shares (shareholding ratio as of May 31, 2024: 0.36%),
a portion of the 194,672,475 shares (shareholding ratio as of May 31, 2024:
1.45%), which is the sum of the Company's common stock held by SMBC
(188,057,475 shares) (shareholding ratio as of May 31, 2024: 1.40%) and SMBC
Nikko Securities (6,615,000 shares) (shareholding ratio as of May 31, 2024:
0.05%), in the Tender Offer if the Company conducts a tender offer at a price
discounted 10% from the lower of (i) the closing price of the Company's common
stock on the TSE Prime Market on July 22, 2024, i.e., the business day
immediately preceding the date of the board of directors' meeting at which a
resolution was made to conduct the Tender Offer, and (ii) the simple average
closing price of the Company's common stock for the past one month up to the
same day. In respect of the discount rate, in order to grasp the status of the
discount rate in a certain number of recent similar projects, the Company
confirmed 45 cases of tender offers for treasury shares that completed
settlement between June 2022 and May 2024, the past two years, starting from
fiscal 2022, when the new market segmentation started due to the
reorganization of the TSE and discussions on reduction of cross-shareholdings
became more active in Japan, up to the month immediately preceding June 25,
2024, on which the proposal was made (the "Reference Cases"). Of the 45
Reference Cases, in 39 cases (excluding 5 cases in which a premium was set,
and 1 case in which the tender offer price was determined using a share
valuation report) (of which a discount rate of less than 5% was set in 0
cases, a discount rate of 5% or more and less than 10% was set in 2 cases, a
discount rate of 10% (including those that were approximately 10%) was set in
28 cases, and a discount rate of 11% or more was set in 9 cases), the most
common discount rate was 10%. By reference to this, the Company considered the
discount rate of 10% was general and at a reasonable level, and determined
that the discount rate be set at this rate. Furthermore, with respect to the
price of the Company's common stock that is the basis of the discount, the
Company considered that using a more recent share price would more fully
reflect the latest performance of the Company. Accordingly, the Company
considered it reasonable, and thus determined, to set the price at the lower
of (i) the closing price of the Company on the TSE Prime Market on July 22,
2024, and (ii) the simple average closing price of the Company's common stock
for the past one month up to the same day, which is a shorter period than the
past three months and six months up to July 22, 2024. As a result, the Company
received responses from MS&AD, Tokio Marine & Nichido, and MUFG on
June 28, 2024, and from SMFG on July 5, 2024, that if the Company conducts the
Tender Offer on such terms, they will tender, in the Tender Offer, 290,122,345
shares (shareholding ratio as of May 31, 2024: 2.15 %), a portion of the
975,520,215 shares of the Company's common stock (shareholding ratio as of May
31, 2024: 7.24 %) held by the Prospective Tendering Shareholders as of today.

 

MS&AD, Tokio Marine & Nichido, MUFG, and SMFG explained that they have
not determined the policy on handling, including disposition, of the Company's
common stock remaining after the Tender Offer at present, and that they intend
to consider possible options.

Based on the considerations and discussions above, as of today, the Company
resolved, by way of a written resolution in lieu of the board of directors'
resolution pursuant to Article 370 of the Companies Act and the Company's
articles of incorporation (including electronic or magnetic records; the same
applies hereinafter): to repurchase treasury shares pursuant to the provisions
of Article 156, Paragraph 1 of the Companies Act as applied mutatis mutandis
pursuant to the provisions of Article 165, Paragraph 3 of the Companies Act
and the Company's articles of incorporation; to conduct the Tender Offer as
the specific method thereof; and given that the closing price of the Company's
common stock was 3,090 yen on July 22, 2024, i.e., the business day
immediately preceding the date of the board of directors' resolution (July 23,
2024), and the simple average closing price of the Company's common stock was
3,261 yen for the past one month up to July 22, 2024 (rounded to the nearest
yen; the same applies hereinafter for the calculation of the closing price),
to set the Tender Offer Price at 2,781 yen (rounded to the nearest yen; the
same applies hereinafter for the calculation of the Tender Offer Price), which
is calculated by applying a 10% discount rate to 3,090 yen, the closing price
of the Company's common stock on the TSE Prime Market on July 22, 2024, i.e.,
the business day immediately preceding the date of the board of directors'
resolution (July 23, 2024), the lower price of the two. In addition, in
respect of the number of shares to be purchased in the Tender Offer, it is
necessary to minimize the outflow of assets from the Company and thus the
Company resolved to set it at 290,122,345 shares (shareholding ratio as of
June 30, 2024: 2.15 %), which was the number of shares that MS&AD, Tokio
Marine & Nichido, MUFG, and SMFG responded that they will tender. Also,
because there is a possibility that the number of tendered shares will exceed
the number of shares to be purchased, as a result of adjusting the number of
shares constituting less than one unit using the pro rata method if there are
applications to tender in the Tender Offer exceeding the number of shares to
be purchased, the Company resolved to set the upper limit at 290,122,445
shares (shareholding ratio as of June 30, 2024: 2.15 %), which is calculated
by adding one unit (100 shares) to the number of shares to be purchased in the
Tender Offer. The Company has received explanation that if the numbers of
Tendered Share Certificates in the Tender Offer (the "Tendered Share
Certificates") exceeds the number of shares to be purchased, and under the pro
rata method, there are more shares of the Company's common stock remaining
than expected by the Prospective Tendering Shareholders, the policy on
handling, including disposition, of such remaining shares of the Company's
common stock has not been determined at present, and that they intend on
considering possible options.

