② Management policy after the Tender Offer

This Tender Offer is conducted as part of the Business Integration and after the implementation of the Tender Offer, the Tender Offerors, ZHD and the Target Company are assumed to conduct a series of transactions as described in “(ⅰ) Method of the Business Integration” in “① The Definitive Business Integration Agreement and the Transaction Agreement” in “(3) Important Agreements Concerning the Tender Offer” below. Please refer to the Press Release concerning the Definitive Business Agreement Integration for basic policies and other details after the Business Integration.

③ Process and Reasons for the Decision that led to the Target Company's Approval of the Tender Offer

According to the Target Company Press Release, the process and reasons for the decision that led the Target Company to approve the Tender Offer were as follows.
As described above in “(ⅱ) Background to the conclusion of the MOU on the Business Integration” in “① Background and Reasons for the Tender Offer”, SoftBank, ZHD, NAVER, and the Target Company, began discussions on various possibilities, including business alliances, in mid-June 2019. After that, since around early August of the same year, the four companies have discussed and examined a wide range of options for the Business Integration feasibility and methods, bearing in mind limitations, etc. under applicable domestic and overseas laws and regulations.
As a result, a basic common understanding was reached among the four companies that the method described below in “(ⅰ) Method of the Business Integration”, in “① The Definitive Business Integration Agreement and the Transaction Agreement” in “(3) Important Agreements Concerning the Tender Offer” including the privatization of the Target Company by the Tender Offerors was to be mainly considered, and the MOU was executed as of November 18, 2019. On the same day, the Tender Offerors submitted to the Target Company a letter of intent regarding the proposal of the Tender Offer for trades aimed at the transaction to realize the Business Integration, proposing a Tender Offer Price of JPY 5,200 per Target Company Common Share.

In the course of such discussions and reviewing, the Target Company determined that there was a structural conflict of interest between the controlling shareholder of the Target Company, NAVER, and the Target Company's minority shareholders in carrying out the Business Integration and similarly there were issues with unsymmetrical information, and therefore the Target Company began to implement a framework for conducting examination and negotiation, etc. of the Business Integration independently from NAVER from the standpoint of improving the Target Company's enterprise value and securing the interests of the Target Company's general shareholders, to ensure the appropriateness of the transaction terms and the fairness of the procedures of the Business Integration.

Specifically, as discussed below in “(d) Establishment of the Special Committee in the Target Company” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in “(4) Basis for Valuation of the Price of Purchase” in “2. Outline of Purchase”, the Target Company established a special committee on October 15, 2019, which consists of three persons, Rehito Hatoyama (Chairperson), Tadashi Kunihiro and Koji Kotaka who have no interests with the Tender Offerors, ZHD, and the Target Company, are the outside directors of the Target Company notified to TSE as independent officers, and are judged to have the experience and eligibility necessary to consider the Business Integration (hereinafter, the “Special Committee”). In considering the Business Integration, the Target Company consulted with the Special Committee with respect to (ⅰ) whether the Business Integration facilitates the improvement of the corporate value and its purpose is reasonable, (ⅱ) whether the fairness of procedures for the Business Integration is ensured, (ⅲ) whether the validity of the terms and conditions of the Business Integration is ensured, and (ⅳ) whether it is considered based on the above (ⅰ) to (ⅲ) that the Business Integration is disadvantageous to the minority shareholders of the Target Company.
After the proposal of the Tender Offers in Japan and the U.S. including the Tender Offer from the Tender Offerors, given that the Business Integration will fall within transactions with controlling shareholder provided in the Securities Listing Regulations of TSE in the future, if the Delisting Procedures including the Tender Offer is implemented, the Target Company continues to consult with the Special Committee, and made the following resolutions at the meeting of the board of directors held on November 18, 2019; the terms of reference for the Special Committee are changed to (ⅰ) whether the Business Integration facilitates the improvement of the enterprise value and its purpose is reasonable, (ⅱ) whether the fairness of procedures for the Business Integration is ensured, (ⅲ) whether the appropriateness of the terms and conditions of the Delisting Procedures, including the Tender Offer Price of the Tender Offer, is ensured, (ⅳ) whether it is considered based on the above (ⅰ) to (ⅲ) that the Business Integration is disadvantageous to the minority shareholders of the Target Company, and (ⅴ) whether it is considered that it is reasonable to announce the opinion supporting the Tender Offers in Japan and the U.S. including the Tender Offer by the board of directors of the Target Company and recommend to tender the Tender Offers in Japan and the U.S. including the Tender Offer to the Target Company's shareholders (hereinafter, (ⅰ) through (ⅴ) are collectively referred to as the “Terms of Reference”); the board of directors will accurately understand and comprehend the judgement of the Special Committee, and make the decision with respect to the Business Integration including the Tender Offer with the highest regard for the contents of the decision of the Special Committee; and the board of directors will not agree to the Business Integration including the Tender Offer if the Special Committee determines that the execution or the terms and conditions of the Delisting Procedures including the Tender Offer are not appropriate.
Furthermore, as discussed below in “(e) Acquisition of a share valuation report and a fairness opinion from an independent third party valuation organization by the Special Committee” and “(f) Acquisition of advice from an independent law firm for the Special Committee” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in “(4) Basis for Valuation of the Price of Purchase” in “2. Outline of Purchase”, the Special Committee appointed Merrill Lynch Japan Securities Co., Ltd. (“BoA”) as a financial advisor and Nakamura, Tsunoda & Matsumoto and White & Case Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho)/White & Case (Gaikokuho-Kyodo-Jigyo) as legal advisors, respectively independent from the Tender Offerors, ZHD, and the Target Company.

