RNS Number:8547N
Toshiba Corporation
23 July 2003
July 22, 2003
Tadashi Okamura, President & CEO
Toshiba Corporation
Shibaura 1-1-1, Minato-ku, Tokyo, Japan
Contact: Hideo Kitamura, General Manager
Corporate Communication Office
Tel: 81 3 3457 2096
Notice of Integration of Industrial Electric and Automation Systems Businesses
Toshiba Corporation (President and CEO: Tadashi Okamura, hereafter 'Toshiba')
and Mitsubishi Electric Corporation (President and CEO: Tamotsu Nomakuchi,
hereafter 'Mitsubishi') today agreed to establish a new joint venture company
(hereafter "Newco"), with equal ownership. Newco will succeed to the industrial
electric and automation systems business for manufacturing plant (the "Business"
see 3.(1) for details) now conducted directly by, or through subsidiaries of,
Toshiba and Mitsubishi.
The following are the procedure to form Newco:
1. On October 1, 2003, Toshiba and Mitsubishi will separate the Businesses
into a Toshiba and Mitsubishi joint venture company, TMA Electric Corporation
(President and CEO: Mamoru Kitamura, hereafter "TMAE"), established in October
1999, with equal ownership. This process is hereinafter referred to as
"Corporate Separation".
2. On the same day as and following the Corporate Separation, Toshiba and
Mitsubishi will merge TMAE into Toshiba GE Automation Systems Corporation
(President and CEO: Takuo Funahashi, hereafter 'TGAJ'), and will also do the
same for and TGA Investment Service Yugen gaisha (President and CEO: Naoki
Kanda, a Toshiba subsidiary, hereafter 'TGAIS'). TGAJ will commence business as
Newco, equally owned by Toshiba and Mitsubishi.
3. Newco will change its trading name to Toshiba Mitsubishi-Electric
Industrial Systems (provisional name).
Through synergies achieved by the integration, Toshiba and Mitsubishi will
strengthen operating structures in the Businesses, which will enable Newco to
position itself as a leading system integrator and assure its survival in the
global market. Enhanced promotion of overall competitiveness, global presence
and management efficiency is also anticipated.
Toshiba and Mitsubishi reached basic agreement on the merger on April 18, 2003
and have now established a definitive agreement.
1. Outline of the integration
(1) Schedule
July 16, 2003 Toshiba decided approved Corporate Separation
July 22, 2003 Mitsubishi decided approved Corporate Separation
July 23, 2003 Formal Agreement between Mitsubishi and
Toshiba on Corporate Separation (Plan)
October 1, 2003 Date of Corporate Separation (Plan)
October 1, 2003 Registration of Corporate Separation (Plan)
(2) Method
-Corporate Separation
("Kaisha-Bunkatsu" under the terms of the Japanese Commercial Code)
Toshiba and Mitsubishi separate the Businesses, which are transferred to TMAE in
accordance with the process of Corporate Separation admitted under the Japanese
Commercial Code. Toshiba and Mitsubishi follow the "Simplified Corporate
Separation" method," which does not necessitate a resolution at the
shareholders' meeting.
- Reason for selecting this method
This method was chosen to transfer the Businesses efficiently compared
with other method such as transfer of business ("Eigyo-Jhoto") which is
typically employed in Japan before the introduction of Corporate Separation
procedure.
(3) Allocation of Shares
Toshiba will own TMAE's newly issued 5,000 common shares.
Mitsubishi will own TMAE's newly issued 5,000 common shares.
In order to assure fairness and accountability, Toshiba asked Mizuho Securities
Co., Ltd. (hereafter Mizuho Securities) to provide an appraisal as an
independent third-party in connection with the above share allocation ration.
The allocation was determined in consideration of the advice and the agreement
of the three companies involved, including TMAE. Mizuho Securities took into
account of DCF method, Market Price method, and similar company comparison
method, in reaching the allocation ratio.
(4) Cash Subsidy
Toshiba and Mitsubishi will not receive any cash in the process of Corporate
Separation.
(5) Legal Rights and Obligations
TMAE will succeed to the assets, liabilities, rights and obligations, including
contract status, involved in the transferred business, except those agreed by
the three parties.
(6) Forecast of Payment of Obligation
Toshiba and Mitsubishi consider that TMAE, as well as Toshiba and Mitsubishi,
will be able to fulfill all payment obligations that will become due after the
Corporate Separation date.
