Notice Concerning the Planned Commencement of the Joint Tender Offer for Shares of LINE Corporation (Securities Code: 3938) | About Us

Press Releases 2019

(ⅲ)
Contents of Judgment;

According to the Target Company Press Release, under the background circumstances discussed above, and as a result of the Special Committee carefully discussing and considering the Terms of Reference based on (ⅰ) legal advice from Nakamura, Tsunoda & Matsumoto, the Special Committee's legal advisor on Japanese law, and White & Case Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho)/White & Case (Gaikokuho-Kyodo-Jigyo), the Special Committee's US legal advisor on U.S. law, and (ⅱ) financial advice received from the special committee's exclusive financial advisor and third-party valuation firm, BoA, as well as on the BoA Valuation Report and BoA Fairness Opinion dated December 23, 2019, obtained from BoA, the Special Committee unanimously agreed and submitted the Report dated December 23, 2019 to the Target Company's board of directors, the details of which are outlined below.

(ⅰ)
Report
1. (a)
  The Business Integration, including the Tender Offer, can be seen as contributing to an increase in corporate value and being for a reasonable purpose;
2. (b)
  The procedures for carrying out the Business Integration, including the Tender Offer, can be seen as having ensured fairness;
3. (c)
  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. (d)
  Taken in light of (a) through (c) together, the announcement of an opinion in support of the Tender Offers in Japan and the U.S. including the Tender Offer and the resolution of the Target Company's board of directors with regard to the Business Integration (including the 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 minority shareholders;
5. (e)
  It can be considered reasonable for the Target Company's board of directors to express its opinion in support of the Tender Offers in Japan and the U.S., and recommend that the Target Company's shareholders and the holders of the American Depositary Shares tender their shares in response to the Tender Offers in Japan and the U.S.
6. Please note that preparation of the Report regarding the U.S. Tender Offer and statement of the determinations and opinions stated in the Report (irrespective of whether they relate to the fairness of procedures or the price in the Tender Offer and the Delisting Procedures, or relating to any other matter) are based on the following assumptions reported by the Target Company and its advisors.
  1. ⅰ
    Documents submitted to the U.S. Securities and Exchange Commission in connection with the Tender Offer and the Delisting Procedures involving the Tender Offer will comply with applicable U.S. securities regulations (including, without limitation, disclosure of the proposed price and other related terms (including the timing of purchase and other procedural requirements of tender offers applicable pursuant to U.S. securities regulations) to the holders of the certificates subject to the U.S. Tender Offer including the American Depositary Shares).
  2. ⅱ
    The price paid to holders of the certificates subject to the U.S. Tender Offer including the American Depositary Shares in the Delisting Procedures involving the Tender Offer will be a USD denominated price calculated by converting the Tender Offer Price to USD based on the market rate on the date of receipt by the tender agent of the certificates subject to the U.S. Tender Offer including the American Depositary Shares or the fair rate determined by a reasonable calculation method and process, minus the ordinary reasonable expenses and other fair expenses incurred in connection with the conversion from JPY to USD and termination of the deposit of American Depositary Shares.

Additionally, since the Target Company is listed on both the Japanese and U.S. stock exchanges, the Special Committee makes it clear that the terms used in the Report are used in the way in which they are used in the laws of Japan (including, but not limited to the Companies Act) that are directly applicable to the Target Company as a company in which shares are listed on the Japanese stock exchange. Specifically, the term, “independence” (including the term used with regard to financial advisor and legal advisor of the Target Company), which the Special Committee uses, and the term used in the Special Committee's discussion of a ”MoM” and indirect “market check” are used in the way in which they are used in the laws of Japan and “Fair M&A Guidelines - Enhancing Corporate Value and Securing Shareholders' Interests” announced as of June 28, 2019 by the Ministry of Economy, Trade and Industry. Although it is possible that the terms similar to the aforementioned terms exist in the U.S. or each states of the U.S., the aforementioned terms and the usage of these terms with regard to the examination of the Special Committee are different from the terms and the usage of these terms used in the U.S. or each states of the U.S., and thus, in any disclosures, without supplementary explanations, these cannot be used in a confusing way with regard to the opinions of the Special Committee.