 

Mr. Masahiko Oshima, the Company's director, has concurrently held the
position of senior advisor of Sumitomo Mitsui Banking Corporation, a
subsidiary of SMFG, until July 7, 2024, and Ms. Emi Osono concurrently holds
the position of director of Tokio Marine Holdings, Inc. ("Tokio Marine"), the
parent company of Tokio Marine & Nichido, and in the relevant written
resolution, the written consent from both directors has been obtained. This is
because, under the Companies Act, a written resolution requires the written
consent of all directors who are eligible to vote on matters relating to the
proposal, and since it may be construed that the two directors do not have
special interest prescribed in Article 369, paragraph (2) of the Companies Act
with respect to the above proposal and are eligible to vote, in such case,
written consent is also required from the two directors. There is no fact that
Mr. Oshima and Ms. Osono were involved in the consideration of the Tender
Offer in their capacities for the Company.

With respect to the funds required for the Tender Offer, the Company plans to
allocate all funds from its own capital. The Company's consolidated on-hand
liquidity (cash and cash equivalents; the same applies hereinafter for the
calculation of on-hand liquidity) as of March 31, 2024, as described in the
Annual Securities Report for the fiscal year ended March 2024 submitted by the
Company on June 25, 2024 (the "Annual Securities Report for the Fiscal Year
Ended March 2024"), was 9,412,060 million yen (on-hand liquidity ratio: 2.5
months) (Note 7), and is expected to be 8,605,212 million yen (on-hand
liquidity ratio: 2.3 months) (Note 8) even after appropriating the funds
required for the Tender Offer (806,848 million yen). Therefore, since on-hand
liquidity can be sufficiently secured, it is considered that the Company's
financial health and safety can be maintained in the future.

 

(Note 7) This was obtained by dividing the Company's consolidated on-hand
liquidity as of March 31, 2024 stated in the Annual Securities Report for the
Fiscal Year Ended March 2024 by monthly operating revenue (refers to the
figure obtained by dividing the consolidated operating revenue for the fiscal
year by 12 months; the same applies hereinafter) calculated from the Annual
Securities Report for the Fiscal Year Ended March 2024 (rounded to the second
decimal place).

(Note 8) This was obtained by deducting the amount of funds required for
purchase, etc. in the Tender Offer from the Company's consolidated on-hand
liquidity as of March 31, 2024 stated in the Annual Securities Report for the
Fiscal Year Ended March 2024, and dividing such figure by the monthly
operating revenue calculated from the Annual Securities Report for the Fiscal
Year Ended March 2024 (rounded to the second decimal place).

 

In addition, the policy regarding disposition, etc. of the treasury shares
repurchased by the Tender Offer has not yet been determined at present.

The Tender Offer is to be conducted as part of the Company's ongoing efforts
to reduce cross-shareholdings in order to build a lean balance sheet toward
its transformation into a mobility company. The Company plans to tender
52,610,900 shares (shareholding ratio of MS&AD's common stock: 3.31%),
which is a portion of MS&AD's common stock held by the Company
(157,832,799 shares) (shareholding ratio of MS&AD's common stock (Note 9):
9.92%), in the tender offer of treasury shares by MS&AD as announced by
MS&AD in the "Notice Regarding Repurchase through Tender Offer, Tender in
Tender Offer by TOYOTA MOTOR CORPORATION, and Estimated Gain On Sales of
Securities" dated July 23, 2024 ("MS&AD's Tender Offer of Treasury
Shares"), and all of Tokio Marine's common stock held by the Company
(9,414,165 shares) (shareholding ratio of Tokio Marine's common stock (Note
10): 0.48%), in the tender offer of treasury shares by Tokio Marine as
announced by Tokio Marine in the "Notice Regarding Repurchase through Tender
Offer" dated July 23, 2024 ("Tokio Marine's Tender Offer of Treasury Shares"),
respectively. With respect to MS&AD's Tender Offer of Treasury Shares and
Tokio Marine's Tender Offer of Treasury Shares, the Company was notified by
MS&AD and Tokio Marine & Nichido on January 17 and 25, 2024 of their
intention to sell the Company's common stock that they hold for the purpose of
reducing cross-shareholdings, and in response, in late February 2024, the
Company notified MS&AD and Tokio Marine respectively of its intention to
sell all or a part  of the 157,832,799 shares of MS&AD's common stock
held by the Company (shareholding ratio of MS&AD's common stock: 9.92%)
and all or a part of the 9,414,165 shares of Tokio Marine's common stock held
by the Company (shareholding ratio of Tokio Marine's common stock: 0.48%), and
commenced discussions. In early April 2024, the Company was approached by
MS&AD with a request that the sale of MS&AD's common stock by the
Company be conducted by conducting a tender offer by MS&AD aimed at
acquiring treasury shares, and the Company tendering in such tender offer.
Subsequently, in late April 2024, the Company notified MS&AD to the effect
that it will accept such request to conduct the sale of MS&AD's common
stock by the Company through a tender offer by MS&AD aimed at acquiring
treasury shares. In addition, in mid April 2024, the Company approached Tokio
Marine with a request that the sale of Tokio Marine's common stock by the
Company be conducted by conducting a tender offer by Tokio Marine aimed at
acquiring treasury shares, and the Company tendering in such tender offer. As
a result, in late April 2024, the Company was notified by Tokio Marine that it
accepted such request to conduct the sale of Tokio Marine's common stock by
the Company through a tender offer by Tokio Marine aimed at acquiring treasury
shares. Furthermore, in late April 2024, it was agreed that the number of
shares of common stock to be tendered by the Company will be 52,610,900 shares
(shareholding ratio of MS&AD's common stock: 3.31%), which is a portion of
MS&AD's common stock held by the Company (157,832,799 shares)
(shareholding ratio of MS&AD's common stock: 9.92%), with respect to
MS&AD's Tender Offer of Treasury Shares, and all of Tokio Marine's common
stock held by the Company (9,414,165 shares) (shareholding ratio of Tokio
Marine's common stock: 0.48%) with respect to Tokio Marine's Tender Offer of
Treasury Share. The Company is also considering and discussing with MUFG and
SMFG the sale of 51,291,693 shares (shareholding ratio of MUFG's common stock:
0.44%) (this includes the 4,608,540 shares of MUFG's common stock
(shareholding ratio of MUFG's common stock: 0.04%) contributed to the
retirement benefit trust set up by the Company, for which the Company reserves
the right to authorize the exercise of voting rights; the same applies
hereinafter to MUFG's common stock held by the Company), which is a portion of
MUFG's common stock held by the Company (153,871,693 shares) (shareholding
ratio of MUFG's common stock (Note 11): 1.32%) (this includes the 4,608,540
shares of MUFG's common stock (shareholding ratio of MUFG's common stock:
0.04%) contributed to the retirement benefit trust set up by the Company, for
which the Company reserves the right to authorize the exercise of voting
rights; the same applies hereinafter to MUFG's common stock held by the
Company) and all of SMFG's common stock held by the Company (6,861,712 shares)
(shareholding ratio of SMFG's common stock (Note 12): 0.52%) (this includes
the 1,486,400 shares of SMFG's common stock (shareholding ratio of SMFG's
common stock: 0.11%) contributed to the retirement benefit trust set up by the
Company, for which the Company reserves the right to authorize the exercise of
voting rights; the same applies hereinafter to SMFG's common stock held by the
Company) for the purpose of reducing cross-shareholdings, and plans to sell
these shares through the market in the future. In addition, the Company has
not determined the policy on handling, including disposition, of the
105,221,899 shares (shareholding ratio of MS&AD's common stock: 6.62%) of
MS&AD's common stock remaining after tendering in MS&AD's Tender Offer
of Treasury Sharesand the 102,580,000 shares (shareholding ratio of MUFG's
common stock: 0.88%) of MUFG's common stock remaining after the sale of the
shares through the market at present, and will consider possible options.

