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ANNOUNCEMENT OF COMMENCEMENT OF TENDER OFFER FOR DENSEI-LAMBDA K.K
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ANNOUNCEMENT OF COMMENCEMENT OF TENDER OFFER FOR DENSEI-LAMBDA K.K
http://www.global.tdk.com/news_center/pressTDK Press Release
September 26, 2007
At a meeting of the Board of Directors held on September 26, 2007, TDK Corporation (hereinafter the "Company") resolved that it will acquire shares and stock acquisition rights of DENSEI-LAMBDA K.K. (Code: 6917, hereinafter the "Target") by means of a tender offer (hereinafter the "Tender Offer") and hereby notifies you of the following.
1. Purpose of Tender Offer, Etc
|(1)||Outline of the Tender Offer
The Company is a corporation mainly engaged in the manufacture and sale of electronic materials and components, etc. On the other hand, the Target is a corporation mainly engaged in the power supply business, including the manufacture and sale of switching power supplies and uninterruptible power supplies.
At present, the Company indirectly wholly owns both Lambda Holdings Inc., a US corporation which is a wholly owned subsidiary of TDK U.S.A. Corporation (hereinafter "Lambda Holdings"), and Lambda Far East Ltd., a UK corporation which is a wholly owned subsidiary of Lambda Holdings (hereinafter "Lambda Far East"; the Company, Lambda Holdings and Lambda Far East shall be hereinafter collectively called the "Related Parties of the Company"), through TDK U.S.A. Corporation, a US corporation which is a wholly owned subsidiary of the Company. Further, the Target is a consolidated subsidiary of the Company as it indirectly holds 58.1% of all of the issued and outstanding shares of the Target (12,691,200 shares) (hereinafter the "Indirect Shareholdings") through both Lambda Holdings and Lambda Far East.
The Company will make the Tender Offer with the intention of causing the Related Parties of the Company to acquire any and all of the issued and outstanding shares of common stock (including shares of common stock issued or transferred by the last day of the tender offer period (hereinafter the "Tender Offer Period"), as a result of the exercise of stock acquisition rights issued by the Target based on the resolutions of the 25th Ordinary General Meeting of Shareholders of the Target held on June 26, 2002 and the meeting of the Board of Directors of the Target held on December 20, 2002 (hereinafter "Stock Acquisition Right"), and Stock Options Using Treasury Shares (as defined below)), as well as Stock Acquisition Rights of the Target (hereinafter "All Shares").
|(2)||Decision Making Process for the Launch of the Tender Offer
The Company has decided to launch the Tender Offer in order to turn the Target into a wholly owned subsidiary in which all of the issued and outstanding shares will be, directly or indirectly, held by Related Parties of the Company (hereinafter the "Transaction") for the purpose of accomplishing a drastic and smooth restructuring of the power supply business and the electronic materials and components businesses (hereinafter the "Business Restructuring") within the TDK Group (including the Target) in which the Company is a leading company (hereinafter the "TDK Group") as mentioned below.
The Target's predecessor, Nippon Electronic Memory Industry Co., Ltd., was established in 1970 and changed its name to Nemic-Lambda Co., Ltd. in 1978 following a capital participation by Veeco Instruments Inc. (current Lambda Holdings), a US manufacturer of electronic power supplies. In 1999, it merged with Nippon Electric Industry Co., Ltd. and changed its name to DENSEI-LAMBDA K.K. In 2005, the Company acquired all of the shares in Lambda Holdings, a parent company of the Target, from Invensys plc, a UK manufacturer of industrial equipment and, as mentioned above, made the Target into its consolidated subsidiary. Further, in 2006, in order to establish a global sales system for switching power supplies and implement its growth strategy in Europe and America, the Target acquired seven corporations belonging to the Lambda America and Europe Groups and turned them into its wholly owned subsidiaries.
Currently, the Target provides development, manufacture, sales and maintenance services for power supply systems, mainly switching power supplies and uninterruptible power supplies. In particular, the Target's switching power supplies hold the top catalog switching power supply market share in Japan. The Target also makes an effort to spread out its products through its bases around the world in order to become a top manufacturer in the area of power electronics not only in the Japanese, but also in the global market.