(ⅱ)
Review
1. (a)
  The Business Integration including the Tender Offer can be recognized to contribute to the advancement of the Target Company's corporate value and be for a reasonable purpose due to the following.
  1. (ⅰ)
    It was decided that the Target Company's understanding regarding the purpose and significance of the Business Integration stated in “② Purpose and Background of the Tender Offer” in “(2) Basis and Reasons for Opinion” in “3. Details, Basis, and Reasons for Opinion Regarding the Tender Offer” is consistent with the objective reality, and even from the understanding of the members of the Special Committee, the Target Company's outside directors, regarding the Target Company's circumstances such as actively operating businesses in Asia, it is reasonable for the Target Company Group to seek to carry out the Business Integration upon a spirit of equality with the ZHD Group and play a proactive role in the operation of the Integrated Company after the Business Integration.
  2. (ⅲ)
    After reviewing comprehensively the facts that it received explanations from the Target Company that compared with other possibilities (including growth through the execution of a business on a stand-alone basis and without conducting an integration with another company), the Business Integration brings great integration synergies to the Target Company and contributes to an increase of the Target Company's enterprise value, and from NAVER that transactions like selling the Target Company Common Shares without relying on the Business Integration are not anticipated, and received a response from both the Target Company and NAVER that they recognize that there are no realistic alternatives to the Business Integration, as well as factors such as the business environment faced by the Target Company, the risks associated with the execution of business on a stand-alone basis and the possibilities of integrating with a third party other than ZHD, the Special Committee concluded that in order to improve the Target Company's corporate value, the Business Integration would be more effective than executing business on a stand-alone basis and there are no alternatives to the Business Integration that are more realistic than the Business Integration.
2. (b)
  The Business Integration including the Tender Offer can be recognized as having ensured fairness in the procedures related to the Business Integration, and fair procedures were implemented in order to ensure the interests of ordinary shareholders, from the perspective of ensuring (1) a situation that one could view as being the same as if it were a transaction between independent parties, and (2) an opportunity for ordinary shareholders to make an appropriate judgment based on adequate information, due to the following points.
  1. (ⅰ)
    The Special Committee acknowledges that with respect to the Business Integration, an independent Special Committee was established at the Target Company and functioned effectively.
  2. (ⅱ)
    The Special Committee acknowledges that it obtained independent advice from Nakamura, Tsunoda & Matsumoto and White & Case Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho)/White & Case (Gaikokuho-Kyodo-Jigyo), as well as BoA. The Special Committee also acknowledges that it obtained independent advice from outside experts Anderson Mori & Tomotsune and Shearman & Sterling Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho), as well as J.P. Morgan Securities.
  3. (ⅲ)
    The Special Committee acknowledges that it obtained a share valuation report from BoA, a financial advisor and an independent third party valuation firm that has a lot of experiences, as a basis for its determination regarding the Tender Offer and the Delisting Procedures. The Special Committee also acknowledges that it obtained a share valuation report from J.P. Morgan Securities, an independent third party valuation firm that has a lot of experiences, as the basis for its determination regarding the Delisting Procedures.
  4. (ⅳ)
    The Special Committee obtained the BoA Fairness Opinion from BoA. The Target Company also obtained the JPM Fairness Opinion from J.P. Morgan Securities.
  5. (ⅴ)
    The Special Committee received an explanation from the Target Company's management that, with respect to the internal examination framework for the Business Integration, Hae-Jin Lee, who also serves as NAVER's Global Investment Officer, was excluded from the Target Company's board discussion and decision-making regarding the Business Integration from the perspective of eliminating arbitrariness from the Target Company's decision-making process in deliberating on and deciding upon the Business Integration. Additionally, the Special Committee questioned the Target Company's management regarding the internal examination framework in the Business Integration and received answers that no employee concurrently serving at NAVER was involved in the Business Integration on the Target Company's side. Based on these explanations and answers, the Special Committee judged that an examination framework independent from NAVER had been put in place. Moreover, with respect to the fact that the Target Company's Representative Director and CWO, Jungho Shin, who also holds a position as Representative of Search and Clova Company, a company within NAVER, was involved in the decisions and deliberations regarding the Business Integration at the Target Company, the special committee determined that his involvement was not a problem for the fairness of the process based on, in addition to the explanation provided by Anderson Mori & Tomotsune, the following factors: (ⅰ) Six years had passed since he was transferred to the Target Company from NAVER; (ⅱ) he did not, and was not in a position to, become involved in the deliberation or decision-making regarding the Business Integration by NAVER; (ⅲ) the Target Company had received a written confirmation letter from him to the effect that, among other things, his involvement in the Business Integration was conducted solely for the benefit of the Target Company, and he would not in any way negotiate, consult with, deliberate or make contact regarding the Business Integration with the Target Company, ZHD, SoftBank or other related persons from the position of NAVER or a related person of NAVER; and (ⅳ) his involvement was necessary and indispensable to the deliberation of the Business Integration by the Target Company.
  6. (ⅵ)
    The Special Committee considered it possible to conduct a proactive market check in order to explore the possibility of strategic alternatives to improve enterprise value of the Target Company other than through the Business Integration. For this reason, the Special Committee asked NAVER to explain and deliberate on whether it would be possible for them to consider transactions whereby NAVER sells the shares of the Target Company that it owns, in lieu of the Business Integration. However, NAVER provided a clear answer to the effect that they do not anticipate that kind of transaction. Accordingly, the Special Committee determined that there would be limited meaning to conducting a proactive market check, whereby one explores and considers whether there are alternative potential buyers in the market, because there is no realistic alternative to the Business Integration. However, while it would be worthwhile to a certain extent to conduct an indirect market check even in this case by conducting the M&A transaction after having created an environment where it is possible to make a competing proposal by a potential buyer after the announcement of the transaction even though NAVER holds 72.64% of the Target Company Common Shares and is not considering selling them, and thus, if a third party implements a tender offer with the tender offer price higher than the Tender Offer Price and consequently the number of the shares which NAVER purchases in the Tender Offer is limited to a small number, NAVER can implement the Delisting Procedures after the Tender Offer, the Special Committee determined that in the Business Integration, since a relatively long term is kept after the announcement of the Tender Offer, even if other competitive tender offer is implemented, NAVER can commence the Delisting Procedures, the possibility of impacting the Delisting Procedures is limited and there is an indirect opportunity for alternative bidders to make a competing acquisition proposal.
