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Post by Transformers At The Moon on Aug 9, 2005 7:56:36 GMT
Notice of Execution of Merger Agreement Between TOMY and Takara, Issuance of New
Shares by Takara by Allotment to Third Parties and Share Split by TOMY
TOKYO, Aug. 5 /PRNewswire-FirstCall/ --
This exchange offer or business combination is made for the securities of
a foreign company. The offer is subject to disclosure requirements of a
foreign country that are different from those of the United States. Financial
statements included in the document, if any, have been prepared in accordance
with foreign accounting standards that may not be comparable to the financial
statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may
have arising under the federal securities laws, since the issuer is located in
a foreign country, and some or all of its officers and directors may be
residents of a foreign country. You may not be able to sue a foreign company
or its officers or directors in a foreign court for violations of the U.S.
securities laws. It may be difficult to compel a foreign company and its
affiliates to subject themselves to a U.S. court's judgment.
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Post by Transformers At The Moon on Aug 9, 2005 7:56:52 GMT
[Translation]
To whom it may concern:
TOMY Company, Ltd. ("TOMY") and Takara Co., Ltd. ("Takara") hereby
announce that today, with the approval of their respective boards of
directors, they have executed the merger agreement based on the basic
agreement executed on May 13, 2005 with respect to their merger as of March 1,
2006 (the company surviving after the merger is hereinafter referred to as the
"New Company"). Takara and TOMY hereby also announce that Takara's board of
directors passed a resolution today with respect to the issuance of new shares
by allotment to third parties and TOMY's board of directors passed a
resolution today with respect to the share split as described below.
I. Execution of Merger Agreement between TOMY and Takara
1. Purpose of Merger
This merger will integrate the toy business operations of TOMY and
Takara, their core operations, which will promote the development of
attractive content, the effective use of existing content and the
expansion of TOMY and Takara's toy entertainment business by using
their product development and marketing abilities in a mutually
complementary manner, and to reinforce their management fundamentals
in response to environmental shifts such as a decrease in the number
of children, the progress of IT and globalization by strengthening
profitability due to synergic effects realized by cost reduction
through improving the efficiency of various areas such as
production, logistics, sales and administration. The business
fundamentals of the New Company will be reinforced by the
comprehensive strengths of TOMY and Takara. Furthermore, the New
Company will advance the media mix strategy using the New Company's
content and pursue the challenge of becoming the No. 1 company in a
wide assortment of business fields ranging from toys to general
merchandise.
2. Outline of Merger
(1) Schedule of Merger
Board of Directors' meetings for approval of the merger agreement:
August 5, 2005
Execution of the merger agreement: August 5, 2005
Shareholders' meetings for approval of the merger agreement:
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Post by Transformers At The Moon on Aug 9, 2005 7:57:30 GMT
September 6, 2005
Date of merger: March 1, 2006
(2) Manner of Merger
TOMY and Takara have agreed to merge with each other in accordance
with a spirit of equality. Under the legal procedures, TOMY will be
the surviving company and Takara will be dissolved.
(3) Merger Ratio
Company TOMY Takara
Merger Ratio 1 0.356 (*)
(*) As described in "III. Share Split by TOMY" below, TOMY will
implement a share split the record date for which is September
30, 2005. The merger ratio that was disclosed at the time of
the execution of the Basic Agreement (May 13, 2005) was
adjusted in accordance with the ratio of such share split by
TOMY. Thus, the merger ratio mentioned above has not been
changed in substance.
Note:
1. Allotment ratio of shares
0.356 TOMY shares will be allotted and delivered with respect
to one (1) Takara share.
2. Basis for calculation of merger ratio
TOMY and Takara requested the third parties Nikko City Group
Securities Co., Ltd. and Nikko Cordial Securities Inc.
(collectively, "Nikko") to calculate the merger ratio. In
addition, TOMY requested the third party Daiwa Securities SMBC
Co. Ltd. ("Daiwa") to calculate the merger ratio. Based on
the results of such calculations, TOMY and Takara agreed upon
the merger ratio described above after mutual consultation
with one another.