In order to strengthen its relationship with the Target and maximize synergies, the Company has been engaged in various activities, together with the Target, such as the supply of products, the improvement of manufacturing systems and the joint development of the products. In 2006, as a part of these activities, the Company and the Target integrated their sales channels, jointly developed EMC filters for power lines, integrated their quality assurance systems, and started cooperative sales of switching power supplies under the TDK-Lambda brand through the sales networks of the Company and the Target.
However, considering that the recent market environment in connection with the power supply business and the electronic materials and components businesses is growing and expanding not only within the existing field of industrial equipments but also into new fields, such as automobile and digital home appliances, it is necessary for the TDK Group, including the Target, to utilize management resources more effectively and, accordingly, to maximize synergies in order to pursue continuous business growth under such environment in the future.
The Company has therefore determined that it is necessary to undertake drastic restructuring of the management resources of the TDK Group, such as marketing, technological resources, manufacturing capabilities and manufacturing bases, and plans to develop the power supply business and the electronic materials and components businesses of the TDK Group into a business enterprise pursuing higher competitiveness and profitability through the Business Restructuring which is considered as a part of the restructuring of management resources. More specifically, after the completion of the Transaction, the Company is considering, as a part of the Business Restructuring within the TDK Group, including the Target, to expedite decision making processes in the power supply business and the electronic materials and components businesses, to integrate operating bases and IT and logistic services, to establish a co-development system for new products and services and to reduce costs by further rationalizing headquarters operations, etc. The Company believes that the Business Restructuring can accelerate the integration of the Target's technological and sales capabilities as a leading manufacturer in the catalog switching power supply market into the power supply devices arising from the Company's wealth of raw material resources and technologies, establish business systems which meet the various demands of the power supply market that is expanding and changing toward the future, and finally achieve superiority in the global power supply market. Also the Company determined that the Business Restructuring would promote the integration of the power supply business and the electronic materials and components businesses within the TDK Group and, as a result of this, the TDK Group may shorten its decision making processes which, in turn, may speed management decision making and increase profitability to be brought by the effects of rationalization by the business restructuring.
In order to smoothly carry out the Business Restructuring, the Company has decided to launch the Tender Offer as a part of the Transaction.
|(3)||Outline of Conditions of the Tender Offer
As stated above, the Company will make the Tender Offer in such a way that the Related Parties of the Company may acquire All Shares in the Target. Because the Company has set neither a minimum threshold nor an upper limit on the number of share certificates, etc., to be purchased through the Tender Offer, it will purchase any and all of the tendered shares, etc.
The Tender Offer provides the Target's shareholders with an opportunity to sell their shares of common stock in the Target at a price that is more favorable than recent market prices.
Given that the Company indirectly owns a majority of the voting rights of the Target's shares of common stock outstanding, as one of the measures to ensure the appropriateness of the purchase price proposed under the Tender Offer, the Company requested the Company's financial advisor, Goldman Sachs Japan Co., Ltd. ("Goldman Sachs"), in the latter part of July 2007, to conduct an analysis of the Target's equity valuation.
Upon such request from the Company, based on the business plan for the Target prepared by the Company and the results of the assessments made by the Company together with the Target's management, Goldman Sachs conducted an analysis of the Target's equity valuation using the average market share price method, the common stock comparison method, and the discounted cash flow ("DCF") method, and reported the results of the analysis to the Company's Board of Directors on September 26, 2007. (Supplemental explanation on disclosures and disclaimers etc. has been received from Goldman Sachs who conducted the analysis of the Target's equity valuation at the Company's request. Please refer to (Note 7) at the end of this document for additional details.) The Company, using as a reference the results of the analysis of the Target's equity valuation conducted by Goldman Sachs, and taking into consideration the synergy effects to be created between the Company and the Target, the results of business, legal, accounting and tax due diligence related to the Target, the Target's revised earnings forecasts for the financial year ending March 2008 (April 1, 2007-March 31, 2008), the likelihood of obtaining the support of the Target to the Tender Offer, the likelihood of a successful completion of the Tender Offer, and other factors, as well as premium implied at the time of deciding the tender offer price in precedent tender offers for share certificates etc. by entities other than the issuer, all considered as a whole, and in addition taking into account the results etc. of discussions and negotiations with the Target, decided the purchase price under the Tender Offer to be 1,715 yen per share.