  7. (ⅶ)
    The Special Committee received the explanation that there is not a condition precedent that requires a majority of the minority tender their shares in order to consummate the tender offer (“MoM”) based on the understanding that in light of the fact that NAVER owns 72.64% of the Target Company Common Shares, an MoM may enable a comparatively small number of shares to be used to interfere with the Tender Offer and it may be possible that the establishment of such a condition may not be in the interest of ordinary shareholders who wish to tender in the Tender Offer. The Special Committee found this point to be reasonable. Accordingly, the Special Committee determined that the absence of such condition is not unreasonable.
  8. (ⅷ)
    The Special Committee acknowledges that there are plans to ensure an opportunity for ordinary shareholders to make an appropriate decision based on sufficient information about the Business Integration.
  9. (ⅸ)
    The Special Committee concluded that coercive elements have been eliminated for reasons such as the Delisting Procedures after the implementation of the Tender Offer not including a transaction structure that cannot secure the right of shareholders to demand purchase of their shares or demand a decision on the price of their shares for dissenting shareholders and there being a plan to disclose a planned share consolidation based on the Tender Offer Price promptly after the Tender Offer.
3. (c)
  Based on the following, it is acknowledged that the appropriateness of the transaction terms (excluding the prices for the Share Options and Convertible Bonds in the Tender Offer) of the Delisting Procedures, including the Tender Offer, has been ensured.
  1. (ⅰ)
    With respect to the method of acquisition, the Delisting Procedures are conducted for the purpose of taking the Target Company private by making the Target Company's shareholders consist solely of NAVER and SoftBank. The Special Committee carefully discussed whether or not the method of conducting a share consolidation as the second step, following a first step of the Tender Offer, is an appropriate method to achieve that purpose. The Special Committee also carefully discussed the reasonableness of the type of purchase consideration used in the Tender Offer. One might have considered using shares of NAVER, SoftBank or the Integrated Company (ZHD) in lieu of cash consideration. However, the businesses of NAVER, SoftBank and ZHD are quite a bit different from the business of the Target Company. In addition, it may be thought that the use of cash consideration enables shareholders of the Target Company to avoid the risk of a decrease in the share price compared with what could occur were the consideration to be in the form of shares instead of cash. After comprehensively considering the afore-mentioned discussion, the Special Committee concluded that the type of purchase consideration used in the Tender Offer to be appropriate.
  2. (ⅱ)
    The Tender Offer Price can be recognized as appropriate based on the following factors: ① Regarding the Business Plan that forms the basis of the valuation by the DCF Analysis in the BoA Valuation Report, the Special Committee received explanations from the Target Company's management about the preparation process, objectives, and important assumptions, etc., asked questions to the Target Company's management about the key factors of business growth potential related to each key point, core business synergies and other key points, etc., received their responses, and carefully discussed the reasonableness of the Business Plan based on these explanations and responses from the Target Company's management. ② the BoA Valuation Report does not contain points that can be recognized as unreasonable regarding the content of the valuation or the method of valuation, and the Tender Offer Price is above the top end of the range of market price analysis in BoA Valuation Report and within the range of the DCF Analysis; ③ the premium provided in the Tender Offer Price is considered a significant premium in comparison with the levels of the premiums provided in similar transactions; ④ the Special Committee obtained the BoA Fairness Opinion from BoA, ⑤ the Tender Offer Price was agreed as a result of sincere negotiation between the Target Company and the Tender Offerors with the substantive involvement of the Special Committee, which of its own accord, requested its attendance at negotiations, attended negotiations on three occasions, and expressed its opinion.
  3. Although the Share Options and the Convertible Bonds are subject to the Tender Offer, the purchase price for Share Options is JPY 1 per Share Option and the purchase price of the Convertible Bonds is below the face value thereof. Additionally, as of the announcement of the Tender Offer, the Target Company plans to express their opinion to the effect that the Target Company leaves it to the discretion of each holder of Share Options and Convertible Bonds as to whether to tender their Share Options and Convertible Bonds. Thus, the Special Committee withholds its opinion on the appropriateness of the purchase price of the Share Options and the Convertible Bonds.
4. (d)
  As discussed above, we recognize that the Business Integration contributes to the advancement of the Target Company's corporate value and that its purpose is reasonable, fairness has been ensured in the procedures related to the Business Integration, and appropriateness of the terms (excluding the prices for the Share Options and Convertible Bonds in the Tender Offer) of the Delisting Procedures, including the Tender Offer, has been ensured. Accordingly, we think that the announcement of an opinion in support of the Tender Offers in Japan and the U.S. including the Tender Offer and the resolution of the Target Company's board of directors with regard to the Business Integration that involves the Delisting Procedures using a share consolidation or other methods after the Tender Offer, are not against the interests of the Target Company's minority shareholders.
5. (e)
  Accordingly, we believe it to be appropriate for the Target Company's board of directors to express its opinion in support of the Tender Offers in Japan and the U.S. including the Tender Offer, and recommend that the Target Company's shareholders and American Depositary Share holders tender their shares in response to the Tender Offers in Japan and the U.S. including the Tender Offer.