3. Results, manner and basis for calculation by third parties
In assessing TOMY and Takara, Nikko performed an analysis
based on, among other things, the market stock price method,
the modified net asset book value method and the DCF
(discount cash flow) method. Nikko calculated the merger ratio
comprehensively, taking these analysis results into account.
In assessing TOMY and Takara, Daiwa performed an analysis
based on, among other things, the market stock price method
and the DCF method. Daiwa calculated the merger ratio
comprehensively, taking these analysis results into account.
4. Number of new shares to be issued in the merger (tentative)
Upon the merger, TOMY will issue 54,362,710 shares of common
stock upon the merger and will allot and deliver to Takara's
shareholders, including Takara and TOMY, (the term
"shareholders" being hereinafter defined as including
beneficial shareholders) as entered or recorded in Takara's
latest shareholder register as of the day immediately
preceding the date of merger, (the term "shareholder register"
being hereinafter defined as including beneficial shareholder
registers) shares of common stock. The number of shares to be
allotted and delivered to each shareholder will be calculated
by multiplying the total number of shares of common stock of
Takara held by the relevant shareholder by 0.356. The record
date for dividends for such new shares is scheduled to be
October 1, 2005.
(4) Cash Distribution upon Merger (Gappei-kofukin)
There will be no cash distribution upon the merger.
(5) Interim Dividends
TOMY will distribute, prior to the merger date, interim dividends
to each shareholder or registered pledgee entered or recorded in
TOMY's latest shareholder register as of September 30, 2005 at 7.5
yen per share of common stock not exceeding 200,000,000 yen in
total. Such interim dividends shall be applied to the shares
before the share split.
(6) The merger is conditioned on Takara duly issuing new shares by
allotment to third parties in compliance with the laws of Japan as
described in II. below.
3. Status after Merger
(1) Corporate Name: Kabushiki Kaisha Takara TOMY
(in English, TOMY COMPANY, LTD.)
(2) Business: Toy operations and other businesses
(3) Place of Head Office: Katsushika-ku, Tokyo
(4) Representative and Officers:
President and CEO Kantaro Tomiyama (present)
Vice President and CEO Keita Satoh (present Chairman of
Takara)
Director Shiryo Okuaki (present Senior Managing
Director of TOMY)
Director Masami Ochiai (present Director of
Takara)
Director Haruyuki Niimi (appointed by Takara)
Director Osamu Mashimo (present Director of
Takara)
Director Toshiki Miura (present Managing
Director of TOMY)
Director Yasuyuki Watanabe (appointed by TOMY)
Corporate Auditor Tsunekazu Umeda (present Corporate
Auditor of TOMY)
Corporate Auditor Jun Nogami (present Auditor of Takara)
Corporate Auditor Takeichi Nozawa (present Auditor of
Takara)
Corporate Auditor Mitsuo Matsuba (present Corporate
Auditor of TOMY)
Corporate Auditor Shigeyuki Mito (present Auditor of
Takara)
Corporate Auditor Toshi Yoshinari (present Corporate
Auditor of TOMY)
* Directors and Corporate Auditors, except for the President
and CEO, are listed here in order as based on their
Japanese syllabary.
(5) Paid-in Capital: 7,000,000,000 yen
(This amount is calculated by adding
4,010,059,802 yen, the paid-in capital
to be added in the merger, to
2,989,940,198 yen, TOMY's paid-in
capital as of June 30, 2005. The
amount may vary due to exercises of
stock options issued by TOMY and
conversions of bonds with share
purchase warrants into shares up until
the merger date.)