The purchase price for the Target's shares of common stock proposed under this Tender Offer represents a premium of approximately 33.0% (rounded off to one decimal place) on the 1,289 yen closing price of the Target's shares of common stock on the First Section of the Tokyo Stock Exchange, Inc. on September 25, 2007, a premium of approximately 38.9% (rounded off to one decimal place) on the 1,235 yen simple average (rounded off to the whole number) of closing prices of the Target's shares of common stock on the First Section of the Tokyo Stock Exchange, Inc. for the last 1 month ending September 25, 2007, and a premium of approximately 28.4% (rounded off to one decimal place) on the 1,336 yen simple average (rounded off to the whole number) of closing prices of the Target's shares of common stock on the First Section of the Tokyo Stock Exchange, Inc. for the last 3 months ending September 25, 2007.
As required under the provisions of Article 27-2, Paragraph 5 of the Securities and Exchange Law (Law No. 25 of 1948, as amended; hereinafter the "Law." From September 30, 2007, the title of the Law will be changed to the Financial Instruments and Exchange Law), Article 8, Paragraph 5, Item 3 of the Securities and Exchange Law Enforcement Order (Cabinet Order No. 321 of 1965, as amended; hereinafter the "Order." From September 30, 2007, the title of the Order will be changed to the Financial Instruments and Exchange Law Enforcement Order) and Article 5, Paragraph 5 of the Cabinet Office Ordinance Concerning the Disclosure of Tender Offers for Stock, Etc. by Persons Other than Issuers (Ministry of Finance Ordinance No. 38 of 1990, as amended; hereinafter the "Regulations"), the Company will make the Tender Offer for the Stock Acquisition Rights as well. The Company sets the tender offer price of a Stock Acquisition Right at JPY1 considering the conditions for exercising a Stock Acquisition Right (i.e., the Directors, Statutory Auditors (kansayaku) and Executive Officers (shikko-yakuin) who are right holders, are required to stay in such positions with the Target or its affiliate, at the time of exercise of such Stock Acquisition Right, and, employees are required to be either a Director, a Statutory Auditor, an Executive Officer or an employee of the Target or its affiliate, at the time of exercise of such Stock Acquisition Right).
All Stock Acquisition Rights of the Target are subject to restrictions on transfer requiring approval of the Board of Directors of the Target. It is not necessarily obvious, whether or not the Board of Directors of the Target will give approval to the prospective transfer, or even if it intends to do so, whether or not the Board of Directors can actually give its approval by the last day of the Tender Offer Period.
In addition to the above, the Target issued a right to demand the Target to transfer treasury shares held by it (hereinafter "Stock Option Using Treasury Shares") based on the resolutions of the 23rd Ordinary General Meeting of Shareholders of the Target held on June 27, 2000 and the 24th Ordinary General Meeting of Shareholders of the Target held on June 26, 2001 pursuant to Article 210-2, Paragraph 2, Item 3 of the Commercial Code (Law No.48 of 1898, as amended) before the amendment thereto by the Law No.128 of 2001. However, the Company will not make the Tender Offer for the Stock Options Using Treasury Shares because it is not legally required to do so under the provisions of Article 27-2, Paragraph 5 of the Law, Article 8, Paragraph 5, Item 3 of the Order and Article 5, Paragraph 5 of the Regulations.
|(4)||Agreements Relating to the Tender Offer, Etc.
The meeting of the Board of Directors held on September 26, 2007 resolved that the Target agreed to the Tender Offer.