(e)
Acquisition of a share valuation report and a fairness opinion from an independent third party valuation organization by the Special Committee

According to the Target Company Press Release, in order to obtain expert advice and support regarding the matters such as the valuation of corporate value and price negotiations, the Special Committee retained BoA, a financial advisor and third-party valuation institution independent of the Tender Offerors and the Target Company, to calculate the share value of the Target Company Common Shares (including the American Depositary Shares, hereinafter, the “Target Company Common Shares etc.”) and submit an opinion (fairness opinion) as to whether or not the purchase price for the Target Company Common Shares etc. is fair to the holders of the Target Company Common Shares etc. (except for the Tender Offerors and their affiliated companies) from a financial perspective, and obtained the BoA Valuation Report and the BoA Fairness Opinion dated December 23, 2019 to the effect that the purchase price for the Target Company Common Shares etc. is fair to holders of the Target Company Common Shares etc. from a financial perspective, based on the assumptions set forth below and certain other conditions.
According to the Target Company Press Release, BoA examined the business reports prepared by the Target Company and various methods for evaluating the Target Company shares and determined that two evaluation methods below are appropriate.

A.
Market share price analysis based on the fact that the Target Company Common Shares are traded on the First Section of the TSE
B.
Based on an assumption that the Target Company is a going concern, a DCF Analysis in order to reflect in the valuation the status of the future business activities of the Target Company, based on the assumptions set forth below and certain other conditions.

According to the Target Company Press Release, please note that BoA is not a Tender Offeror or the Target Company's related party, and has no material conflict of interest that should be stated in relation to the Delisting Procedures including the Tender Offer.
According to the Target Company Press Release, the range of the share value per share of the Target Company Common Shares calculated based on such methods are as follows.

Method	Range of Share Value of the Target Company Common Shares per share
Market Share Price Analysis	JPY 3,570 ~ JPY 4,585
DCF Analysis	JPY 4,701 ~ JPY 6,293