 

(Note 9) "Shareholding ratio of MS&AD's common stock" refers to the ratio
(rounded to the second decimal place) to the number of shares (1,590,359,977
shares) obtained by deducting the number of treasury shares held by MS&AD
as of June 30, 2024 (17,854,223 shares) from the total number of shares issued
by MS&AD as of the same day (1,608,214,200 shares) as described in the
"Share Buyback Report" filed by MS&AD on July 9, 2024. The same applies
hereinafter.

(Note 10) "Shareholding ratio of Tokio Marine's common stock" refers to the
ratio (rounded to the second decimal place) to the number of shares
(1,962,614,953 shares) obtained by deducting the number of treasury shares
held by Tokio Marine as of June 30, 2024 (15,385,047 shares) from the total
number of shares issued by Tokio Marine as of the same day (1,978,000,000
shares) as described in the "Share Buyback Report" filed by Tokio Marine on
July 11, 2024. The same applies hereinafter.

(Note 11) "Shareholding ratio of MUFG's common stock" refers to the ratio
(rounded to the second decimal place) to the number of shares (11,690,380,033
shares) obtained by deducting the number of treasury shares held by MUFG as of
June 30, 2024 (647,330,887 shares) from the total number of shares issued by
MUFG as of the same day (12,337,710,920 shares) as described in the "Share
Buyback Report" filed by MUFG on July 11, 2024. The same applies hereinafter.

(Note 12) "Shareholding ratio of SMFG's common stock" refers to the ratio
(rounded to the second decimal place) to the number of shares (1,308,516,022
shares) obtained by deducting the number of treasury shares held by SMFG as of
June 30, 2024 (8,881,062 shares) from the total number of shares issued by
SMFG as of the same day (1,317,397,084 shares) as described in the "Share
Buyback Report" filed by SMFG on July 12, 2024. The same applies hereinafter.

 

2. Details of the resolution of the board of directors on the acquisition of
treasury shares (Disclosed on May 8, 2024)

(1) Details of resolution

 Type of share certificates  Total                             Total acquisition cost
 Common stock                410,000,000 shares (Upper limit)  1,000,000,000,000 yen (Upper limit)

(Note 1) The total number of issued shares is 16,794,987,460 shares (as of
today).

(Note 2) The percentage of the total number of shares to be repurchased,
410,000,000 shares, out of the total number of shares issued on June 30, 2024
(excluding 13,469,570,195 treasury shares) is 3.04% (rounded to the second
decimal place).

(Note 3) The period during which the shares can be repurchased is from May 9,
2024, to April 30, 2025.

 

(2) Listed share certificates relating to treasury shares already repurchased
based on the resolutions

 Type of share certificates  Total     Total acquisition cost
 Common stock                0 shares  0 yen

(Note 4) There are no share certificates of the Company that have already been
acquired by the Company pursuant to the resolution of the board of directors
held on May 8, 2024 prior to the publication date for commencing the Tender
Offer.

 

3. Tender Offer outline

(1) Schedule, etc.

 (a)  Date of resolution of board of directors                 Tuesday, July 23, 2024
 (b)  Publication date for commencing the Tender Offer         Wednesday, July 24, 2024

                                                               Electronic public notice will be posted, and the posting of the electronic
                                                               public notice will be published in the Nihon Keizai Shimbun.