(6) Fiscal Year End: March 31
(7) Impact on Business: To be announced on or around August 24,
2005
(8) Business Forecast after Merger:
To be announced on or around August 24,
2005
II. Issuance of New Shares by Allotment to Third Parties by Takara
1. Terms and Conditions of Issuance of New Shares
(1) Number of New Shares to be Issued: 62,242,000 shares of
common stock
(2) Issue Price: 156 yen per share
(3) Total Issue Price: 9,709,752 000 yen
(4) Capitalization Amount: 78 yen per share
(5) Application Date: September 28, 2005
(tentative)
(6) Payment Date: September 28, 2005
(tentative)
(7) Record Date for Dividends: April 1, 2005
(8) Subscribers and Number of Shares: Index Corporation
39,827,000 shares
T2 Fund Limited
22,415,000 shares
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Post by Transformers At The Moon on Aug 9, 2005 7:57:52 GMT
(9) Matters with respect to Agreement for Continuous Holding of
New Shares and Other Conditions:
No such matters exist. However, if the allotted new shares
are transferred within two (2) years from the issuance date,
Takara is planning to request the subscriber to agree to a
condition to the effect that such subscriber will report the
content of such transfer to Takara or New Company.
(10) Each item mentioned above is conditioned on the approval by
special resolution (of issuance of new shares at an
especially favorable issue price) at the extraordinary
shareholders' meeting scheduled to be held on September 6,
2005 and the coming into effect of the relevant filings under
the Securities and Exchange Law.
2. Change in Total Number of Issued Shares due to This Capital Increase
Total number of issued shares of Takara at present: 90,462,244
shares
Number of new shares due to capital increase: 62,242,000
shares
Total number of issued shares of Takara
after capital increase: 152,704,244
shares
3. Issuance of New Shares and the Usage of Funds
(1) Reason for the Issuance of New Shares
Takara has been intensively creating content and expanding
distribution channels, aiming at becoming a life-
entertainment company that has toys as its core business.
While this has enabled Takara to develop products within new
spheres and markets, the cost for disposition of inventory
and selling and general and administrative expenses have
increased, and as a result, Takara's profit structure has
changed to one with a higher break-even point.
Although Takara has started to change its business model, it
generated considerable losses in its fiscal year ended on
March 31, 2005 as a result of a reduction of fixed costs and
a reduction in its unprofitable businesses and subsidiaries,
which resulted in a material deterioration of Takara's
financial position. Accordingly, the improvement of its
financial position is a pressing management issue of Takara.
The contemplated issuance of new shares by allotment to third
parties will increase Takara's share capital by approximately
9,709 million yen, the aggregate issuance price and will
significantly strengthen Takara's financial position and
enhance its restructuring of unprofitable businesses and its
business restructuring focusing on areas of growth.
(2) Grounds for the Determination of the Issue Price
The issue price, 156 yen per share, has been determined as a
result of negotiations and discussions among Takara and the
two subscribers based on Takara's asset status (with the
consolidated net assets per share of Takara being 100.33 yen
as of the end of the fiscal year ending on March 31, 2005).
(3) Usage of the Funds Raised
Among the funds raised though the issuance of new shares,
7,000 million yen is scheduled to be used for redeeming
Series 1 Unsecured Convertible Bonds whose redemption date is
February 28, 2006, and the remaining funds will be used for
improvement of toy business performance and investment in
contents in order to enhance the toy business.
4. Distribution of Dividends to Shareholders
Takara has a basic policy that an appropriate amount of dividends
reflecting business results will be distributed on a continuous
basis while at the same time increasing retained earnings in order
to strengthen business fundamentals. However, as the improvement of
its financial status is a currently pressing issue, Takara intends
to use its earnings in order to strengthen its business fundamentals
and improve its performance and financial position.
5. Status of Equity Finance Raised in the Past Three Years and Other
Matters
(1) Status of Equity Finance
There are no applicable matters for this item.
(2) Changes in Share Prices in the Past Three Accounting Periods
and the Latest Period
Period Period Period Period
ended in ended in ended in ending in
March 2003 March 2004 March 2005 March 2006
Opening price 828 688 710 509
Highest price 1,155 850 722 532
Lowest price 585 585 423 321
Closing price 701 700 511 340
P/E 15.69 78.30 - -
Note:
1. The share prices for the period ending in March 2006 are those
for the period from April 1, 2005 to August 4, 2005.