According to the Target Company Press Release, in the market share price analysis used by BoA, due to the publication of speculative press reports concerning the Business Integration after the closing of the trading session of the TSE on November 13, 2019, calculations were carried out based on the closing price of JPY 4,585 for the Target Company Common Shares on the First Section of the TSE as of November 13, 2019, as the valuation record date, and the simple averages of the closing prices for one month, three months and six months prior thereto (respectively JPY 4,085, JPY 3,934, and JPY 3,570) were used to calculate the range of share values of the Target Company Common Shares of JPY 3,570 to JPY 4,585.
According to the Target Company Press Release, in the DCF Analysis, analysis was carried out based on the Target Company's business plans and financial projections, the earnings and investment plans in the Target Company's business plans, and other factors, such as information that has been disclosed publicly, that the Target Company submitted to BoA (as discussed below, however, BoA has not independently verified the accuracy and completeness of such materials, and does not bear any responsibility or obligation to conduct independent verification). According to the Target Company Press Release, the enterprise value and share value were analyzed by discounting the free cash flows expected to be generated by each business of the Target Company by a certain discount rate back to the current value, and a share value range of JPY 4,701 to JPY 6,293 per share was calculated. According to the Target Company Press Release, the Target Company's business plans which constituted the assumptions of BoA's calculation using the DCF Analysis in accordance with the instruction of the Target Company contemplate 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. According to the Target Company Press Release, these business plans and free cash flows reflected in the DCF Analysis do not include synergies from the Business Integration. Additionally, the discount rate (weighted average capital cost) was analyzed based on CAPM (capital asset pricing model) generally used in share valuation practice, and a discount rate range of 5.75% to 6.75% or 9.50% to 10.50% was applied. According to the Target Company Press Release, calculation of the going concern value used a perpetual growth rate analysis, and adopted a perpetual growth rate of 1.25% to 1.75% at the direction of the Target Company.

[Note]