2. Outline of the companies
As of March 31, 2003
Toshiba Mitsubishi TMAE
Separation Separation Company Successor Company
Company
Company Name Development, manufacture, Development, manufacture, Development and
sales, and service of sales and services of energy manufacturing of large sized
digital products, and electric systems, motors and generators
electronic devices and industrial automation
components, social system, Information and
infrastructure equipment communication systems,
and systems, home electronic device, and home
appliances, and other appliances
products
Established June 25, 1904 January 15, 1921 October 1, 1999
Head Office Shibaura 1-1-1, Marunouchi 2-2-3, Mita 3-13-16,
Location Minato-ku, Tokyo Chiyoda-ku,Tokyo Minato-ku, Tokyo
Represent Tadashi Okamura, Tamotsu Nomakuchi, Mamoru Kitamura, President
-ative President and CEO President and CEO and CEO
Capital 274,926 million yen 175,820 million yen 2,000 million yen
Outstanding 3,219,027 thousand shares 2,146,967 thousand 40,000 shares
Shares shares
Total Assets 708,583million yen 465,702 million yen 4,259 million yen
Shareholders' 2,877,805 million yen 2,422,083 million yen 13,438 million yen
Equity
Financial March 31 March 31 March 31
Closing Date
Number 39,875 35,457 685
of Employees
Major Government Government Toshiba Corporation
Customers Local Government Local Government Mitsubishi Electric
Corporations Corporations Corporation
Principal The Master Trust Bank of The Master Trust Bank of Toshiba Corporation
Shareholders Japan (trust) 5.3% Japan (trust) 6.6% 50%
The Dai-ichi Mutual Life
and Share- Insurance Company Japan Trustee Service Bank, Mitsubishi Electric
Ltd (trust)
holdings 3.6% 5.3% 50%
Japan Trustee Service Bank,
Ltd(trust) 3.6%
Meiji Life Insurance
4.0%
Major Banks Sumitomo Mitsui Banking Bank of Tokyo -Mitsubishi Bank of Tokyo -Mitsubishi
Corporation, Mizuho Corporate Bank, Sumitomo Mitsui Banking
UFJ Bank Sumitomo Mitsui Banking Corporation
Mizuho Corporate Bank, etc. Corporation, Mitsubishi Trust Bank
Mitsubishi Trust Bank, Mizuho Corporate Bank,
etc. etc.
Relations Capital Toshiba and Mitsubishi hold TMAE's shares
HR Toshiba and Mitsubishi dispatch directors to TMAE
Business Toshiba and Mitsubishi purchase products from TMAE and sell them
Recent Three-Year Business Results Unit Million yen
Toshiba Mitsubishi
Financial Closing Date March 2001 March 2002 March 2003 March March March 2003
2001 2002
Sales 3,678,977 3,196,896 3,408,251 2,932,682 2,409,362 2,319,210
Operating Income (loss) 125,880 -196,752 35,188 188,195 -62,592 608
Recurring Income (loss) 95,327 -231,816 43,378 137,154 -109,501 26,494
Net Income (loss) 26,411 -260,332 83,364 32,483 -143,694 -12,167
Net Income (loss) per Share 8.20 -80.87 25.90 15.13 -66.92 -5.67
(yen)
Annual Dividend per Share 10.00 0.00 3.00 10.00 0.00 3.00
(yen)
Shareholders Equity (yen) 286.42 198.58 220.14 307.01 229.02 216.91
3. Business to be separated
(1) Business to be separated
a. Sales, engineering, installation and servicing of industrial electric and
automation systems, except common-use and mass-produced products to be
distributed to customers in general.
b. Development and manufacturing industrial supervisory control systems, and
power electronics products.
(2) Business Results for the Year ending March 31, 2004
Revenue of Toshiba's Business amounted to nearly 50 billion yen, about 2% of
Toshiba's total sales.
(3) Assets and Liabilities of Business to be separated
-Forecast to September 30, 2003
a. Toshiba's Business has assets of nearly 29.1 billion yen and debt
of nearly 13.1 billion yen.
b. Mitsubishi's Business has assets of nearly 31.4 billion yen and
debt of nearly 14.4 billion yen.
c. The above forecast is based on the balance sheets of both companies
as of March 2003. The figures will be finalized in October, in consideration of
increases and decreases in the balance sheets of both companies.
4. Effects of Corporate Separation on Toshiba's Financial Results
There will be no change in the trade name, principal lines of business,
principal office, representative, capital stock, total assets, or financial
closing date.
Corporate Separation will not reduce the paid-in capital. No significant effect
on Toshiba's consolidated operating results is forecast.
5. Outline of the Newco
(1) Outline of the Newco after changing its name
Toshiba Mitsubishi-Electric Industrial Systems
Company Name a. Sales, engineering, installation and servicing of industrial electric and
automation systems except common-use and mass-produced products to be distributed
to customers in general
b. Development and manufacture of industrial supervisory control systems, and
power electronics products.
Start of Business October 1, 2003
Head Office Location Mita 3-13-16, Mita, Minato-ku, Tokyo
Representative Isamu Matsuyama, President and CEO
Capital 15 billion Japanese yen (plus approximately 20 billion
Japanese yen in capital reserves)
Outstanding Share 10, 000 shares
Shareholders Equity Nearly 35 billion yen
Total Assets Nearly 79 billion yen
Financial Closing March 31
Date
Number of Employees Nearly 2,200
Major Customers Nippon Steel Corporation, JFE Steel Corporation,
Mitsubishi Heavy Industries, Ltd., Asahi Breweries, Ltd.,
etc
Principal Toshiba 50% Mitsubishi 50%
Shareholders
and Shareholdings
Major Banks Sumitomo Mitsui Banking Corporation,
Bank of Tokyo-Mitsubishi, etc
(2)Representative of the separation company (scheduled for October 1, 2003)
Mr. Isamu Matsuyama, President and CEO (former Mitsubishi)
Forward Looking Statement:
This contains forward-looking statements concerning Toshiba's future plans,
strategies and performance. These forward-looking statements are not historical
facts, rather they represent assumptions and beliefs based on economic,
financial and competitive data currently available. Furthermore, they are
subject to a number of risks and uncertainties that, without limitation, relate
to economic conditions, worldwide mega-competition in the electronics business,
customer demand, foreign currency exchange rates, tax rules, regulations and
other factors. Toshiba therefore wishes to caution that actual results may
differ materially from our expectations.
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