                                                               (https://disclosure2.edinet-fsa.go.jp/)
 (c)  Filing date for the tender offer registration statement  Wednesday, July 24, 2024
 (d)  Period of the Tender Offer                               From Wednesday, July 24, 2024 to Monday, August 26, 2024 (23 business days)

 

(2) Tender Offer Price

2,781 yen per share of common stock

 

(3) Basis for calculation of Tender Offer Price

(a) Basis for calculation

In determining the Tender Offer Price, the Company considered that it would be
desirable to (i) use the market price of the Company's common stock as a
basis, from the perspective of emphasizing the clarity and objectivity of the
basis, and (ii) to repurchase treasury shares at a price discounted to a
certain extent from the market price to prevent the outflow of assets from the
Company to the extent possible, from the perspective of respecting the
interests of the shareholders who will continue to hold the Company's common
stock without tendering in the Tender Offer. Based on the above, on June 25,
2024, the Company made a proposal to MS&AD, Tokio Marine, MUFG, and SMFG
regarding the tendering of the 290,122,345 shares (shareholding ratio as of
May 31, 2024: 2.15%), a portion of 975,520,215 shares of the Company's common
stock (shareholding ratio as of May 31, 2024: 7.24%), which is the sum of
94,690,635 shares (shareholding ratio as of May 31, 2024: 0.70%), a portion of
the Company's common stock held by Mitsui Sumitomo Insurance (284,071,835
shares) (shareholding ratio as of May 31, 2024: 2.11%), 5,158,520 shares
(shareholding ratio as of May 31, 2024: 0.04%), a portion of the Company's
common stock held by Aioi Nissay Dowa (15,475,420 shares) (shareholding ratio
as of May 31, 2024: 0.11%), 85,107,800 shares (shareholding ratio as of May
31, 2024: 0.63%), a portion of the Company's common stock held by Tokio Marine
& Nichido (255,323,570 shares) (shareholding ratio as of May 31, 2024:
1.90%), 44,950,905 shares (shareholding ratio as of May 31, 2024: 0.33%), a
portion of the Company's common stock held by MUFG Bank (214,430,905 shares)
(shareholding ratio as of May 31, 2024: 1.59%), all of the Company's common
stock held by MUTB (11,546,010 shares) (shareholding ratio as of May 31, 2024:
0.09%), and 48,668,475 shares (shareholding ratio as of May 31, 2024: 0.36%),
a portion of the 194,672,475 shares (shareholding ratio as of May 31, 2024:
1.45%), which is the sum of the Company's common stock held by SMBC
(188,057,475 shares) (shareholding ratio as of May 31, 2024: 1.40%) and SMBC
Nikko Securities (6,615,000 shares) (shareholding ratio as of May 31, 2024:
0.05%), in the Tender Offer if the Company conducts a tender offer at a price
discounted 10% from the lower of (i) the closing price of the Company's common
stock on the TSE Prime Market on July 22, 2024, i.e., the business day
immediately preceding the date of the board of directors' meeting at which a
resolution was made to conduct the Tender Offer, and (ii) the simple average
closing price of the Company's common stock for the past one month up to the
same day.

With respect to the discount rate, of the 45 Reference Cases, in 39 cases
(excluding 5 cases in which a premium was set, and 1 case in which the tender
offer price was determined using a share valuation report) (of which a
discount rate of less than 5% was set in 0 cases, a discount rate of 5% or
more and less than 10% was set in 2 cases, a discount rate of 10% (including
those that were approximately 10%) was set in 28 cases, and a discount rate of
11% or more was set in 9 cases), the most common discount rate was 10%. By
reference to this, the Company considered the discount rate of 10% was general
and at a reasonable level, and determined the discount rate to be set at this
rate. Furthermore, with respect to the price of the Company's common stock
that is the basis of the discount, the Company considered that using a more
recent share price would more fully reflect the latest performance of the
Company. Accordingly, the Company considered it reasonable, and thus
determined, to set the price at the lower of (i) the closing price of the
Company on the TSE Prime Market on July 22, 2024, and (ii) the simple average
closing price of the Company's common stock for the past one month up to the
same day, which is a shorter period than the past three months and six months
up to July 22, 2024. As a result, the Company received responses from
MS&AD, Tokio Marine & Nichido, and MUFG on June 28, 2024, and from
SMFG on July 5, 2024, that if the Company conducts the Tender Offer on such
terms, they will tender in the Tender Offer, 290,122,345 shares (shareholding
ratio as of May 31, 2024: 2.15%), a portion of the 975,520,215 shares of the
Company's common stock (shareholding ratio as of May 31, 2024: 7.24%) held by
the Prospective Tendering Shareholders as of today.