Because the Company indirectly owns a majority of the voting rights for shares of common stock in the Target, the Target has obtained from Daiwa Securities SMBC Co., Ltd., a third party institution that is independent from both the Company and the Target, a "Valuation Report" dated as of September 25, 2007, which provides a variety of analysis regarding the value of a share in the Target, as reference materials when considering the appropriateness of the tender offer price for shares in the Target in case the Tender Offer is launched. In its valuation report, as a result of a comprehensive valuation using the market share price method, the DCF method and the common stock comparison method, Daiwa Securities SMBC Co., Ltd. reports that it is appropriate to understand the range of stock value per share in the Target as being between JPY1,579 and JPY1,722. On September 26, 2007 the Target published revised earnings forecasts for the Fiscal Year 2008 (April 1, 2007 to March 31, 2008). In this regard, Daiwa Securities SMBC Co., Ltd. reported that the contents of such revised earnings forecasts were taken into account in its valuation report. Upon consideration of the above-mentioned valuation methods and the range of stock value per share in the Target as reported therein, the Target's Board of Directors determined the Tender Offer Price as being appropriate.
In addition, referring to, and considering, the legal advice provided by Mori Hamada & Matsumoto, a legal advisor for the Target, all three Directors of the Target who participated in the resolution unanimously resolved that the Board of Directors of the Target expressed their opinion that they agree to this Tender Offer at the meeting of the Board of Directors held on September 26, 2007.
In order to avoid a conflict of interests between the Company and the Target, Messrs. Minoru Takahashi, Seiji Enami, Shiro Nomi and Etsuro Yoshinaga, directors, executive officers, or employees of the Company, concurrently serving as Directors of the Target, did not participate in the discussions and voting at the aforementioned meeting of the Board of Directors of the Target. Further, they did not participate in the discussions and negotiations between the Company and the Target as representatives of the Target.
Furthermore, all of the Statutory Auditors, including any outside Statutory Auditor of the Target but excluding Mr. Mitsuaki Konno, expressed their opinion that they did not have any objection to the resolution of the meeting of the Board of Directors of the Target that expressed their agreement to the Tender Offer. However, since Mr. Mitsuaki Konno, who is a Statutory Auditor of the Target, is concurrently serving as a consultant of the Company, he refrained from expressing his opinion in connection with the above expression of the Board of Directors of the Target, in order to avoid a conflict of interests between the Company and the Target.
|(5)||Prospects after the Tender Offer
If the Company fails to acquire All Shares in the Target (except for the Indirect Shareholdings) by way of the Tender Offer, the Company plans to carry out the following procedures to complete the Transaction:
After the completion of the Tender Offer, the Company plans to request the Target to hold a meeting of shareholders to discuss, among others: (i) an agenda aimed at changing the Target into a Corporation with Class Shares (shuruikabushiki-hakko-kaisha), as defined in the Corporation Act, by amending the Articles of Incorporation of the Target to enable it to issue another class of shares in addition to the shares of common stock; (ii) an agenda aimed at amending the Articles of Incorporation of the Target to create a Term of Redeemable Right for All the Shares (zenbu-shutoku-joko) in connection with all the shares of common stock issued by the Target; and (iii) an agenda aimed at allowing the Target to acquire all such shares and to deliver another class of shares in exchange. The Related Parties of the Company plan to vote for each of the aforementioned agendas in the relevant meeting of shareholders, and if the Tender Offer is successfully completed, the Company may hold two-thirds (2/3) or more of the total voting rights of the Target, including the Indirect Shareholdings.
