Press Releases 2019
2. Outline of Purchase
(1) Corporate Profile of the Target Company
① | Name | LINE Corporation | |||
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② | Address | JR Shinjuku Miraina Tower, 23rd Floor, 4-1-6 Shinjuku Shinjuku-ku, Tokyo, 160-0022, Japan |
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③ | Name and title of representative | Mr. Takeshi Idezawa Representative Director and President |
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④ | Scope of business | Advertising service based on the mobile messenger application “LINE,” core businesses including the sales of stamp and game service, and strategic businesses including Fintech, AI and commerce service. | |||
⑤ | Share capital | JPY96,535 million (as of September 30, 2019) | |||
⑥ | Year of incorporation | September 4, 2000 | |||
⑦ | Equity attributable to the shareholders of the Target Company | JPY164,844 million (as of September 30, 2019) | |||
⑧ | Total assets | JPY530,442 million (as of September 30, 2019) | |||
⑨ | Principal shareholders and shareholdings (as of June 30, 2019) |
NAVER | 72.64% | ||
MOXLEY & CO LLC | 3.64% | ||||
JAPAN TRUSTEE SERVICES BANK, LTD. | 2.11% | ||||
⑩ | Relationships with the other parties at this time | ||||
Shareholding relationships | Not applicable with respect to SoftBank. NAVER is the parent company of the Target Company and holds the Target Company Common Shares of 174,992,000 (which represents 72.64% of all the outstanding shares of the Target Company Shares, 240,883,642 shares, as of June 30, 2019) and a portion of the Convertible Bonds. |
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Human relationships | Not applicable with respect to SoftBank. Mr. Hae Jin Lee, an executive officer of NAVER, also serves as the chairman of the board of directors of the Target Company. |
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Business relationships | There are existing business relationships between SoftBank and the Target Company with respect to communication services, etc. There are existing business relationships between NAVER and the Target Company with respect to advertising services, etc. |
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Current Status of Related Parties | SoftBank is not a related party to the Target Company. NAVER is the parent company of the Target Company. |
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⑪ | Results of Operation and Financial Position for the Last Three Years (on a consolidated basis) | ||||
For the year | 2016 ending December 31 | 2017 ending December 31 | 2018 ending December 31 | ||
Revenues | JPY140,704 million | JPY167,147 million | JPY207,182 million | ||
Profit from operating activities | JPY19,897 million | JPY25,078 million | JPY16,110 million | ||
Profit (loss) before tax from continuing operations | JPY17,990 million | JPY18,145 million | JPY3,354 million | ||
Profit (loss) attributable to the shareholders of the Target | JPY6,763 million | JPY8,078 million | (JPY3,718 million) | ||
Earnings per share: basic profit (loss) for the period attributable to the shareholders of the Target | JPY34.84 | JPY36.56 | (JPY15.62) |
(2) Schedule
The Tender Offer is expected to be implemented under the provisions of the Definitive Business Integration Agreement upon the satisfaction of the Conditions Precedent. The Tender Offer is expected to be implemented promptly upon the satisfaction of the Conditions Precedent. As of today, the Tender Offerors are aiming at commencing the Tender Offer in May to June, 2020. However, it is difficult to accurately predict the period required for the procedures in connection with the domestic and foreign competition authorities. Therefore, the details of the schedule of the Tender Offer will be announced as soon as they are fixed.