Based on the considerations and discussions above, as of today, by way of a
written resolution in lieu of the board of directors' resolution pursuant to
Article 370 of the Companies Act and the provisions of the Company's articles
of incorporation, given that the closing price of the Company's common stock
was 3,090 yen on July 22, 2024, i.e., the business day immediately preceding
the date of the board of directors' resolution (July 23, 2024), and the simple
average closing price of the Company's common stock was 3,261 yen for the past
one month up to July 22, 2024, after confirming that the lower of the two
prices was 3,090 yen, the closing price of the Company's common stock on July
22, 2024, the Company resolved: to repurchase treasury shares pursuant to the
provisions of Article 156, Paragraph 1 of the Companies Act as applied mutatis
mutandis pursuant to the provisions of Article 165, Paragraph 3 of the
Companies Act and the Company's articles of incorporation; to conduct the
Tender Offer as the specific method thereof; and to set the Tender Offer Price
at 2,781 yen, which will be calculated by applying a 10% discount rate to the
closing price of the Company's common stock on the TSE Prime Market on July
22, 2024, i.e., the business day before the date of the board of directors'
meeting at which a resolution was made to conduct the Tender Offer. In
addition, in respect of the number of shares to be purchased in the Tender
Offer, it is necessary to minimize the outflow of assets from the Company and
thus the Company resolved to set it at 290,122,345 shares (shareholding ratio
as of June 30, 2024: 2.15 %), which was the number of shares that MS&AD,
Tokio Marine & Nichido, MUFG, and SMFG responded they will tender. Also,
because there is a possibility that the number of tendered shares will exceed
the number of shares to be purchased, as a result of adjusting the number of
shares constituting less than one unit using the pro rata method if there are
applications to tender in the Tender Offer exceeding the number of shares to
be purchased, the Company resolved to set the upper limit at 290,122,445
shares (shareholding ratio as of June 30, 2024: 2.15%), which is calculated by
adding one unit (100 shares) to the number of shares to be purchased in the
Tender Offer

The Tender Offer Price of 2,781 yen represents a 10.00 % discount (rounded to
the second decimal place; the same applies hereinafter for the calculation of
the discount rate) from 3,090  yen, the closing price of the Company's common
stock on the TSE Prime Market on July 22, 2024, i.e., the business day before
the date of the board of directors' meeting at which a resolution was made to
conduct the Tender Offer; a 14.72% discount from 3,261 yen, the simple average
closing price of the Company's common stock for the past one month up to the
same day; and 16.44% discount from 3,328 yen, the simple average closing price
of the Company's common stock for the past three months up to the same day.

Furthermore, based on a resolution of the board of directors on November 1,
2023, the Company recently acquired 32,097,200 shares of the Company's common
stock for 99,999,796,450 yen through market purchases during the acquisition
period from November 2, 2023, to April 30, 2024. The average acquisition price
per share for these acquisitions through the market purchase method was 3,116
yen (rounded to the nearest yen), resulting in a difference of 335 yen
(rounded to the nearest yen) compared to the Tender Offer Price. This
difference arises because the acquisition price using the market purchase
method was determined based on the market prices on each acquisition date,
whereas the Tender Offer Price is based on the closing price of the Company's
common stock on the TSE Prime Market on the business day immediately preceding
the date of the board of directors' meeting at which a resolution was made to
conduct the Tender Offer, which was 3,090 yen. While that amount represents a
0.83% decrease (rounded to the second decimal place) compared to the
acquisition price of 3,116 yen for such market purchases, a 10% discount was
further applied to arrive at the Tender Offer Price.

 

(b) Calculation background

In determining the Tender Offer Price, the Company considered that it would be
desirable to (i) use the market price of the Company's common stock as a
basis, from the perspective of emphasizing the clarity and objectivity of the
basis, and (ii) to repurchase treasury shares at a price discounted to a
certain extent from the market price to prevent the outflow of assets from the
Company to the extent possible, from the perspective of respecting the
interests of the shareholders who will continue to hold the Company's common
stock without tendering in the Tender Offer. Based on the above, on June 25,
2024, the Company made a proposal to MS&AD, Tokio Marine, MUFG, and SMFG
regarding the tendering of the 290,122,345 shares (shareholding ratio as of
May 31, 2024: 2.15%), a portion of 975,520,215 shares of the Company's common
stock (shareholding ratio as of May 31, 2024: 7.24%), which is the sum of
94,690,635 shares (shareholding ratio as of May 31, 2024: 0.70%), a portion of
the Company's common stock held by Mitsui Sumitomo Insurance (284,071,835
shares) (shareholding ratio as of May 31, 2024: 2.11%), 5,158,520 shares
(shareholding ratio as of May 31, 2024: 0.04%), a portion of the Company's
common stock held by Aioi Nissay Dowa (15,475,420 shares) (shareholding ratio
as of May 31, 2024: 0.11%), 85,107,800 shares (shareholding ratio as of May
31, 2024: 0.63%), a portion of the Company's common stock held by Tokio Marine
& Nichido (255,323,570 shares) (shareholding ratio as of May 31, 2024:
1.90%), 44,950,905 shares (shareholding ratio as of May 31, 2024: 0.33%), a
portion of the Company's common stock held by MUFG Bank (214,430,905 shares)
(shareholding ratio as of May 31, 2024: 1.59%), all of the Company's common
stock held by MUTB (11,546,010 shares) (shareholding ratio as of May 31, 2024:
0.09%), and 48,668,475 shares (shareholding ratio as of May 31, 2024: 0.36%),
a portion of the 194,672,475 shares (shareholding ratio as of May 31, 2024:
1.45%), which is the sum of the Company's common stock held by SMBC
(188,057,475 shares) (shareholding ratio as of May 31, 2024: 1.40%), and SMBC
Nikko Securities (6,615,000 shares) (shareholding ratio as of May 31, 2024:
0.05%), in the Tender Offer if the Company conducts a tender offer at a price
discounted 10% from the lower of (i) the closing price of the Company's common
stock on the TSE Prime Market on July 22, 2024, i.e., the business day
immediately preceding the date of the board of directors' meeting at which a
resolution was made to conduct the Tender Offer, and (ii) the simple average
closing price of the Company's common stock for the past one month up to the
same day. With respect to the discount rate, of the 45 Reference Cases, in 39
cases (excluding 5 cases in which a premium was set, and 1 case in which the
tender offer price was determined using a share valuation report) (of which a
discount rate of less than 5% was set in 0 cases, a discount rate of 5% or
more and less than 10% was set in 2 cases, a discount rate of 10% (including
those that were approximately 10%) was set in 28 cases, and a discount rate of
11% or more was set in 9 cases), the most common discount rate was 10%. By
reference to this, the Company considered the discount rate of 10% was general
and at a reasonable level, and determined the discount rate to be set at this
rate. Furthermore, with respect to the price of the Company's common stock
that is the basis of the discount, the Company considered that using a more
recent share price would more fully reflect the latest performance of the
Company. Accordingly, the Company considered it reasonable, and thus
determined, to set the price at the lower of (i) the closing price of the
Company on the TSE Prime Market on July 22, 2024, and (ii) the simple average
closing price of the Company's common stock for the past one month up to the
same day, which is a shorter period than the past three months and six months
up to July 22, 2024. As a result, the Company received responses from
MS&AD, Tokio Marine & Nichido, and MUFG on June 28, 2024, and from
SMFG on July 5, 2024, that if the Company conducts the Tender Offer on such
terms, they will tender, in the Tender Offer, 290,122,345 shares (shareholding
ratio as of May 31, 2024: 2.15%), a portion of the 975,520,215 shares of the
Company's common stock (shareholding ratio as of May 31, 2024: 7.24%) held by
the Prospective Tendering Shareholders as of today.