2. The P/E for the period ended in March 2005 was not calculated
because of the existence of a net deficit for the period, and
the P/E for the period ending in March 2006 was not calculated
as the period has not ended yet.
6. Outline of Parties to Which Shares will be Allotted
Name Index Corporation
Location of Head Office 4-1-1, Taishido, Setagaya-ku, Tokyo
Title and Name of
Representative Yoshimi Ogawa
President and CEO
Capital 22,214,364,634 yen
Number of Outstanding Shares 950,683.36
Major Shareholders and
Shareholding Ratio Masami Ochiai 21.19%
Mitsubishi Corporation 6.42%
Yoshimi Ogawa 5.69%
Japan Trustee Services
Bank, Ltd. (trust account) 5.04%
SKY Perfect Communications Inc. 4.69%
Fuji Television Network, Inc. 4.08%
The Mitsubishi Trust and
Banking Corporation (trust account) 3.26%
Tokyo Broadcasting System, Inc. 1.69%
Kazutoshi Watanabe 1.68%
The Master Trust Bank of
Japan, Ltd. (trust account) 1.63%
Main Businesses Content Business, Solution Business, Commerce
Business and Publishing Business
Main Result of Operations
and Financial Position Fiscal Year Ended Fiscal Year Ended in
in August 2003 August 2004
Sales 20,487 39,131
Operating Income 2,299 3,578
Ordinary Income 2,442 3,581
Current Net Income 1,289 -11,175
Total Assets 12,819 51,423
Shareholders' Equity 9,185 7,919
Relationships with Takara Capital Index Corporation is a shareholder
holding 12,864,000 shares of
Takara (14.2% of the outstanding
shares). Takara is a shareholder
holding 600 shares of Index
Corporation (0.06% of the
outstanding shares).
Personnel Index Corporation has four (4) of
its officers working at Takara.
Business Index Corporation has been
entrusted with the development of
mobile contents and toys.
Note:
1. The "Capital" and "Number of Outstanding Shares" are as of June 30,
2005.
2. The figures provided under "Major Shareholders and Shareholding
Ratio" are the numbers of shares entered in the shareholder register
as of February 28, 2005, plus the number of new shares issued by
allotment to third parties for which payment was made on June 15,
2005.
Name T2 Fund Limited
Location of Head Office 2-5-7, Hirakawa-cho, Chiyoda-ku, Tokyo
Title and Name of Representative Seiji Kajiwara
Director
Capital 3 million yen
Number of Outstanding Shares -
Major Shareholders and
Shareholding Ratio Seiji Kajiwara 100%
Main Businesses Management and administration of
investment partnership property
Main Result of Operations and
Financial Position Fiscal Year Fiscal Year
Ended in March 2004 Ended in March 2005
Sales 5 million yen - million yen
Operating Income -2 million yen -0 million yen
Ordinary Income -2 million yen 0 million yen
Current Net Income -20 million yen 0 million yen
Total Assets 52 million yen 51 million yen
Shareholders' Equity -19 million yen -18 million yen
Relationships with Takara Capital T2 Fund Limited is
a shareholder holding
7,240,000 shares of Takara
(8.0 % of the outstanding
shares).
Personnel N. A.
Business N. A.
7. Major Shareholders After Capital Increase
No. Name of Number of Percentage
Shareholder Owned Shares Owned
1 Index Corporation 52,691,000 34.5%
2 T2 Fund Limited 29,655,000 19.4%
3 K.K. TAK 10,866,832 7.1%
4 MAC Small Cap
Investment Limited
Partnerships
5,705,600 3.7%
5 Takara Amusement
Co., Ltd. 3,000,000 1.9%
Note:
The figures under "Percentage Owned" are the numbers of shares entered in
the shareholder register as of March 31, 2005, plus the number of new
shares issued by the allotment to third parties based on the relevant
Substantial Shareholding Report filed with the competent authority.