(3) Price of Purchase
① Common stock JPY 5,380 per share*1
- [Note]
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- *1
As described in “1. Overview of the Tender Offer” in “(1) Purpose of Purchase”, since the American Depositary Receipts are traded only in the U.S. securities market and it is not confirmed whether or not a tender offer in Japan can practically accept the tender of American Depositary Receipts, the Tender Offerors have continuously confirmed whether or not the American Depository Receipt can be included in the types of the Share Certificates, etc. to be purchased in the Tender Offer. However, since each of the American Depositary Receipts can be converted to one share of the Target Company Common Shares, the holders of the American Depositary Receipts who desire to tender to the Tender Offer instead of the U.S. Tender Offer can tender to the Tender Offer after converting the American Depositary Receipts to the Target Company Common Shares. The conversion procedures and costs are disclosed on Form F-1 submitted by the Target Company to the SEC, the SEC's website, etc. and should be checked by the holders of the American Depositary Receipt in the U.S. The U.S. Tender Offer to be conducted in parallel with the Tender Offer is scheduled to include also the American Depositary Receipt in the target of the U.S. Tender Offer. The price of purchase per each American Depositary Receipt in this tender offer will be set at the same price as the Tender Offer Price (JPY 5,380). Since the settlement of the U.S. Tender Offer will be made in the United States dollar, the settlement will be made in the United States dollar to be calculated by the method to determine the exchange rate which will be set in advance at the commencement of the U.S. Tender Offer. The procedures for the U.S. Tender Offer and other terms of the settlement will be disclosed on the SEC's website, etc. as soon as they are set. As of today, the Tender Offerors have continuously confirmed whether or not the American Depository Receipt can be practically included in the target of the Tender Offer, and if so, the specific range and procedures for the Tender Offerors to accept the tender by holders of the American Depository Receipt. Please be informed of the specific treatment by the commencement of the Tender Offer.
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② Share Options
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(ⅰ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on December 11, 2013 (hereinafter, the “Fourth Series Share Options”)
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(ⅱ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on December 11, 2013 (hereinafter, the “Fifth Series Share Options”)
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(ⅲ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on December 11, 2013(hereinafter, the “Sixth Series Share Options”)
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(ⅳ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on February 5, 2014(hereinafter, the “Seventh Series Share Options”)
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(ⅴ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on February 5, 2014 (hereinafter, the “Eighth Series Share Options”)
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(ⅵ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on August 1, 2014 (hereinafter, the “Tenth Series Share Options”)
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(ⅶ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on August 1, 2014 (hereinafter, the “Eleventh Series Share Options”)
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(ⅷ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on September 30, 2014(hereinafter, the “Thirteenth Series Share Options”)
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(Ⅸ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on September 30, 2014(hereinafter, the “Fourteenth Series Share Options”)
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(Ⅹ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on January 30, 2015(hereinafter, the “Sixteenth Series Share Options”)
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(Ⅺ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on January 30, 2015(hereinafter, the “Seventeenth Series Share Options”)
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(Ⅻ)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on January 30, 2015(hereinafter, the “Eighteenth Series Share Options”)
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(XIII)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on January 30, 2015(hereinafter, the “Nineteenth Series Share Options”)
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(XIV)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on June 26, 2017(hereinafter, the “Twentieth Series Share Options”)
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(XV)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on July 9, 2019 (hereinafter, the “Twenty-second Series Share Options”)
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(XVI)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on July 9, 2019 (hereinafter, the “Twenty-third Series Share Options”)
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(XVII)
JPY1 per unit of share options issued by resolution of the board of directors of the Target Company on July 9, 2019 (hereinafter, the “Twenty-fourth Series Share Options”, and the share options in (ⅰ) above to (XVII) are collectively referred to as “the Share Options”.*2
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- *2
In addition to the above, the Target Company made the resolution to issue “the Twenty-fifth Share Options of Line Corporation” (hereinafter, the “Twenty-fifth Series Share Options”) at the meeting of the board of directors held on July 9, 2019. However, the Twenty-fifth Series Share Options are scheduled to be issued on April 3, 2020 and have not been issued as of today, so such Share Options are not included in the scope of the Share Certificate, etc. to be purchased on the Tender Offer. If the Twenty-fifth Series Share Options were issued as of the date of commencement of the Tender Offer, such Share Options will be included in the scope of purchase. In such cases, the price of purchase will be JPY1 per unit of share options, as is the case with the Share Options.
- *2
③ Convertible Bonds
- (ⅰ)
JPY 7,203,820 per a face value of JPY10,000,000 of Euroyen convertible bonds due 2023 issued by the resolution of the board of directors of the Target Company on September 4, 2018 (hereinafter, the “Convertible Bonds due 2023”)
- (ⅱ)
JPY 7,155,400 per a face value of JPY10,000,000 of Euroyen convertible bonds due 2025 issued by the resolution of the board of directors of the Target Company on September 4, 2018 (hereinafter, the “Convertible Bonds due 2025” and together with the Convertible Bonds due 2023 stated in (ⅰ) above, the “Convertible Bonds”)
(4) Basis for Valuation of the Price of Purchase
① Basis of Valuation
- (ⅰ)
Common stock
(Basis of valuation by NAVER)
In determining the Tender Offer Price, in order to ensure the fairness of the Tender Offer Price, NAVER requested Deutsche Bank, its financial advisor, as a third-party valuation institution independent from the Tender Offerors, ZHD or the Target Company, to evaluate the share value of the Target Company. Deutsche Bank is not a related party to the Tender Offerors, ZHD or the Target Company, nor does it have any material interests in relation to the Tender Offer (except for the receipt of fees in connection with its engagement in a series of transactions relating to the Business Integration).