*
According to the Target Company Press Release, the BoA Valuation Report and BoA Fairness Opinion were submitted in connection with the Special Committee of the Target Company's board of directors examining the purchase price for the Target Company Common Shares etc. in the Tender Offer from a financial perspective in such role, and was submitted to the Special Committee of the Target Company's board of directors for their convenience for the purpose of such examination. According to the Target Company Press Release, the BoA Fairness Opinion does not express any opinion or view whatsoever with respect to the other aspects of the Business Integration and does not express any opinion or view whatsoever with respect to consideration received by the holders of any type of security, creditors, or other interested parties of any of the parties in connection with the Business Integration. According to the Target Company Press Release, BoA does not express any opinion or view whatsoever with respect to the terms or other aspects of the Business Integration, including the form or structure, etc. of the Business Integration (excluding the purchase price for the Target Company Common Shares etc. in the Tender Offer to the extent expressly stated in the BoA Fairness Opinion), and does not express any opinion or view whatsoever with respect to other strategies that could be adopted by the Target Company or implemented by the Target Company, the relative merits of the Business Integration, or regarding the business decision-making in relation to carrying out or implementing the Business Integration. According to the Target Company Press Release, BoA does not express any opinion or recommendation whatsoever with respect to whether the Target Company's shareholders should tender their shares for the Tender Offer or how the Target Company's shareholders should exercise their voting rights or act in relation to the Business Integration or matters in connection therewith. According to the Target Company Press Release, BoA does not express any opinion or view whatsoever with respect to the fairness (irrespective of whether financial or otherwise) of the amount, nature, or other aspect of remuneration to the officers, directors, or employees of the parties to the Business Integration relative to the purchase price for the Target Company Common Shares etc. According to the Target Company Press Release, BoA does not express any opinion or view whatsoever with respect to the impact of the exchange rate in connection with the Tender Offer, and BoA Fairness Opinion is solely based on the purchase price for the Target Company Common Shares etc. in the Tender Offer expressed in JPY as mentioned above. According to the Target Company Press Release, BoA does not express any opinion whatsoever in relation to whether Target Company Common Shares etc. should be traded at any time, including after the Delisting Procedures are publicly disclosed or commenced. According to the Target Company Press Release, as stated, BoA has not been retained to solicit, and is not soliciting, any third party to express interest or make a proposal with respect to the purchase of all or part of the Target Company or for any alternative transaction.
BoA, in relation to the BoA Valuation Report and BoA Fairness Opinion, performed work including the following.
- A.
  Considering the Target Company's public information with respect to business and finance in certain scope.
- B.
  Considering the Target Company's internal finance and operation information (including the Company's financial projection (the “Target Company Projection”) which were prepared by the management) provided by the Company's management to BoA and discussed between the Company's management and BoA.
- C.
  Discussing with the Target Company's management regarding the Target Company's current and past business, operation, financial status and prospect
- D.
  Considering the trend of the Target Company Common Shares' market share value on TSE and performing comparative analysis with the trend of the market share value of other companies, which BoA determined the relevance with the Company's market share value.
- E.
  Performing comparative analysis between the information relating to Target Company's financial and share exchange and the applicable information of other companies that BoA determined relevant.
According to the Target Company Press Release, when preparing the BoA Valuation Report and the BoA Fairness Report and carrying out the valuation analysis on which they are based, BoA did not independently verify the financial or other information and data publicly disclosed, submitted to BoA, or separately examined or discussed by BoA, assumed that such information and data was accurate and complete, and relied on the accuracy and completeness thereof. According to the Target Company Press Release, furthermore, BoA is not aware of any facts or circumstances that would cause such information or data to be inaccurate or could give rise to any misunderstanding in any material respect, and has relied on the representations of the Target Company's management. According to the Target Company Press Release, the financial projections relating to the Target Company prepared by the Target Company's management reflect the best projections and honest judgment of the Target Company's management relating to the Target Company's future performance obtainable at this time, BoA has received representations from the Target Company to the effect that they have been reasonably prepared, and BoA has used these as assumptions at the direction of the Special Committee of the Target Company's board of directors. According to the Target Company Press Release, out of necessity, the BoA Valuation Report uses the current financial, economic, foreign exchange, market and other conditions and circumstances as assumptions (except for where otherwise stated in such analysis) as of the date of the BoA Valuation Report and the BoA Fairness Opinion, and is based on the information able to be obtained by BoA as of such date. According to the Target Company Press Release, circumstances arising after the date of the BoA Valuation Report and the BoA Fairness Opinion may affect the content of the BoA Valuation Report and the BoA Fairness Opinion, but BoA bears no obligation to update, revise, or reconfirm the BoA Valuation Report and the BoA Fairness Opinion. According to the Target Company Press Release, the BoA Valuation Report and the BoA Fairness Opinion do not infer or imply any opinion whatsoever with respect to any matter not expressly stated in the BoA Valuation Report and the BoA Fairness Opinion or anything after the submission date of the BoA Valuation Report and the BoA Fairness Opinion.
According to the Target Company Press Release, as explained above, the BoA analysis provided above is an outline of the main financial analysis in connection with the BoA Valuation Report and the BoA Fairness Opinion at the direction of the Special Committee of the Target Company's board of directors, and does not encompass the entire analysis carried out by BoA in connection with the BoA Valuation Report and the BoA Fairness Opinion. According to the Target Company Press Release, the preparation of the BoA Valuation Report and the BoA Fairness Opinion and the analysis forming the basis thereof, was a complex analysis process involving various judgments regarding the appropriateness and relevance of each financial analysis methodology and the application of each method to the specific circumstances, and therefore it is not necessarily appropriate to state just part of the analysis results or a summary. According to the Target Company Press Release, the analysis by BoA needs to be considered as a whole. According to the Target Company Press Release, furthermore, extracting just one part of the analysis or factor, or only looking at the information in the tables, etc., without taking into consideration all of the analysis and factors considered or all of the explanations regarding analysis, may give rise to an misunderstanding or incomplete understanding of the process forming the basis for BoA' analysis and opinion. According to the Target Company Press Release, the fact that a certain analysis is referred to in the above outline does not mean that such analysis was given more weight than other analyses mentioned in such outline.