Based on the considerations and discussions above, as of today, by way of a
written resolution in lieu of the board of directors' resolution pursuant to
Article 370 of the Companies Act and the provisions of the Company's articles
of incorporation, given that the closing price of the Company's common stock
was 3,090 yen on July 22, 2024, i.e., the business day immediately preceding
the date of the board of directors' resolution (July 23, 2024), and the simple
average closing price of the Company's common stock was 3,261 yen for the past
one month up to July 22, 2024, after confirming that the lower of the two
prices was 3,090 yen, the closing price of the Company's common stock on July
22, 2024, the Company resolved: to repurchase treasury shares pursuant to the
provisions of Article 156, Paragraph 1 of the Companies Act as applied mutatis
mutandis pursuant to the provisions of Article 165, Paragraph 3 of the
Companies Act and the Company's articles of incorporation; to conduct the
Tender Offer as the specific method thereof; and to set the Tender Offer Price
at 2,781 yen, which will be calculated by applying a 10% discount rate to the
closing price of the Company's common stock on the TSE Prime Market on July
22, 2024, i.e., the business day before the date of the board of directors'
meeting at which a resolution was made to conduct the Tender Offer. In
addition, in respect of the number of shares to be purchased in the Tender
Offer, it is necessary to minimize the outflow of assets from the Company and
thus the Company resolved to set it at 290,122,345 shares (shareholding ratio
as of June 30, 2024: 2.15 %), which was the number of shares that MS&AD,
Tokio Marine & Nichido, MUFG, and SMFG responded they will tender. Also,
because there is a possibility that the number of tendered shares will exceed
the number of shares to be purchased, as a result of adjusting the number of
shares constituting less than one unit using the pro rata method if there are
applications to tender in the Tender Offer exceeding the number of shares to
be purchased, the Company resolved to set the upper limit at 290,122,445
shares (shareholding ratio as of June 30, 2024: 2.15%), which is calculated by
adding one unit (100 shares) to the number of shares to be purchased in the
Tender Offer.

 

(4) Number of share certificates planned for purchase

 Type of share certificates  Number of share certificates planned for purchase  Number of share certificates planned to be in excess  Total
 Common stock                290,122,345 shares                                 ― shares                                              290,122,345 shares

(Note 1) If the total number of the Tendered Share Certificates does not
exceed the number of share certificates planned for purchase (290,122,345
shares), the Company will purchase all of the Tendered Share Certificates. If
the total number of Tendered Share Certificates exceeds the number of share
certificates planned for purchase (290,122,345 shares), the Company will not
purchase all or some of the surplus. The Company will conduct delivery related
to the purchase of share certificates and other settlements according to the
pro rata method provided in Article 27-13, Paragraph 5 of the Financial
Instruments and Exchange Act (Act No. 25 of 1948, including subsequent
revisions, the "Act") that is applied mutatis mutandis pursuant to Article
27-22-2, Paragraph 2 of the Act, and Article 21 of the Cabinet Office Order on
Disclosure Required for Tender Offer for Listed Share Certificates by Issuers
(Ministry of Finance Order No. 95 of 1994, including subsequent revisions).

(Note 2) Even if the shares are less than one unit, such shares are also
subject to the Tender Offer. If the shareholders exercise their right to
demand purchase of shares less than one unit in accordance with the Companies
Act, the Company may purchase its treasury shares during the period for
purchase, etc. (the "Tender Offer Period") in accordance with the procedures
under laws and regulations.

 

(5) Funds required for Tender Offer

806,848,241,445 yen

(Note) The total funds required for the purchase include the total purchase
amount (806,830,241,445 yen), purchase handling charges, and estimated costs
for other expenses such as the public notice regarding the tender offer, and
printing of the tender offer statement and other necessary documents.

 

(6) Settlement method

(I) Name and address of head office of financial instruments business
operator/bank that will conduct settlement of the Tender Offer

Nomura Securities Co., Ltd.          1-13-1 Nihonbashi, Chuo-ku,
Tokyo

 

(II) Commencement date of settlement

September 18, 2024 (Wednesday)

 

(III) Settlement method

Upon expiration of the Tender Offer Period, a written notice of purchase
though a tender offer will be sent by post to the address or location of any
person who consents to the offer for purchase or who offers for sale the share
certificates, etc. through the Tender Offer (the "Tendering Shareholders")
(standing proxies in the case of shareholders residing outside Japan and who
do not have a tradable account with the tender offer agent (including
corporate shareholders; the "Foreign Shareholders")) without delay.