Deutsche Bank has evaluated the value of the Target Company Common Shares by using the Average Market Price Method due to the fact that the Target Company Common Shares are listed on TSE, and a discounted cash flow analysis (hereinafter, a “DCF Analysis”) in order to reflect financial forecasts and other information and data related to the Target Company provided by the management of NAVER in the evaluation. NAVER received a report on the valuation of the Target Company Common Shares from Deutsche Bank (hereinafter, the “DB Valuation Report”) on December 22, 2019.
NAVER has not requested or received any opinion concerning the fairness of the Tender Offer Price (a fairness opinion) from Deutsche Bank. The analyses prepared by Deutsche Bank and furnished to NAVER are not an opinion to NAVER or holders of the Target Company Common Shares as to the fairness of the Business Integration or the Tender Offer Price, do not constitute a recommendation to the Tender Offerors, ZHD, the Target Company, or holders of the Target Company Common Shares as to the Business Integration, or as to whether holders of the Target Company Common Shares should tender the Target Company Common Shares in the Tender Offer or as to how to vote or act with respect to any other matter, and should not be relied on as the basis for any investment decision.
The results of valuation made by Deutsche Bank with respect to the value of each common share of the Target Company is as follows:
Average Market Price Method | JPY 3,570 to JPY 4,585 |
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DCF Analysis | JPY 3,819 to JPY 5,497 |
Under the Average Market Price Method, Deutsche Bank reviewed the historical trading prices of the Target Company Common Shares on TSE and chose November 13, 2019 as the “record date” in order to avoid any impact on the share value due to speculative press reports regarding the Business Integration that was reported after such date. Based on the closing price of the Target Company Common Shares of JPY 4,585 on TSE as of the record date, the simple average closing price over the month-long period ending November 13, 2019 of JPY 4,085, the simple average closing price over the 3-month-long period ending November 13, 2019 of JPY 3,934, and the simple average closing price over the 6-month-long period ending November 13, 2019 of JPY 3,570 (rounded off to the nearest JPY 1; hereinafter the same applies to calculation of the simple average closing price ), Deutsche Bank derived a range of implied value per the Target Company Common Share of JPY 3,570 to JPY 4,585.
Under the DCF Analysis, Deutsche Bank performed a DCF Analysis of the Target Company using various factors including the Target Company's business plans and financial forecasts for the fiscal years ending December 31, 2019 to December 31, 2024 approved for Deutsche Bank's use by the management of NAVER, earnings projections and investment plans as prescribed in the Target Company's business plans, and other publicly available information. Deutsche Bank evaluated equity value and enterprise value of the Target Company by discounting the Target Company's projected free cash flow for the period on and after the fourth quarter of the fiscal year ending December 31, 2019 to present value using a specific discount rate, and based on such calculations, derived a range of implied value per the Target Company Common Share of JPY 3,819 to JPY 5,497. The business plans and financial forecasts of the Target Company that were provided to Deutsche Bank by NAVER for purposes of the DCF Analysis assumed that operating losses will be recorded during the fiscal years ending December 31, 2019 and December 31, 2020 due to the investments and high marketing costs associated with the strategic businesses, and that a significant increase in profits will be recorded for the period after the fiscal year ending December 31, 2021 due to the decrease in marketing costs and positive impacts of the business investments. Deutsche Bank did not take into account the synergies or tax impacts anticipated by the management of NAVER to result from a series of transactions relating to the Business Integration, and assumed that there are no off-balance sheet liabilities.