If all the procedures of (i) through (iii) above are implemented, all the shares of common stock issued by the Target will be acquired by the Target after the Term of Redeemable Right for All the Shares (zenbu-shutoku-joko) is created, and another class of shares in the Target will be delivered to shareholders of the Target as consideration for the acquisition of all of such shares; provided that, as for the shareholders to whom the number of such other class of shares in the Target to be allotted will be a fractional number less than one share, they will receive the cash for such fraction after the completion of sale, etc. of such other class of shares in the Target equivalent to the sum of all of the fractions held by such shareholders (if there remains a further fraction after the sum, such fraction will be omitted) in accordance with the procedures under the relevant laws and regulations. The amount of such cash to be received by such shareholders is planned to be calculated based upon the Tender Offer Price. Such cash amount may, however, be different from and, exceed, equal or be less than the Tender Offer Price, depending on the business, results of the business, financial condition, assets or management of the Target or the outlook thereof, at the time when such calculation is made, since the timing of such calculation differs from the time at which the Tender Offer Price is determined. The class and number of shares to be delivered to shareholders of the Target as consideration for such acquisition of the Target's common stock after the Term of Redeemable Right for All the Shares (zenbu-shutoku-joko) is created have not been determined at present, however, they are going to be determined so that the shareholders of the Target who will not apply for the Tender Offer (excluding the Related Parties of the Company) will be allotted only fractions of less than one share in order for the Related Parties of the Company to hold all the issued and outstanding shares in the Target and to turn the Target into a wholly owned subsidiary of the Related Parties of the Company. In regard to item (ii) of the agendas above, which is to amend the Articles of Incorporation of the Target to create a Term of Redeemable Right for All the Shares (zenbu-shutoku-joko) in connection with all the shares of common stock issued by the Target: (a) shareholders will have the right to request the Target to purchase their shares pursuant to Articles 116 and 117 of the Corporation Act and other related laws and regulations for the purpose of protecting minority shareholders' rights, or (b) in case where the Target's acquisition of all the shares with a Term of Redeemable Right for All the Shares (zenbu-shutoku-joko) is resolved at the meeting of shareholders, shareholders may file a court request to determine the fair acquisition price pursuant to Article 172 of the Corporation Act and other related laws and regulations, for the purpose stated in (a) above. In this regard, since the purchase price and the fair price for the acquisition under (a) and (b) above will be finally determined by a court, the price received by the shareholders in each case (a) or (b) above may be different from the Tender Offer Price. Shareholders who intend to implement such procedures must confirm and determine the required procedures by themselves and under their own responsibility.
Please note that the Tender Offer is not intended in any way to solicit the shareholders of the Target to vote for the agendas in the said shareholders meeting.
Notwithstanding the above, depending on the Company's shareholding ratio after the completion of the Tender Offer, the circumstances regarding shareholdings by shareholders other than the Related Parties of the Company, and the interpretation by authorities regarding related laws and regulations, etc., it is still possible for other measures, which may pursue effects equivalent to those mentioned above, to be implemented, and/or that it would take time for those measures to be actually implemented. In any case, it is planned that cash will be finally distributed to the Target's shareholders, other than the Related Parties of the Company, in order to achieve the completion of the Transaction. Even in such case, the amount of cash to be delivered to such shareholders is planned to be calculated based upon the Tender Offer Price, which may however be different from and, exceed, equal or be less than the Tender Offer Price, depending on the business, results of the business, financial condition, assets or management of the Target or the outlook thereof, at the time when such calculation is made, since the timing of such calculation differs from the time at which the Tender Offer Price is determined. The Company will make a public announcement immediately after the Company determines, following consultation with the Target, details of the measures to be taken in the above case.
As of the date hereof, the shares of common stock in the Target are listed on the Tokyo Stock Exchange and the Osaka Stock Exchange (hereinafter collectively "Stock Exchanges"). However, as the Company has not set an upper limit regarding the number of share certificates, etc., to be purchased by the Tender Offer and since the Company will purchase any and all the tendered shares, etc., depending on the result of the Tender Offer, there is a possibility that the share certificates representing the shares of common stock in the Target will be delisted after the prescribed procedures in accordance with the delisting standard of the Stock Exchanges. In addition, even if such delisting standard is not met, the Company is planning to carry out the Transaction after the completion of this Tender Offer pursuant to applicable laws and regulations and, in such case, the share certificates representing the shares of common stock in the Target will be delisted. After such delisting, the share certificates representing the shares of common stock in the Target may not be traded on the Stock Exchanges and it is expected that selling them in the future will become difficult.
In addition to the above, after the completion of the Tender Offer and at a request of the tender offeror, the Target would implement the procedures necessary to cancel the Stock Acquisition Rights and the Stock Options Using Treasury Shares which remain unexercised.
Shareholders should consult with their tax advisors with respect to tax-related matters regarding the receipt of cash delivered as a result of the Tender Offer or implementation of each of the procedures for the completion of the Transaction or for the sales of shares in the Target by exercising the right to request the Target to repurchase such shares in connection with the implementation of such procedures.
