Canon Inc. to acquire shares of Tokki Corporation through tender offer, allocation of new shares
TOKYO, November 13, 2007— Chairman and CEO: Fujio Mitarai; Headquarters: Ohta-ku, Tokyo) decided at its Board of Directors meeting held on November 13, 2007, to acquire shares and share warrants of Tokki Corporation ("Tokki"; President: Teruhisa Tsugami; Headquarters: Chuo-ku, Tokyo) by way of a tender offer, and to purchase shares newly issued by Tokki through a third-party allocation. Should the tender offer be successfully completed, combined with the shares purchased through the new share allocation, Canon would own a majority of Tokki's outstanding shares following the payment date of the third-party new share allocation, making Tokki a consolidated subsidiary of Canon.
Under Phase III of the Excellent Global Corporation Plan, launched in 2006, Canon aims to achieve sound growth while maintaining its healthy profit-generating structure. In addition to efforts to further enhance the company's technology toward securing the overwhelming number one position worldwide in all current core businesses, Canon is focusing on the launching of display operations as a new business. As one of the initiatives in these efforts, the company is diligently working to develop organic LED elements and process technologies targeting the application of an organic LED display product.
Following its founding in 1967, Tokki realized growth in such areas as factory automation (FA) systems, peripheral equipment, and machine tools. In 1983, the company entered the field of vacuum thin-film devices and began offering unique trial manufacturing test equipment and mass-production systems realized through the integration of vacuum-thin-film and FA-system technologies. In recent years, Tokki has expanded into the development, design, manufacture and marketing of production equipment for organic LED displays and thin-film solar panels. From the fiscal year ended June 2005, however, Tokki recorded three consecutive years of negative earnings due to such factors as a decrease in orders, placing the company in financially challenging circumstances.
Amid these conditions, Canon and Tokki held discussions to consider management participation and the provision of financial and business-administration support.
The tie-up with Tokki will enable Canon to significantly speed up the development of organic LED displays, and is also expected to prove beneficial for the synergy it makes possible with Canon's consolidated subsidiary Canon ANELVA Corporation, which manufactures vacuum and thin-film processing equipment for the fabrication of semiconductors, flat-panel displays and hard disk drives. Additionally, through the cooperative relationship, Tokki can expect such benefits as improving its financial condition, reducing procurement and production costs by leveraging the strength of the Canon Group, contracted manufacturing from Canon Group companies, and expanding business orders through the Canon Group's marketing network and creditworthiness.
After taking into account these circumstances, Canon and Tokki decided that the business tie-up following the conversion of Tokki into a Canon consolidated subsidiary would contribute to raising the corporate value of both companies.
As for Canon's acquisition of shares of Tokki by tender offer and purchase of shares newly allocated by Tokki, in addition to the signing of a capital alliance agreement between the two companies on November 13, 2007, Canon has also entered into a tender offer agreement with Tokki Chairman Kenichi Tsugami, who is also Tokki's top shareholder, for the tender offer in connection with stock owned by same and relatives.
Basic overview of capital alliance agreement (excerpts)
| 1. | Canon will purchase 14,200,000 shares of common stock (amount per share: 417 yen; total amount: 5,921,400,000 yen) newly issued through third-party allocation |
| 2. | Canon will acquire a majority of Tokki's outstanding shares through the tender offer and the shares purchased through the new share allocation |
| 3. | A majority of Tokki's board members and two corporate auditors will be dispatched from Canon |
| 4. | As for directors, Tokki will have two representative directors, with one to be appointed from among the board members dispatched by Canon, and current representative director Teruhisa Tsugami to continue holding the post |
Canon, subject to the successful completion of the tender offer, will purchase shares newly issued through third-party allocation in accordance with the capital alliance agreement.
Furthermore, Tokki, at its Board of Directors meeting on November 13, 2007, in addition to deciding in favor of the tender offer, resolved to allot all shares newly issued through third-party allocation to Canon with December 28, 2007, following the conclusion of the tender offer acceptance period, as the payment date for the newly issued shares. Also, in connection with this tender offer, Canon has, as mentioned above, entered into a tender offer agreement with Kenichi Tsugami and, in accordance with this agreement, has obtained consent to acquire 3,072,700 shares (a 15.6% stake prior to the issuance of new shares through third-party allocation) of the 3,272,712 shares of Tokki stock owned by same along with Kikue Tsugami, a relative of Mr. Tsugami, and Yuko Seki.
