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TDK and Tabuchi Electric Agree to Equity-based Business Alliance

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TDK and Tabuchi Electric Agree to Equity-based Business Alliance

February 21, 2007

TDK Corporation (TDK) and Tabuchi Electric Co., Ltd. (Tabuchi Electric) have announced that their respective boards of directors today passed resolutions to conclude a Memorandum of Understanding (MOU) regarding an equity-based business alliance to strengthen their cooperative relationship in the two companies' businesses. Based on this agreement, Tabuchi Electric will issue new shares to TDK via a private placement.

  1. Background and Aim of the Equity-based Business Alliance

    (1) Background
    The digital home appliances field is an important market for the evolution and expansion of the world electronics industry. It is a field that is advancing on a daily basis in terms of both size and technological developments. In this context, power supplies are increasingly under the spotlight as key devices for digital home appliances, enhancing the value of finished products from such perspectives as helping save energy, conserving resources, and protecting the environment. While this market is expected to expand going forward, the business environment is also expected to become increasingly challenging in regards to the development of new products and the need to reduce costs.

    (2) Aim of the Alliance
    The TDK Group is a leading company in passive components such as magnetic products, including ferrite cores which are key components of power supplies, ceramic capacitors and EMC (Electromagnetic Compatibility) components, and the top manufacturer of power supplies for industrial equipment. Meanwhile, Tabuchi Electric is one of the industry's leading suppliers of custom power supplies for consumer electronics, excelling in high-voltage, high-frequency transformer technology. Through a technology-centered business alliance, both companies believe that they can increase their corporate value and be better able to supply customers with value-added products on a timely basis.
  2. Outline of the Alliance

    The two companies will:
    (1)  cooperate in design, development, production and materials procurement to promote both companies' businesses in the field of custom power supplies for consumer electronics,
    (2)  make effective use of each other's products as well as exchange information regarding materials and purchasing, and
    (3)  conduct regular technology exchanges in the field of power supply-related components to effectively utilize the results of each other's research for the commercialization of products and other ends.
  3. Details of the Equity-based Alliance (Issue of New Shares Via Private Placement)
    (1)  No. of new shares to be issued: 5,000,000 shares of common stock
    (2)  Issue price: ¥162 per share
    (3)  Total purchase price: ¥810,000,000
    (4)  Amount to be included in common stock: ¥81 per share
    (5)  Application date: March 7, 2007 (Wednesday)
    (6)  Payment date: March 8, 2007 (Thursday)
    (7)  Share certificate issue date: March 8, 2007 (Thursday)
    (8)  Allottee and number of shares: TDK Corporation (5,000,000 shares)
  4. Profiles of the Two Companies

    TDK Corporation
      (1)  Main businesses: Manufacture and sales of electronic materials and components and recording media products
      (2)  Head office: 1-13-1, Nihonbashi, Chuo-ku, Tokyo
      (3)  Representative: Takehiro Kamigama, President and COO
      (4)  Common stock: ¥32,641,976 thousand
      (5)  No. of employees: 53,975 (Consolidated, as of September 30, 2006)

    Tabuchi Electric Co., Ltd.
      (1)  Main businesses: Manufacture and sales of power supply units, transformers, inverters and other products
      (2)  Head office: 4-2-21, Miyahara, Yodogawa-ku, Osaka-shi, Osaka
      (3)  Representative: Toshihiro Kaihoshi, President
      (4)  Common stock: ¥2,790,816 thousand
      (5)  No. of employees: 4,240 (Consolidated, as of September 30, 2006)
  5. Impact on Both Companies' Operating Results
    The impact on the consolidated net sales and consolidated net income of both companies after the conclusion of this MOU will be negligible.

For further information, contact the Corporate Communications Dept.
Tel.: 81-3-6778-1055