2. Outline of Tender Offer, Etc.
|1)||Outline of the Target
|2)||Tender Offer Period
|3)||Tender Offer Price
|4)||Basis of Calculation of Tender Offer Price, Etc.
|5)||Number of Share Certificates, Etc. Scheduled to be Purchased
|6)||Changes in the Shareholding Ratio due to the Tender Offer
|7)||Purchase Price: JPY15, 532,604,080
|9)||Other Conditions and Tender Offer Method
|10)||Date of Public Notice of Commencement of the Tender Offer
September 27, 2007 (Thursday)
|11)||Tender Offer Agent
Nomura Securities Co., Ltd.
3. Other Matters
|1)||Existence or non-existence of an agreement with the Target or officers thereof, and contents thereof
|2)||Other information necessary for investors to decide whether they intend to subscribe in the Tender Offer
If a claim for repurchase of shares amounting to less than one unit is exercised by any shareholder in accordance with the Corporation Act, the Target may repurchase such shares during the Tender Offer Period in accordance with procedures prescribed by laws and regulations. In such case, the Target will effect the repurchase at the market price.
The Company and the Target have announced "Notice on Revisions to Earnings Forecasts" on September 26, 2007 at the Stock Exchange. The earnings forecasts of the Target for fiscal year ending in March 2008 (From April 1, 2007 to March 31, 2008) in such announcement are as follows. The following is an excerpt from the announcement. Please refer to the contents of the said announcement for details.
Consolidated Earnings Forecasts
|(Note 1)||In this document, when figures in a table are rounded off or omitted, the value representing the total of such figures may not necessarily match up with the sum of such figures.|
|(Note 2)||In this document, any indication of a date or time shall refer to the date or time in Japan unless otherwise provided. The "business day" indicated in this document shall mean the days other than the days provided in each item of Article 1, Paragraph 1 of the Law Concerning Government Office Holidays (Law No. 91 of 1988), as amended.|
|(Note 3)||The Tender Offer is to be conducted in accordance with the procedures and information disclosure standards prescribed in the Securities and Exchange Law of Japan (Law No. 25 of 1948), as amended, the name of which will be revised as the "Financial Instruments Exchange Law" after September 30, 2007, however, these procedures and standards are not necessarily the same as the procedures and information disclosure standards in the United States. In particular, Article 13 (e) and Article 14 (d) of the U.S. Securities Exchange Act of 1934, and the rules prescribed thereunder do not apply to the Tender Offer, and the Tender Offer does not conform to those procedures and standards. The financial information described in the tender offeror's financial statements, which included in this document, are prepared in conformity with the U.S. GAAP, except for the segment information. However, the other financial information included in this document are prepared in accordance with Japan's accounting standards and are not based on U.S. GAAP and the contents thereof may not necessarily be equivalent to those prepared under the U.S. GAAP. As the tender offeror is not a company incorporated outside the U.S. and most officers of the Tender Offeror are residents outside the U.S., it may be impossible to exercise rights and claims that may be asserted under the securities-related laws of the U.S. There is also a chance that it may be difficult to institute proceedings in a court outside the U.S. against a company outside the U.S. or its officers based on a violation of the securities-related laws of the U.S. Additionally, there is no guarantee that it would be possible to make a company outside the U.S. and its subsidiary or affiliates subject to the jurisdiction of a U.S. court.|
|(Note 4)||Unless otherwise specified, all procedures relating to the Tender Offer are to be conducted entirely in Japanese. If any portion of the documentation relating to the Tender Offer is prepared in English and there is any inconsistency between the English documentation and the Japanese documentation, the Japanese documentation will prevail.|
|(Note 5)||This document includes the "forward-looking statements" as defined in Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Actual results might be substantially different from the forecasts given explicitly or implicitly as the "forward-looking statements," due to any known or unknown risks, uncertainties or any other factors. Neither the tender offeror nor any of its affiliates assures that such explicit or implicit forecasts given as "forward-looking statements" will be realized. The "forward-looking statements" contained in this document have been prepared based on the information possessed by the tender offeror as of the date hereof, and, unless otherwise obliged under applicable laws and regulations or the exchange rules, neither the tender offeror nor any of its affiliates assumes any obligation to update or revise this document to reflect any future events or circumstances.|
|(Note 6)||Rule 14e-5 under the U.S. Securities Exchange Act of 1934 prohibits a "covered person", including the Target, from purchasing any share certificates, etc. outside of the offer while the offer remains open, subject to certain exceptions. The U.S. Securities and Exchange Commission has granted a limited exception on behalf of any Japanese target that is a "covered person" that is required to make purchases of its share certificates, etc. from holders of share certificates, etc constituting less than one "unit" during the relevant period pursuant to the Corporation Act of Japan (Law No. 86 of 2005), as amended. The Tender Offeror understands that the Target intends to comply with its obligation to make such purchases. As of March 31, 2007, the most recent record date for the share certificates, etc., the total number of share certificates, etc constituting less than one "unit" was 99,110.|
|(Note 7)||Supplemental explanation on disclosures and disclaimers etc. received from Goldman Sachs, who at the Company's request conducted the analysis of the Target's equity valuation with September 21, 2007 as the base date, are as follows.