NAVER resolved at the meeting of its board of directors held on December 23, 2019 that the Tender Offer Price will be JPY 5,380 per share, based on a comprehensive review of various factors, including the results of due diligence in respect of the Target Company that took place from late October 2019 to early November 2019, precedent examples of premiums paid in tender offers by parties other than the Issuer where the parent company took or intended to take its listed subsidiary private upon completion of such tender offer, the likelihood of approval of the Tender Offer by the Target Company's board of directors, the market trends of the price of the Target Company Common Shares and the prospects of subscription for the Tender Offer, in addition to the valuation analysis contained in the DB Valuation Report received from Deutsche Bank, as well as taking into account results of the discussions and negotiations with the Target Company.
- [Note]
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- *
The following is a supplemental explanation of the assumptions made, matters considered and limitations in connection with Deutsche Bank's financial analyses of the share value of the Target Company, based on various conditions in effect as of, and information that Deutsche Bank received by, December 22, 2019.
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In preparing the DB Valuation Report, Deutsche Bank reviewed certain publicly available financial and other information concerning the Target Company, certain internal analyses, financial forecasts and other information relating to the Target Company prepared by the management of the Target Company, and certain internal analyses, financial forecasts and other information relating to the Target Company prepared by the management of NAVER. Deutsche Bank did not assume any responsibility for independently verifying, nor did it independently verify, any of the information of the Target Company, including any financial information or financial forecasts that were analyzed (regardless of whether such information were publicly available, or provided by NAVER or the Target Company). Accordingly, Deutsche Bank has assumed and relied upon the accuracy and completeness of all such information. Deutsche Bank has not verified any assets or liabilities of the Tender Offerors, ZHD or the Target Company, nor has it independently appraised or valued any assets or liabilities of the Tender Offerors, ZHD or the Target Company. In relying on the financial forecasts that were provided by NAVER or the Target Company, including analyses and forecasts concerning the financial impacts that the Tender Offer may have on the Target Company, Deutsche Bank assumed that such information was reasonably prepared and reflected the best currently available estimates and judgment of NAVER or the Target Company, as applicable. In preparing the DB Valuation Report, Deutsche Bank did not express any view as to such analyses or forecasts or the reasonableness of the assumptions on which they were based. The DB Valuation Report is based on financial, market and other conditions in effect as of December 22, 2019, as well as information that Deutsche Bank received by such date. Events that occur after the date of the DB Valuation Report may affect the valuation results contained in the DB Valuation Report, however Deutsche Bank does not have any obligation to revise, modify or reaffirm the contents of the DB Valuation Report.
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In respect of the DB Valuation Report, Deutsche Bank has assumed that the Tender Offerors and the Target Company will each take appropriate actions to comply with the restrictions and agreed terms necessary for the consummation of the Tender Offer, and that all conditions and obligations to which the Tender Offerors and the Target Company are subject in respect of the Tender Offer will be completed or satisfied without being waived. Deutsche Bank has further assumed that all material consents and approvals by government, regulatory authority or other parties (hereinafter, the “Authorities”) necessary for the commencement of the Tender Offer will be obtained, and that neither the obtaining of such consents, approvals or orders by the Authorities nor any revisions, modifications or waiver of any contracts to which the Tender Offerors or the Target Company is a party will have any adverse effect on the Tender Offerors or the Target Company, nor will they impose any restrictions, regulations or conditions that may reduce the profits resulting from the Tender Offer for the Tender Offerors or the Target Company, nor will the profits expected to be earned from the Tender Offer be revised, modified or relinquished.
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Deutsche Bank does not provide legal, tax or regulatory advice. With respect to such matters, NAVER relies on the advice of specialists who are experts in such fields.
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The DB Valuation Report was provided solely for the information of the board of directors of NAVER and to assist the board of directors of NAVER in connection with its consideration of the Tender Offer Price. Deutsche Bank has not recommended any specific purchase price to NAVER or its board of directors, shareholders, creditors or other relevant parties, and does not recommend or guarantee that any specific purchase price is the only appropriate purchase price. The DB Valuation Report does not constitute a recommendation as to whether or not NAVER should commence the Tender Offer, whether any holder of the Target Company Common Shares should tender shares into the Tender Offer, or as to how any holder of the Target Company Common Shares or any other securities should vote or act with respect to any matter. By submitting the DB Valuation Report to the board of directors of NAVER, Deutsche Bank did not guarantee the business plans or financial forecasts as provided by the Target Company or NAVER, nor did it guarantee that the earnings projections and investment plans as contained therein will be realized or implemented.