As explained below “(b) Acquisition of share valuation report and a fairness opinion from an independent third party valuation institution by the Target Company” and “(c) Acquisition of advice from an independent law firm by the Target Company” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in “(4) Basis for Valuation of the Price of Purchase” in “2. Outline of Purchase”, JP Morgan Securities Japan Co., Ltd. (hereinafter, “J.P. Morgan Securities”) as a financial advisor and third-party valuation organization and Anderson Mori & Tomotsune and Shearman & Sterling Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho) as legal advisors, respectively independent from the Tender Offerors, ZHD, and the Target Company.
The Target Company received an initial proposal from the Tender Offerors on November 18, 2019, involving a Tender Offer Price of JPY 5,200, and subsequently continued to discuss and negotiate the terms of the Delisting Procedures including the Tender Offer Price with the Tender Offerors. Specifically, the Target Company received a proposal of a Tender Offer Price of JPY 5,200 on December 10, 2019, proposal of a Tender Offer Price of JPY 5,320 on December 18, however, the Target Company determined those proposed Tender Offer Price is not sufficient and the Target Company requested the Tender Offerors to reconsider the proposal. Through the aforementioned negotiations, the Target Company ultimately received a final proposal of a Tender Offer Price of JPY 5,380 from the Tender Offerors on December 20, 2019.

In the aforementioned examination and negotiation process, with respect to material aspects, based on certain conditions, the Target Company made timely reports to the Special Committee, decided negotiation policies based on directions and requests from the Special Committee, and as necessary the Special Committee sat in on negotiations between the Target Company and the Tender Offerors. Specifically, with respect to the negotiation policy regarding the Delisting Procedures first of all, the Target Company gave advance explanations to the Special Committee, and as the Special Committee requested the Target Company to increase the Tender Offer Price based on the stand-alone share price of the Target Company and the premiums in similar case studies, the Target Company decided its negotiation policy based on such request. The Special Committee also sat in on negotiations regarding the Delisting Procedures between the Target Company and the Tender Offerors on three occasions, and the Special Committee voiced its opinion so that the Special Committee's request would be clearly communicated to the parties.
On December 23, 2019, the Target Company received a report from the Special Committee to the effect ①the Business Integration, including the Tender Offer, can be seen as contributing to an increase in enterprise value and being for a reasonable purpose; ② the procedures for carrying out the Business Integration, including the Tender Offer, can be seen as having ensured fairness; ③ the terms of the Delisting Procedures, including the Tender Offer (excluding the prices for the Share Options and Convertible Bonds in the Tender Offer) can be seen as having ensured appropriateness; ④ taken in light of ① through ③ together, the resolutions of the Target Company's board of directors, including the announcement of the opinion approving the Tender Offers in Japan and the U.S. including the Tender Offer and the Business Integration including the Delisting Procedures using a share consolidation or other methods after the Tender Offer can be considered as not adverse to the interests of the Target Company's minority shareholders; and ⑤it can be considered reasonable for the Target Company's board of directors to express its opinion in support of the Tender Offer s in Japan and the U.S. including the Tender Offer, and recommend that the Target Company's shareholders and American Depositary Receipt holders tender their shares in response to the Tender Offer s in Japan and the U.S. including the Tender Offer (hereinafter the “Report”) , based on certain assumptions (please see “(d) Establishment of the Special Committee in the Target Company” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in “(4) Basis for valuation of the Price of Purchase” in “Outline of Purchase” for an outline of the Report). Please note that, together with the Report, the Special Committee submitted to the Target Company a share valuation report regarding the results of calculations of the value of Target Company Common Shares submitted to the Special Committee by Merrill Lynch Japan Securities as of December 23, 2019 (hereinafter, the “BoA Valuation Report”) and a written opinion (fairness opinion) to the effect that the purchase price for Target Company Common Shares etc. (defined in “(e) Acquisition of a share valuation report and a fairness opinion from an independent third party valuation organization by the Special Committee” in “(4) Basis for valuation of the Price of Purchase” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “2. Outline of Purchase”, hereinafter the same) in the Tender Offer was fair to the holders of Target Company Common Shares etc. (except for the Tender Offerors and their affiliated companies) from a financial perspective under certain conditions (the “BoA Fairness Opinion”) (please see “(e) Acquisition of a share valuation report and a fairness opinion from an independent third party valuation organization by the Special Committee” in “(4) Basis for valuation of the Price of Purchase” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “2. Outline of Purchase” below for the outline of the BoA Valuation Report and the BoA Fairness Opinion).

