September 14, 2005
Nagoya Risui and Gifu Risui to Become Wholly Owned Subsidiaries of Kurita through an Exchange of Stocks
As a result of actions taken at the Board of Directors' meeting of September 14, 2005, Kurita Water Industries Ltd. (hereafter called "Kurita") passed a resolution to initiate the start-up of the following firms as wholly owned subsidiaries of Kurita through an exchange of stocks as of October 18 of 2005; Nagoya Risui Co., Ltd. (hereafter called "Nagoya Risui") and Gifu Risui Co., Ltd. (hereafter called "Gifu Risui"). The details of the resolution are described below. This stock exchange will be implemented without approval from the general meeting of the Kurita stockholders, in accordance with Article 358 (Simple Stock Exchange) of the Commercial Code of Japan.
1. Purpose of the exchange of stocks, and change to wholly owned subsidiaries
The Kurita Group has forged ahead with the reorganization of the sales structure in order to furnish community and customer based sales services. This reorganization aims to reinforce increases in sales and profits in the field of water treatment chemicals businesses. As part of this reorganization, Nagoya Risui and Gifu Risui will become wholly owned subsidiaries of Kurita, to reshape the sales network in the Tokai area where they have established their business bases.
2. Conditions of stock for stock exchange, etc.
(1) Schedule for stock for stock exchange
|August 31, 2005||Board meeting to approve stock for stock exchange agreement (Nagoya Risui and Gifu Risui)|
|September 14, 2005||Board meeting to approve stock for stock exchange agreement (Kurita)|
|September 15, 2005||General meeting of shareholders to approve stock for stock exchange agreement (Nagoya Risui and Gifu Risui)|
|September 15, 2005||Signing of stock for stock exchange agreement|
|October 17, 2005||Due date of stock certificate submission (Nagoya Risui and Gifu Risui)|
|October 18, 2005||Transaction date|
(2) Stock exchange ratio
(Wholly owned subsidiary)
(Wholly Owned subsidiary)
|Stock exchange ratio||1||82.353||20.5556|
- 1) Share allocation ratio
82.353 common shares of Kurita will be allotted per common share in Nagoya Risui.
20.5556 common shares of Kurita will be allotted per common share in Gifu Risui.
- 2) Bases for calculating share exchange ratio
The stock exchange ratio was derived from the following stock valuation of Kurita, Nagoya Risui and Gifu Risui, under an agreement reached among the above corporations.
- a)Stock value of Kurita
The stock price is determined according to the daily average stock price on the Tokyo Stock Exchange on the month preceding negotiations among the parties involved in stock exchange (July).
- b)Stock value of Nagoya Risui and Gifu Risui
The stock price is determined on the basis of valuations where goodwill values are incorporated into the market price net asset method, because Nagoya Risui and Gifu Risui are unlisted companies. The DCF (discounted cash flow) method is used in conjunction with the above valuation to ascertain their stock values.
- a)Stock value of Kurita
- 3) Number of new stocks to be issued in response to the exchange of stocks
In place of new stock issues, Kurita is intending to allot 8,400 of its treasury stock (common shares) to the stockholders of Nagoya Risui (Kurita excluded) and 33,300 to the stockholders of Gifu Risui (Kurita excluded). Kurita has accomplished a stock buy-back from Hiroshi Mine, the stockholder of Nagoya Risui, and has completed prior cancellation of its treasury stock.
(3) Stock exchange subsidy
No stock exchange subsidy provided
3. Summary of parties involved in stock for stock exchange (as of March 31, 2005)
|(1)Company name||Kurita (Parent company)||Nagoya Risui (Wholly owned subsidiary)||Gifu Risui (Wholly owned subsidiary)|
|(2)Business descriptions||Production and distribution of water treatment chemicals, systems and facilities, and rendering of maintenance services||Distribution of water treatment chemicals and equipment, and rendering of maintenance services in the Tokai area||Distribution of water treatment chemicals and equipment, and rendering of maintenance services in the Tokai area|
|(3)Date of foundation||July 13, 1949||April 1, 1975||July 5, 1977|
|(4)Location of headquarters||3-4-7, Nishi-Shinjuku, Shinjuku-ku, Tokyo||3-6-1, Mitsui, Ichinomiya-shi, Aichi||3-19-10, Rokujo-Kita, Gifu-shi|
|(5)Representative||Hiroshi Fujino||Takefumi Onishi||Mitsuru Ishii|
|(6)Capital||13,450 million yen||10 million yen||10 million yen|
|(7)Number of outstanding shares||132,800,256 shares||200 shares||2,000 shares|
|(8)Shareholders' equity||122,590 million yen||45,153,264 yen||64,717,759 yen|
|(9)Total asset||169,355 million yen||130,274,579 yen||125,735,204 yen|
|(10)Fiscal year end||March 31||March 31||March 31|
|(11)Number of employees||1,600||4||5|
|(12)Main clients||Customers in the areas of electronic, pharmaceutical, food, steel, and chemical industries, in addition to government and other public offices||
Ichinomiya City, Kasugai City, Seto City
Mitsubishi Heavy Industries, Ltd.