III. Share Split by TOMY
1. Purpose of Share Split
In order to ensure the liquidity of TOMY shares and the New
Company's shares and the expansion of the investor base, on the
condition that the merger is approved at the respective
extraordinary shareholders' meetings of TOMY and Takara scheduled to
be held on September 6, 2005, TOMY will implement the share split
and reduce the amount of trading unit of TOMY shares prior to the
merger. The merger ratio set forth in I.2.(3) above takes the share
split into account.
2. Outline of Share Split
(1) Manner of Share Split
Every one (1) share of common stock held by shareholders
entered or recorded in TOMY's latest shareholder register as
of September 30, 2005 will be split into two (2) shares.
(2) Change in Total Number of Issued Shares due to Share Split
Total number of issued shares
of TOMY prior to share split: 20,419,299 shares
Number of new shares upon
share split: 20,419,299 shares
Total number of issued shares
of TOMY after share split: 40,838,598 shares
Number of authorized shares of
share capital after share split: 160,000,000 shares
Note:
1. The change in the total number of issued shares
specified above is calculated based on the total number
of issued shares as of June 30, 2005. If, before
September 30, 2005, any outstanding share purchase
warrants (stock options) are exercised or any bonds with
share purchase warrants are converted into shares, the
number of shares specified above may vary.
2. In conjunction with the share split described above, the
Articles of Incorporation of TOMY will be amended. On
the effective date of the share split, the authorized
share capital (the total number of shares to be issued)
will be increased to 160,000,000 shares by 80,000,000
shares.
3. The capital will not increase upon the share split.
(3) Schedule
Ex-rights date for share split: September 27, 2005
Record date for share split: September 30, 2005
Effective date: November 21, 2005
(4) Record Date for Dividends: October 1, 2005
(5) Other matters necessary for the share split will be determined at a
board of directors' meeting in the future.
(6) Adjustment to Exercise Price
In conjunction with the share split, the exercise price for the
share purchase warrants and the bonds with share purchase warrants
convertible into stock issued by TOMY will be adjusted on or after
October 1, 2005 as follows:
(i) Share purchase warrants (for 2000 and 2001, subscription
warrants)
Issue Adjusted Exercise Unadjusted Exercise
Price per Share Price per Share
First Series Share
Purchase Warrants 1,811 Yen 3,621 Yen
(Resolved at ordinary
shareholders' meeting
for 2000)
Second Series Share
Purchase Warrants 1,331 Yen 2,661 Yen
(Resolved at ordinary
shareholders' meeting
for 2001)
Third Series Share
Purchase Warrants 721 Yen 1,441 Yen
(Resolved at ordinary
shareholders' meeting for
2003)
Fourth Series Share
Purchase Warrants 879 Yen 1,757 Yen
(Resolved at ordinary
shareholders' meeting
for 2004)
(ii) Bonds
Issue Adjusted Exercise Unadjusted Exercise
Price per Share Price per Share
First Series Unsecured
Bonds with Share
Purchase Warrants
Convertible into Stock
(Issued on June 23, 2004) 860.5 Yen 1,721 Yen
(7) Policy for Year-End Dividends
The estimated dividend for the fiscal year ending on March 31, 2006
is not expected to be changed at the present. In conjunction with
the share split, the expected year-end dividend that has been
announced will be 3.75 yen, i.e., one half of 7.50.
Corporate Name: Takara Co., Ltd.
Representative: Nobuyuki Okude, President & CEO
(Securities Code No. 7969
Tokyo Stock Exchange, First Section)
Contact: Ryozo Kubo
Chief of Finance & Accounting and Operating Officer
Tel: 03-3603-2134
Corporate Name: TOMY Company, Ltd.
Representative: Kantaro Tomiyama, President & CEO
(Securities Code No. 7867,
Tokyo Stock Exchange, First Section)
Contact: Shoji Tajima
Executive Officer of Head of Business
Administration Div.
Tel: 03-3693-9033
End of Document
SOURCE TOMY Company, Ltd.
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