The purchase will be made in cash. The Tendering Shareholders may receive the
proceeds through the tender offer less the applicable withholding tax (note)
in the method designated by the Tendering Shareholder without delay on or
after the commencement date of settlement (bank transfer fees may apply).

 

(Note) Regarding tax-related matters on shares purchased through a tender
offer

*Shareholders should make their own decisions after consulting an expert
including a certified tax accountant regarding any specific questions and
concerns on tax matters.

 

(i) Taxation for individual shareholders who tendered in the Tender Offer is
as follows.

(a) If the Tendering Shareholder is a resident of Japan or a non-resident of
Japan holding a permanent establishment in Japan

If the amount of proceeds to be delivered through the Tender Offer exceeds the
amount of shares corresponding to the portion serving as the basis of such
delivery of the amount of the Company's stated capital (i.e. if the purchase
price per share exceeds the amount of stated capital per share of the
Company), the amount corresponding to such portion in excess will be deemed as
dividend, and thus taxed. In addition, the amount of proceeds to be delivered
through the Tender Offer less the amount to be deemed as dividends will be
treated as income from share transfer. If there is no amount to be deemed as
dividends (i.e. if the purchase price per share is equal to or less than the
amount of stated capital per share of the Company), the entire amount of cash
to be delivered will be treated as income from share transfer.

The amount deemed as dividend will be taxed and withheld at the tax rate of
20.315% (comprising of income tax and special income tax for reconstruction
(the "Special Income Tax for Reconstruction") pursuant to the "Act on Special
Measures for Securing Financial Resources Necessary to Implement Measures for
Reconstruction following the Great East Japan Earthquake" (Act No. 117 of
2011, as amended)), which collectively account for 15.315%, and inhabitants
tax, which accounts for 5%) (non-residents of Japan holding a permanent
establishment in Japan are not required to pay the special collection of 5%
inhabitants tax). Provided, however, that if the individual shareholder falls
under the category of a large shareholder (the "Large Shareholder") specified
in Article 4-6-2, Paragraph 38 of the Order for Enforcement of the Act on
Special Measures Concerning Taxation (Cabinet Order No. 43 of 1957, as
amended), the amount equivalent to 20.42% (income tax and Special Income Tax
for Reconstruction only) will be withheld. In addition, if the total
shareolding ratio of the Tendering Shareholder who will receive the amount to
be deemed as dividend and the corporation falling under the category of a
family company under the Corporation Tax Act when such Tendering Shareholder
is used as the base shareholder for the judgment accounts to three-hundredth
(3/100) or more of the total number of issued shares, such amount to be deemed
as dividend is subject to comprehensive taxation.

The amount of income from the share transfer less the acquisition costs for
such shares is, in principle, subject to separate self-assessment taxation.

When tendering in the Tender Offer with shares in a tax-exempt account (the
"Tax-exempt Account") provided in Article 37-14 (tax exemption on income from
transfers of small amounts of publicly-traded shares in a tax-exempt account)
of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as
amended), and if the financial instruments business operator at which such
Tax-Free Account is opened is Nomura Securities Co., Ltd., in principle, the
income from the transfer of shares in the Tender Offer will be exempted from
tax. In the case where the Tax-Free Account is opened at a financial
instruments business operator other than Nomura Securities Co., Ltd., the
handling may differ from the aforementioned.

(b) If the Tendering Shareholder is a non-resident of Japan not holding any
permanent establishments in Japan

The amount deemed as dividend will be taxed and withheld at the tax rate of
15.315% (income tax and Special Income Tax for Reconstruction only).
Individual shareholders falling under the category of Large Shareholders are
subject to withholding tax at the rate of 20.42% (income tax and Special
Income Tax for Reconstruction only). Income incurred from such transfer will,
in principle, not be taxed.

 

(ii) If the amount of proceeds to be delivered to corporate shareholders
through the Tender Offer exceeds the amount of shares corresponding to the
portion serving as the basis of such delivery of the amount of the Company's
stated capital, the amount corresponding to such portion in excess will be
deemed as dividend. The portion that is deemed as dividend is, in principle,
subject to withholding tax at the rate of 15.315% (income tax and Special
Income Tax for Reconstruction only).

Furthermore, the amount to be deemed as dividends, which shall be paid by the
Company to the Tendering Shareholders (limited to corporations having its head
office or principal office in Japan (domestic corporations)), who directly
hold more than one-third (1/3) of the total number of issued shares of the
Company on the record date for the payment of such dividends, will not be
subject to income tax and Special Income Tax for Reconstruction, and thus will
not be withheld.

 

Foreign Shareholders who wish to receive a reduction or exemption of income
tax on the amount of such deemed dividend in accordance with the applicable
tax convention should submit an application form for income tax convention to
the tender offer agent together with the tender offer application form.