Sotoh Co., Ltd.
Toyobo Co., Ltd.
Kirin Brewery Co., Ltd.
Mitsubishi Materials Corporation
SANYO Electric Co., Ltd.
Kamioka Mining & Smelting Co., Ltd.
Gifu Auto Body Co., Ltd.
Mitsubishi Materials Corporation
Oji Paperboard Co., Ltd.
|(13)Major stockholders and ratio of shareholding||ITOCHU Corporation||7.73%||Takefumi Onishi||51.00%||Mitsuru Ishii||81.00%|
|Japan Trustee Services Bank, Ltd. (trust account)||6.96%||Kurita Water Industries Ltd.||35.00%||Kurita Water Industries Ltd.||19.00%|
|NipponLife Insurance Company||5.48%||Hiroshi Mine||7.00%|
|Northern Trust Company (AVFC) Sub-account American Client||3.93%||Nagoya Risui Co., Ltd.||7.00%|
|The Master Trust Bank of Japan, Ltd. (trust account)||3.38%|
|Tokyo Marine & Nichido Fire Insurance Co., Ltd.||3.24%|
|(14)Main correspondent bank||UFJ Bank Limited and others||Resona Bank, Limited and others||Juroku Bank, Ltd.|
(15)Relationship between companies concerned
Relationship with Nagoya Risui
|Capital relationship||Kurita owns a 35.00% share of all issued shares of Nagoya Risui.|
|Personnel relationship||Kurita dispatches 2 directors to Nagoya Risui.|
|Business relationship||Kurita secures a supply of products to Nagoya Risui.|
Relationship with Gifu Risui
|Capital relationship||Kurita owns a 19.00% share of all issued shares of Gifu Risui.|
|Personnel relationship||Kurita dispatches 2 directors and 1 auditor to Gifu Risui.|
|Business relationship||Kurita secures a supply of products to Gifu Risui.|
(16) Business performance in the last three fiscal years (individual)
|Kurita (Parent company)|
|Year ending||March 2003||March 2004||March 2005|
|Net sales (million yen)||114,115||112,206||119,175|
|Operating income (million yen)||8,535||9,053||10,020|
|Ordinary income (million yen)||10,693||10,503||12,193|
|Current net income (million yen)||5,450||6,768||7,369|
|Current net income per share (yen)||40.87||52.05||56.63|
|Annual dividends per share (yen)||16.00||16.00||18.00|
|Stockholders' equity per share (yen)||859.85||909.23||952.33|
|Nagoya Risui (Wholly owned subsidiary)||Gifu Risui (Wholly owned subsidiary)|
|Year ending||March 2003||March 2004||March 2005||March 2003||March 2004||March 2005|
|Net sales (million yen)||313,041||268,887||298,620||320,696||349,996||361,446|
|Operating income (million yen)||1,184||2,474||4,929||4,272||7,089||3,390|
|Ordinary income (million yen)||1,623||2,382||5,741||4,307||7,260||3,413|
|Current net income (million yen)||897||2,031||4,253||3,344||4,982||2,955|
|Current net income per share (yen)||4,488.97||10,806.85||17,489.65||1,672.06||2,491.41||1,477.93|
|Annual dividends per share (yen)||2,500.00||5,000.00||5,000.00||500.00||500.00||500.00|
|Stockholders' equity per share (yen)||211,749.72||224,893.49||242,759.48||29,389.54||31,380.95||32,358.88|
4. Circumstances after stock for stock exchange
- (1)Corporate name, business descriptions, location of headquarters, representative, capital
No information on the following items defined in "3. Summary of parties involved in stock for stock exchange" is altered: each corporate name, business descriptions, location of headquarters, representative, and capital.
A merger between Nagoya Risui and Gifu Risui is scheduled to be effected as of December 1, 2005 to allow Nagoya Risui to be a merging corporation (Gifu Risui dissolved accordingly). The corporate name and representative will be changed in response to the merger.
- (2)Impact on business results
The ongoing stock exchange and further merger of the subsidiaries are forecasted to have a no matterial impact on individual and consolidated business results that Kurita will accomplish.