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Deutsche Bank did not have the authority to solicit, and did not solicit, investments in securities or other financial products issued by the Target Company. Deutsche Bank will not provide any opinion in respect of the values of the Target Company's shares after the announcement or consummation of the Tender Offer.
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Deutsche Bank has acted as NAVER's financial advisor in connection with the Tender Offer and will be paid a fee for its services. NAVER has also agreed to reimburse Deutsche Bank for its expenses, and to indemnify Deutsche Bank against certain liabilities, in connection with its engagement. Deutsche Bank is an affiliate of Deutsche Bank AG (hereinafter, together with its affiliates, the “DB Group”). One or more of the members of the DB Group may provide, or may be providing, investment banking, commercial banking (including credit financing) or other financial services to the Tender Offerors, ZHD, the Target Company or their affiliates, and may receive, or may be receiving, fees with respect to such services. In the ordinary course of its business, a member of the DB Group may exercise its voting rights in respect to the Target Company's shares, or actively trade the Target Company's shares, bonds or other marketable securities (or related transactions) for Deutsche Bank's own account or for the accounts of its customers. Accordingly, the DB Group may at any time hold a long or short position in such securities, instruments and obligations.
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Subject to its internal rules and procedures, such as policies concerning conflicts of interest, DB Group may provide investment banking, commercial banking or financial advisory services to clients that may have, currently or in the future, a conflict of interest with NAVER or the Target Company, and may receive fees for such services. In such case, DB Group will not owe any duty to disclose any confidential information to NAVER, the Target Company or their affiliates.
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(Basis of valuation by SoftBank)
In determining the Tender Offer Price, in order to ensure the fairness of the Tender Offer Price, SoftBank requested Nomura Securities Co., Ltd. (hereinafter, “Nomura Securities”), its financial advisor, as a third-party valuation institution independent from the Tender Offerors, ZHD, or the Target Company, to evaluate the share value of the Target Company. Nomura Securities is not a related party to the Tender Offerors, ZHD, or the Target Company, nor does it have any material interests in relation to the Business Integration including the Tender Offer.
Upon conducting a valuation of the Target Company Common Shares among several share price valuation methods, Nomura Securities considered that it was appropriate to evaluate the Target Company Common Shares from multiple angles. Therefore, Nomura Securities has evaluated the value of the Target Company Common Shares on the assumption that the Target Company is a going concern by using the Average Market Price Method due to the fact that the Target Company Common Shares are listed on the First Section of TSE and DCF Analysis in order to reflect future business activities in the valuation. SoftBank received a report on the valuation of the Target Company Common Shares (hereinafter, the “Nomura Valuation Report”) from Nomura Securities dated December 23, 2019. Note that SoftBank has not received a fairness opinion regarding the fairness of the Tender Offer Price.
The results of valuation made by Nomura Securities with respect to the value of each common share of the Target Company is as follows.
Average Market Price Method | JPY 3,570 to JPY 4,585 |
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DCF Analysis | JPY 3,412 to JPY 5,142 |
For the Average Market Price Method, setting a record date of November 13, 2019, before speculative press reports were released (after the close of regular trading hours on November 13, 2019), in order to exclude the effect of speculative press reports on the share price, the closing price on the record date for the Target Company Common Shares on the First Section of TSE was JPY 4,585, the simple average closing price over the 5 business days ending November 13, 2019 was JPY 4,427 (rounded off to the nearest JPY 1; hereinafter the same applies to calculation of the simple average closing price), the simple average closing price over the month-long period ending November 13, 2019 was JPY 4,085, the simple average closing price over the 3-month-long period ending November 13, 2019 was JPY 3,934, the simple average closing price over the 6-month-long period ending November 13, 2019 was JPY 3,570. Based on those values, Nomura Securities evaluated the range of the share value per each common share of the Target Company as being between JPY 3,570 and JPY 4,585.