Goldman Sachs and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes. Goldman Sachs has acted as financial advisor to the Company in connection with, and has participated in certain of the negotiations leading to, the Transaction. Goldman Sachs expects to receive fees for its services in connection with the Transaction, and the Company has agreed to reimburse Goldman Sachs' expenses and indemnify Goldman Sachs against certain liabilities arising out of Goldman Sachs' engagement. In addition, Goldman Sachs and its affiliates have provided certain investment banking services to the Company from time to time. Goldman Sachs and its affiliates also may provide investment banking services to the Company, the Target and their respective affiliates in the future. In connection with the above-described investment banking services Goldman Sachs and its affiliates have received, and may receive, compensation. Goldman Sachs is a full service securities firm engaged, either directly or through its affiliates, in securities trading, investment management, financial planning and benefits counseling, risk management, hedging, financing and brokerage activities for both companies and individuals. In the ordinary course of these activities, Goldman Sachs and its affiliates may provide such services to the Company, the Target and their respective affiliates, may actively trade the debt and equity securities (or related derivative securities) of the Company, the Target and their respective affiliates for their own account and for the accounts of their customers and may at any time hold long and short positions of such securities.
Goldman Sachs has relied upon the accuracy and completeness of all of the financial, accounting, legal, tax and other information discussed with or reviewed by Goldman Sachs and has assumed such accuracy and completeness for purposes of its analysis. In that regard, Goldman Sachs has assumed with the Company's consent that the financial forecasts for the Company and the Target prepared by the management of the Company have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. In addition, Goldman Sachs has not made an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of the Target or any of its subsidiaries and Goldman Sachs has not been furnished with any such evaluation or appraisal. Goldman Sachs is not expressing any opinion that addresses the underlying business decision of the Company to engage in the Transaction or the relative merits of the Transaction as compared to any strategic alternatives that may be available to the Company, nor is Goldman Sachs expressing any opinion as to the prices at which shares of the common stock of the Target will trade at any time. Goldman Sachs' analysis is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the base date and Goldman Sachs assumes no responsibility for updating, revising or reaffirming this analysis based on circumstances, developments or events occurring after the base date. Goldman Sachs' advisory services and analysis in relation to the Transaction are provided solely for the information and assistance of the Company's Board of Directors in connection with its consideration of the Transaction and the analysis was one of many factors taken into consideration by the Company's Board of Directors in making its determination to approve the Transaction. Goldman Sachs' analysis does not constitute a recommendation as to whether or not any holder of shares of the common stock or the Stock Acquisition Rights of the Target should tender such shares or Stock Acquisition Rights in connection with the Tender Offer. Holders of shares of common stock or Stock Acquisition Rights of the Target should not rely upon Goldman Sachs' analysis in making their determination whether or not to tender such shares or Stock Acquisition Rights in connection with the Tender Offer or for any other purpose.
For further information, contact the Corporate Communications Dept.