 

(7) Other

(I) The Tender Offer is not being made, directly or indirectly, in or to the
United States, or by the use of the United States Postal Service or any other
methods or means of interstate or international commerce (including but not
limited to telephone, telex, facsimile, electronic mail, and Internet
communication), and is not conducted through any securities exchange
facilities within the United States. Shareholders may not tender their shares
in the Tender Offer by any of the foregoing methods or means or through the
aforementioned facilities, nor may they tender their shares in the Tender
Offer from within the United States. In addition, neither the tender offer
registration statement for the Tender Offer nor related purchase documents are
being dispatched or distributed by postal mail or any other methods within,
to, or from within the United States, and such dispatches or distributions may
not be made. Applications to tender in the Tender Offer that are directly or
indirectly not in compliance with the above restrictions will not be accepted.
No solicitations for acceptance of securities or any other assets are being
made to residents of the United States or being made within the United States,
and the Company will not accept any securities or any other assets even if
residents of the United States send such securities or any other assets to the
Company or such securities or any other assets are sent from the United States
to the Company. In addition, this press release is not intended to request any
indication of intent to tender in the Tender Offer. When tendering their
shares in the Tender Offer, the Tendering Shareholders (standing proxies in
the case of Foreign Shareholders) may be requested to represent and warrant to
the tender offer agent that: the Tendering Shareholder was not located in the
United States either at the time of application for tendering or at the time
of dispatching the tender offer application form; the Tendering Shareholder
has not, directly or indirectly, received or sent any information (including
copies thereof) related to the Tender Offer within or to the United States, or
from within the United States; the Tendering Shareholder has not used,
directly or indirectly, the United States postal mail or any other methods or
means of interstate or international commerce (including, but not limited to,
telephone, telex, facsimile, electronic mail, and Internet communication) or
through any securities exchange facilities in the United States for the
purchase or signing and delivering of the tender offer application form; and
the Tendering Shareholder is not acting as an agent or entrusted
person/delegate without discretion for any others (excluding cases where such
others is giving all instructions concerning the purchase from outside of the
United States).

(II) The Company has obtained verbal responses respectively from, subject to
the Company resolving to conduct the Tender Offer, MS&AD that it will
tender in the Tender Offer 94,690,635 shares (shareholding ratio as of June
30, 2024: 0.70%) out of the 284,071,835 shares (shareholding ratio as of June
30, 2024: 2.11%) of the Company's common stock it holds through its
subsidiary, Mitsui Sumitomo Insurance (9(th) largest shareholder as of
September 30, 2023), Aioi Nissay Dowa that it will tender in the Tender Offer
5,158,520 shares (shareholding ratio as of June 30, 2024: 0.04%) out of the
15,475,420 shares (shareholding ratio as of June 30, 2024: 0.11%) of the
Company's common stock it holds, Tokio Marine & Nichido (10(th) largest
shareholder as of September 30, 2023) that it will tender in the Tender Offer
85,107,800 shares (shareholding ratio as of June 30, 2024: 0.63%) out of the
255,323,570 shares (shareholding ratio as of June 30, 2024: 1.90%) of the
Company's common stock it holds, MUFG that it will tender in the Tender Offer
44,950,905 shares (shareholding ratio as of June 30, 2024: 0.33%) out of the
214,430,905 shares (holding ratio as of June 30, 2024: 1.59%) of the Company's
common stock it holds through its subsidiary, MUFG Bank, MUTB that it will
tender in the Tender Offer all of the 11,546,010 shares (shareholding ratio as
of June 30, 2024: 0.09%) of the Company's common stock it holds, SMFG that it
will tender in the Tender Offer 42,053,475 shares (shareholding ratio as of
June 30, 2024: 0.31%) out of the 188,057,475 shares (shareholding ratio as of
June 30, 2024: 1.40%) of the Company's common stock it holds through its
subsidiary, SMBC, SMBC Nikko Securities that it will tender in the Tender
Offer all of the 6,615,000 shares (shareholding ratio as of June 30, 2024:
0.05%) of the Company's common stock it holds, adding up to a total of
290,122,345 shares (shareholding ratio as of June 30, 2024: 2.15%) out of
975,520,215 shares (shareholding ratio as of June 30, 2024: 7.24%) of the
Company's common stock. Furthermore, the Company has received explanations
from MS&AD, Tokio Marine & Nichido, MUFG, and SMFG to the effect that
the policy on the handling, including dispositon, of the Company's common
stock which continues to be held by the Prospective Tendering Shareholders
even after the Tender Offer (namely, 189,381,200 shares (shareholding ratio as
of June 30, 2024: 1.41%) of the Company's common stock held by Mitsui Sumitomo
Insurance, 10,316,900 shares (shareholding ratio as of June 30, 2024: 0.08%)
of the Company's common stock held by Aioi Nissay Dowa, 170,215,770 shares
(shareholding ratio as of June 30, 2024: 1.26%) of the Company's common stock
held by Tokio Marine & Nichido, 169,480,000 shares (shareholding ratio as
of June 30, 2024: 1.26%) of the Company's common stock held by MUFG Bank, and
146,004,000 shares (shareholding ratio as of June 30, 2024: 1.08%) of the
Company's common stock held by SMBC that will remain after all the shares
which the Prospective Tendering Shareholders intend to tender in the Tender
Offer has been purchased, as well as the Company's common stock that will
remain in the event where the number of share certificates, etc. tendered in
the Tender Offer exceeds the number of shares to be purchased, and the
Company's common stock remain than expected among the Prospective Tendering
Shareholders due to the application of the pro rata method) is currently
undecided, and that possible options will be considered.

 

(III) The Company has published the "Notice Concerning the Status of the
Repurchase of Shares of our Common Stock" on July 3, 2024. Please refer to the
publication for more details.

 

(IV) The Company has published the "Completion of Investigation Regarding
Model Certification Applications (follow-up report)" on July 5, 2024. Please
refer to the publication for more details.

 

This press release may not be published, distributed, diffused or otherwise
sent into the United States of America (including its territories and
possessions, every State in the United States and the District of Columbia).
This press release does not constitute an extension into the United States of
the tender offer mentioned in this press release.

END

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