With the background explained above, based on the legal advice received from Anderson, Mori & Tomotsune and Shearman & Sterling Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho), advice from J.P. Morgan Securities from a financial perspective, the content of the share valuation report regarding the calculation of the value of the Target Company Common Shares received from J.P. Morgan Securities as of December 23, 2019 (the “JPM Valuation Report”), a fairness opinion received from J.P. Morgan Securities to the effect that, under certain conditions precedent, the purchase price of the Target Company Common Shares in the Tender Offer was fair from a financial perspective for the common shareholders of the Target Company, excluding the Tender Offerors and their related parties (the “JPM Fairness Opinion”), and the BoA Valuation Report and the BoA Fairness Opinion, the Target Company conducted careful discussion and examination at the meeting of the board of directors of the Target Company held on December 23, 2019 of whether the Delisting Procedures, including the Tender Offer, serve to improve the enterprise value of the Target Company and whether the transaction terms of the Delisting Procedures, including the Tender Offer, were appropriate, while giving full respect to the details of the Special Committee's judgment stated in the Report.
Consequently, as stated above in “(ⅰ) Background and Reason for the Tender Offer” in “①Background, Purpose and decision-making process of the decision to implement the Tender Offer”, the Target Company also came to the conclusion that by carrying out the Business Integration including the Tender Offer, the ZHD Group and the Target Company Group will integrate the management resources, and by strengthening business areas and investing to growth areas, respectively, the Target Company determined that it will serve to improve the enterprise value.

The Target Company also determined from the following points, etc. that the Tender Offer Price of JPY 5,380 per share was an appropriate price that ensured the benefit that should be received by the Target Company's general shareholders and that the Target Company's general shareholders are being provided with a reasonable opportunity to sell the Target Company Common Shares with an appropriate premium.