According to the Target Company Press Release, when conducting its analysis, BoA took into account the performance of the industry, general business and economic circumstances, and other matters, but most of these are beyond the control of the Tender Offerors and the Target Company. According to the Target Company Press Release, the projections regarding the Target Company's future performance on which BoA's analysis was based do not necessarily indicate the actual value or future results, and the actual value and future results may be significantly better or worse than such projections. According to the Target Company Press Release, BoA's analysis was performed as part of the analysis for the BoA Valuation Report and the BoA Fairness Opinion and was provided to the Special Committee of the Target Company's board of directors in connection with the submission of the BoA Valuation Report and the BoA Fairness Opinion. According to the Target Company Press Release, BoA's analysis was not carried out with the intention of constituting an appraisal, and does not indicate the price in the event that the business is actually sold or the price that any security whatsoever is traded at or may be traded at in future. According to the Target Company Press Release, therefore, the projections used in the above analysis and the valuation range elucidated in such analysis are by their nature materially uncertain, and should not be construed as indicating BoA's opinion regarding the actual value of the Target Company.
According to the Target Company Press Release, purchase price for the Target Company Common Shares etc. was determined through negotiations between Tender Offerors and (based on the Special Committee's opinion, intent, and requests, etc. with respect to material respects) the Target Company, not a financial advisor. According to the Target Company Press Release, the decision to disclose the opinion approving the Tender Offer was made solely by the Target Company's board of directors in accordance with the recommendation of the Special Committee. As mentioned above, the BoA Valuation Report and the BoA Fairness Opinion were merely one of many factors considered by the Special Committee of the Target Company's board of directors when examining the Business Integration, and must not be construed to be the deciding factor in the opinion of the Special Committee of the Target Company's board of directors regarding the Business Integration or the purchase price for the Target Company Common Shares etc. in the Tender Offer.
According to the Target Company Press Release, BoA has not conducted an independent appraisal or valuation of the Target Company's assets or liabilities (irrespective of whether they are contingent liabilities or not), and has not provided such an appraisal or valuation. According to the Target Company Press Release, BoA has not carried out an on-site inspection of the Target Company's assets or property either. According to the Target Company Press Release, BoA has not evaluated the Target Company's ability to pay its debts or fair value under any applicable law relating to bankruptcy, inability to pay debts, or other matters similar thereto. According to the Target Company Press Release, in accordance with the directions of the Special Committee of the Target Company's board of directors, BoA has assumed that the Tender Offer will be completed with the currently contemplated terms without the waiver, amendment, or revision of material terms or agreed matters, and that there will be no delay, restriction, or condition imposed (including order to cease and desist or to take amendment measure) that may have an adverse effect on Tender Offerors or the Target Company, or the planned interests of the Business Integration in the process of obtaining government, regulatory authority, or other authorization, permit, approval, exemption, or release necessary for the Delisting Procedures.
According to the Target Company Press Release, BoA serves as the financial advisor of the Special Committee of the Target Company's board of directors in relation to the overall Business Integration, including the Business Integration, and receives a fee for such services. The payment of the part of the amount is conditioned on the submission of the fairness opinion and most of the amount is conditioned on the completion of the Tender Offer and the Target Company Squeeze-out (after the completion of the Tender Offer, in case the Target Squeeze-out is not completed by the end of December 2020, such fee will be paid on January 1, 2021). According to the Target Company Press Release, the Target Company has also agreed to indemnify BoA for all costs borne thereby in relation to its involvement and certain liabilities incurred thereby due it its involvement.
According to the Target Company Press Release, BoA and its affiliated companies are full-service securities firms and commercial banks, and provide a wide range of investment banking services, corporate and private banking services, asset and investment management, financing, and financial advisory services, and other commercial services and products to companies, government agencies, and individuals, and are engaged in securities, financial product and derivatives trading, foreign exchange, and other brokerage services, as well as investing on their own account. According to the Target Company Press Release, in the course of their ordinary business, BoA and its affiliated companies invest in securities, such as shares and bonds, and other financial products (including derivatives and bank loans or other debt) of Tender Offerors, the Target Company, ZHD, and their respective affiliated companies, on their own account or the account of customers, operate funds in which Tender Offerors, the Target Company, and their respective affiliated companies invest, acquire or hold long or short positions in Tender Offerors, the Target Company, and their respective affiliated companies, and provide funds, sell or purchase, or otherwise carry out transactions with respect to such positions.
According to the Target Company Press Release, BoA and its affiliated companies have provided and currently provide investment banking services, commercial banking services, and other financial services to the Tender Offerors, the Target Company, ZHD, and its affiliated companies, and may also do so in the future. According to the Target Company Press Release, BoA and its affiliated companies receive fees for the provision of such services, and may receive fees in the future as well. According to the Target Company Press Release, these include, but not limited to, (ⅰ) serving as the dealer manager and consent solicitation agent with respect to the SBG consent solicitation and exchange offer for foreign currency denominated senior notes issued in 2015, conducted in March 2018, (ⅱ) serving a joint global coordinator for the issuance of $3.3 billion of USD denominated senior notes conducted by SBG in April 2018, and (ⅲ) serving as an international active joint bookrunner for the listing and share price setting for the initial public offering for SoftBank.
According to the Target Company Press Release, BoA expresses no opinion or view with respect to any law, regulation, accounting, tax, or similar matter in relation to the Target Company or the Delisting Procedures, and has relied on the assessment of these matters by the Target Company, at the direction of the Special Committee of the Target Company's board of directors. According to the Target Company Press Release, BoA is of the understanding that the Target Company has received advice from qualified experts with respect to such matters that the Target Company deems necessary.