For the DCF Analysis, calculations were based on the revenues and investment plans described in business plans over 6 fiscal years from the fiscal year ending December 2019 to the fiscal year ending December 2024 and publicly available information, from which the Target Company's enterprise value and equity value were derived by discounting the free cash flow expected to be generated by the Target Company in the future from the third quarter of the fiscal year ending December 2019 by a certain rate in order to determine the present value, which resulted in a per-common share price range of JPY 3,412 to JPY 5,142. The business plan based on which the DCF Analysis was conducted contemplates a significant fluctuation in operating profit and loss. Specifically, it anticipates an operating loss due to the post of large marketing expenses and investments to strategic businesses in the fiscal years ending December 2019 and 2020 and a significant fluctuation in revenue due to the reduction of marketing expenses and the improvement of profit and loss according to the emergence of the effect through business investments after the fiscal year ending December 2021. The expected synergies to be realized through the implementation of the Business Integration including the Tender Offer are not taken into account because it is difficult to specifically estimate them at the current point.
- [Note]
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In evaluating the share value of the Target Company, Nomura Securities assumed that publicly available information and all information provided to Nomura Securities is correct and complete, and Nomura Securities has not independently investigated the correctness and completeness of such information. Nomura Securities has not conducted an independent evaluation, appraisal, or assessment of any assets or liabilities held by the Target Company or any affiliated companies (including derivative financial instruments, un-booked assets and liabilities, and other contingent liabilities), including individualized analyses and evaluations of each asset and liability, nor has it requested a third party organization to conduct any appraisal or assessment. With respect to the financial projections made by the Target Company (including profit plans and other information), Nomura Securities has assumed that such projections were developed by the management of the Target Company based on the best and most good faith projections and judgements available at the present time, and were thus considered and developed in a rational fashion. The valuation made by Nomura Securities reflects the information and financial conditions obtained by Nomura Securities up to December 20, 2019. Note that the valuation made by Nomura Securities were made for the sole purpose of being referenced by SoftBank's board of directors when considering the share price of the Target Company Common Shares.
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SoftBank decided to set the Tender Offer Price at JPY 5,380 per share as of today generally taking into account the result of initial due diligence conducted during the period from late September to early November, 2019, precedent examples of premium paid upon determining price of purchase in the past tender offers to Share Certificate, etc. in the issuers other than ones which are similar to the Tender Offer, market trend of share price of the Target Company Common Shares, the likelihood for the board of directors of the Target Company to support the Tender Offer and the prospect of the tender to the Tender Offer in addition to the valuation result of the Nomura Valuation Report acquired from Nomura Securities as of December 23, 2019, as well as taking into account the result of the discussion and negotiation with NAVER and the Target Company.
- (ⅱ)
Share Options
In light of the fact that the Share Options were issued as incentive plans for directors and employees of the Target Company and the fact that the Tender Offerors would be unable to exercise such Share Options even after the Tender Offerors acquired such Share Options, the Tender Offerors have set the price of purchase of the Share Options as JPY1 per unit of share options. In determining the price of Purchase of the Share Options, the Tender Offerors have not obtained a valuation report or a fairness opinion from a third party valuation organization.
- (ⅲ)
Convertible Bonds
The Tender Offerors have decided to acquire the Convertible Bonds due 2023 at a price of JPY6,962,800, which is calculated by multiplying 1,339 common shares (the quotient of the face value of JPY10,000,000 divided by the effective conversion price of JPY7,467, a fractional share shall be omitted) with the Tender Offer Price of JPY 5,380. This price of JPY 7,203,820 represents a discount of 27.96% on the face value of such Convertible Bonds.
The Tender Offerors have decided to acquire the Convertible Bonds due 2025 with a face value of JPY10,000,000 at a price of JPY6,916,000, which is calculated by multiplying 1,330 common shares (the quotient of the face value of JPY10,000,000 divided by the effective conversion price of JPY7,518, a fractional share shall be omitted) with the Tender Offer Price of JPY5,380. This price of JPY 7,155,400 represents a discount of 28.45%on the face value of such Convertible Bonds.
As stated in “(5) Post-Tender Offer Reorganizations (Two-Step Acquisition Items)” in “1. Purpose of Purchase” abovementioned, the Convertible Bonds provide to the effect that, in the event that a tender offer is made to the Target Company Common Shares for delisting, the conversion price will be adjusted due to the settlement of the tender offer. In addition, the Convertible Bonds have the Early Redemption Provision, and the Convertible Bonds that are not acquired by the Tender Offer and are not converted into the Target Company Common Shares are scheduled to be redeemed after the Tender Offer at a par value or more in accordance with the Early Redemption Provision.