1. (ⅰ)
   The price is one that was agreed as a result of thorough, repeated negotiations with the Tender Offerors with the substantial involvement of the Special Committee, and subject to sufficient measures to ensure the fairness of the transaction terms pertaining to the Delisting Procedures, including the Tender Offer, stated in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in in “(4) Basis for valuation of the Price of Purchase” in “2. Outline of Purchase”.
2. (ⅱ)
   The price is greater than the valuation range of the valuation results based on the market share price analysis and within the valuation range of the valuation results based on the discounted cash flow method (hereinafter, the “DCF Method”) of J.P. Morgan Securities' valuation of the Target Company Common Shares, as stated below in “(b) Acquisition of share valuation report and a fairness opinion from an independent third party valuation institution by the Target Company” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in “(4) Basis for Valuation of the Price of Purchase” in “2. Outline of Purchase”, fairness opinions have also been issued to the effect that the purchase price for the Target Company Common Shares in the Tender Offer is fair for the Target Company's common shareholders other than the Tender Offerors and their related parties, under certain conditions precedent, as stated below in “(b) Acquisition of share valuation report and a fairness opinion: from an independent third party valuation institution by the Target Company” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in “(4) Basis for Valuation of the Price of Purchase” in “2. Outline of Purchase”.
3. (ⅲ)
   The price is greater than the valuation range of the valuation results based on the market share price analysis and within the valuation range of the discount cash flow analysis (hereinafter, the “DCF Analysis”) of the valuation results of the Target Company Common Shares by BoA pursuant to the BoA Valuation Report described below in “(e) Acquisition of a share valuation report and a fairness opinion from an independent third party valuation organization by the Special Committee” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “(4) Basis for valuation of the Price of Purchase” in “2. Outline of Purchase”.
4. (ⅳ)
   The price has a premium of 17.34% (rounded to three decimal places; same hereinafter when calculating the premium rate) compared to the closing price of the Target Company Common Shares of JPY 4,585 on the First Section of TSE on November 13, 2019, which is regarded as not being influenced by speculative reports about the Business Integration by parts of the media, a premium of 31.69% over the simple average closing price of JPY 4,085 (rounded to four decimal places; same hereinafter when calculating the simple average closing price) for the one month prior to November 13, 2019, a 36.75% premium over the simple average closing price of JPY 3,934 for the three months prior to November 13, 2019, and a 50.68% over the simple average closing price of JPY 3,570 for the six months prior to November 13, 2019, which are regarded as reasonable levels of premiums in case studies of other tender offers carried out for the purpose of delisting a subsidiary by a parent company.
5. (ⅴ)
   As explained in “(d) Establishment of the Special Committee in the Target Company” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in “(4) Basis for Valuation of the Price of Purchase” in “2. Outline of Purchase” the Report obtained from the Special Committee also found that the price ensured appropriateness.

Therefore, the Target Company has determined that the Delisting Procedures serve to improve the enterprise value of the Target Company and that the transaction terms of the Delisting Procedures including the Tender Offer are appropriate. The meeting of the Target Company's board of directors held on December 23, 2019 passed a resolution that it would announce an opinion to the effect that the board of directors approves of the Tender Offers in Japan and the U.S. including the Tender Offer and to recommend that the Target Company's shareholders and holders of the American Depositary Receipt tender their shares for the Tender Offers in Japan and the U.S. including the Tender Offer.
Additionally, as the Target Company has not examined the appropriateness of the purchase price for Share Options and Convertible Bonds, and as the Share Options were issued to directors and employees of the Target Company and its Subsidiaries and the purchase price is JPY1 per unit of Share Options, the board of directors has resolved to leave it to the discretion of each holder of Share Options and Convertible Bonds as to whether to tender their Share Options and Convertible Bonds.
Please note that with respect to commencement of the Tender Offer, in the Definitive Business Integration Agreement, commencement is conditioned upon satisfaction of the Conditions Precedent, and the U.S. Tender Offer will only commence if the Tender Offer commences. The Tender Offer is planned to be implemented promptly once the Conditions Precedent, including completion of procedures, etc. with domestic and foreign competition authorities, are satisfied, and as of today the Tender Offerors aim to commence the Tender Offer in May to June, 2020, but it is difficult to accurately estimate the time required for procedures, etc. with Japanese and foreign competition authorities.
Therefore, the aforementioned meeting of the Target Company's board of directors also passed a resolution that when the Tender Offers in Japan and the U.S. including the Tender Offer commences they will ask the Special Committee established by the Target Company to tell the board of directors whether there is any change in the Special Committee's opinion the Report as of such date, and if there is no change, at the time that the Tender Offers in Japan and the U.S. including the Tender Offer commences, the Target Company will make an announcement to such effect, and if there is a change the Special Committee will be requested to state its changed opinion, and the Target Company will announce a new opinion regarding the Tender Offers in Japan and the U.S. including the Tender Offer based on such opinion of the Special Committee.
Please see “(g) Approval of all the directors of the Target Company without interests and the opinion of all the statutory auditors of the Target Company without interest that they have no objection” in “(ⅱ) Measures to Ensure the Fairness of the Tender Offer, such as Measures to Ensure the Fairness of the Tender Offer Price and to Avoid Conflicts of Interest” in “②Process of Valuation” in “(4) Basis for Valuation of the Price of Purchase” in “2. Outline of Purchase” for details of the decision-making process of the board of directors.