(f)
Acquisition of advice from an independent law firm for the Special Committee

According to the Target Company Press Release, as stated in “(d) Establishment of a special committee in the Target Company”, the Special Committee has retained Nakamura, Tsunoda & Matsumoto and White & Case Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho)/White & Case (Gaikokuho-Kyodo-Jigyo), as a legal adviser independent from the Tender Offerors, ZHD and the Target Company in order to obtain the professional advice with respect to the fairness of procedures and has received the legal advice including the procedures of the Delisting Procedures and the review method and processes in the Special Committee in relation to the Delisting Procedures.
Nakamura, Tsunoda & Matsumoto or White & Case Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho)/White & Case (Gaikokuho-Kyodo-Jigyo) is not related party to Tender Offerors, ZHD and the Target Company and nor do they have no material interests to be described with respect to the Delisting Procedures including the Tender Offer.

(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 interests that they have no objection

As stated above in “1. Purpose of Purchase”; “(2) Background, Purpose and Decision-making Process of the Decision to Implement the Tender Offer, and the Management Policy after the Tender Offer”; “③ Process and Reasons for the Decision that led to the Target Company's Approval of the Tender Offer”,the Target Company's Board of Directors carefully discussed and examined whether the Delisting Procedures, including the Tender Offer, serve to improve the Target Company's corporate value and whether the transaction terms relating to the Delisting Procedures, including the Tender Offer, are appropriate, based on legal advice from received from Anderson Mori & Tomotsune and Shearman & Sterling Registered Foreign Lawyers' Office (Gaikokuho-Jimu-Bengoshi-Jimusho), advice from a financial perspective received from J.P. Morgan, the JPM Valuation Report and JPM Fairness Opinion as of the same date received from J.P. Morgan, and the BoA Valuation Report and BoA Fairness Opinion submitted via the Special Committee, while giving full respect to the judgment of the Special Committee stated in the Report.
Consequently, as stated above in “1. Purpose of Purchase”; “(2) Background, Purpose and Decision-making Process of the Decision to Implement the Tender Offer, and the Management Policy after the Tender Offer”; “③ Process and Reasons for the Decision that led to the Target Company's Approval of the Tender Offer” the Target Company's board of directors determined that the Delisting Procedures serve to improve the corporate value of the Target Company and the transaction terms of the Delisting Procedures including the Tender Offer were appropriate. At the meeting of the board of directors held today, the board members who participated in deliberations and resolutions unanimously passed a resolution as of today, as the Target Company's opinion, to announce approval of Tender Offers in Japan and in the U.S. including the Tender Offer if the Tender Offers in Japan and in the U.S. including the Tender Offer commences, to recommend that the Target Company's shareholders and holders of the American Depositary Shares tender their shares for the Tender Offers in Japan and the U.S. including the Tender Offer, and that holders of the Share Options and the Convertible Bonds determine at their own discretion whether to tender.
Of the Target Company's three statutory auditors (all outside statutory auditors), except for an outside statutory auditor who could not attend due to work (Yoichi Namekata), two of them participated in deliberations at this meeting of the board of directors, and voiced their opinion that they had no objection to the above resolution. Moreover, it is confirmed that Yoichi Namekata, who could not attend the meeting of the board of directors, prior to the meeting, voiced his opinion that he had no objection to the above resolution, after being given the explanations about the Tender Offer.
Of the Target Company's directors, because Mr. Hae Jin Lee also serves as NAVER's Global Investment Officer, so from the standpoint of eliminating arbitrariness in the decision-making process when examining and making decisions on the Business Integration, he did not participate in the deliberations and resolution of the Target Company's board of directors regarding the Business Integration and did not participate in discussions or negotiations with NAVER for the Target Company. Additionally, after proposal of the Tender Offer, from the standpoint of eliminating arbitrariness in the decision-making process when examining the Tender Offer, he did not participate in deliberation and resolutions of the Target Company's board of directors regarding the Business Integration involving the Tender Offer, including the above meeting of the board of directors held today and did not participate in discussions or negotiations with NAVER for the Target Company.

(h)
Measures to ensure purchase opportunities from other tender offeror

The Target Company has not entered into any agreements with the Tender Offerors that would restrict Target Company's contact with competitive potential bidders, such as agreements that include safeguarding provisions that would prohibit the Target Company from having contact with the competitive potential bidder.
In addition, the Tender Offerors are scheduled to set a Tender Offer Period of 30 business days or more, which is longer than the Japanese statutory minimum of 20 business days. By setting a comparatively long-term tender offer period, the Tender Offerors intend to ensure the appropriate opportunity for the Target Company's shareholders to decide on whether to tender the Tender Offer.

③ Relationships with valuation organization

Deutsche Bank, financial advisor of NAVER (valuation institution), 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. Nomura Securities, financial advisor of SoftBank (valuation institution), is not a related party to the Tender Offerors, ZHD and the Target Company nor does it have any material interest to be described in relation to the Tender Offer.

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