Announcement of Commencement of Tender Offer for Share Certificates, Etc. of PanaHome Corporation (Stock Code: 1924) and Termination of Share Exchange Agreement between Panasonic Corporation and PanaHome Corporation

22-Apr-2017 Intellasia | BusinessWire | 9:12 AM Print This Post

OSAKA, Japan–(BUSINESS WIRE)–Panasonic Corporation (the “Tender Offeror”) hereby announces that the
Tender Offeror resolved at a meeting of its board of directors held
today to acquire shares of common stock (the “Target Company’s Shares”)
of PanaHome Corporation (Stock Code: 1924, First Section of the Tokyo
Stock Exchange, Inc. (the “Tokyo Stock Exchange”), the “Target Company”)
through a tender offer (the “Tender Offer”) in accordance with the
Financial Instruments and Exchange Act (Act No. 25 of 1948, as amended,
the “Act”), as set forth below. Also, in connection therewith, each of
the Tender Offeror and the Target Company resolved at meetings of their
respective boards of directors held today to terminate, by mutual
agreement, the share exchange agreement between both companies (the
“Share Exchange Agreement”) that was announced by the Tender Offeror and
the Target Company in the press release titled “Panasonic Corporation
Announces to Have Executed a Share Exchange Agreement to Make PanaHome
Corporation its Wholly-owned Subsidiary through Share Exchange” dated
December 20, 2016 (the “December 20, 2016 Press Release”). Also today,
both companies terminated the Share Exchange Agreement by mutual
agreement.

Please note that, pursuant to the “Memorandum of Understanding with
respect to the Termination of the Share Exchange Agreement and
Implementation of the Tender Offer” entered into by and between the
Tender Offeror and the Target Company as of today (the “MoU”), the
implementation of the Tender Offer is subject to each of the following
conditions (collectively the “Conditions of the Tender Offer”) being
satisfied: (i) from the execution date of the MoU until the commencement
date of the Tender Offer, no event that will have a material adverse
effect on the businesses, assets, debts, financial position, results of
operations, cash flow or profit plans has occurred or realized in
relation to the Target Company itself or the whole group including the
Target Company and its subsidiaries, and no other event that will be a
material interference of the achievement of a purpose of the Tender
Offer has occurred or realized; (ii) the Target Company’s meetings of
its board of directors lawfully and validly resolve to express an
opinion in favor of the Tender Offer, and to recommend that the
shareholders of the Target Company accept the Tender Offer, and such
resolution has not been changed or withdrew; (iii) there are no
judgements, decisions or orders, etc. by a judicial or administrative
body that restrict or prohibit the commencement of the Tender Offer and
there are no procedures pending in a judicial or administrative body
seeking to restrict or prohibit the commencement of the Tender Offer;
and (iv) there are no unpublicized material facts (the material facts
set forth in paragraph 2, Article 166 of the Act) with respect to the
Target Company and the Tender Offeror is not aware of any unpublicized
facts concerning a tender offer, etc. (the facts set forth in paragraph
3, Article 167 of the Act) of the Target Company’s Shares.

1.

         

Purpose, etc. of Tender Offer

 

(1)

Overview of the Tender Offer

As of the date hereof, the Tender Offeror holds 91,036,634 shares (a
shareholding ratio (Note) of 54.18%) of the Target Company’s Shares
that are listed on the First Section of the Tokyo Stock Exchange,
and the Target Company is a consolidated subsidiary of the Tender
Offeror.
      (Note)       “Shareholding ratio” means any shareholding ratio relative to the
total number of issued shares of the Target Company as of March 31,
2017 (i.e., 168,563,533 shares) less the number of treasury shares
held by the Target Company as of the same day (i.e., 541,791 shares)
(equating to 168,021,742 shares) (shareholding ratios are rounded up
or down to second decimal places), and hereinafter the same shall
apply.
The Tender Offeror resolved at the meeting of its board of directors
held today to implement the Tender Offer, with the commencement date
of the Tender Offer being April 28, 2017, as a part of a transaction
aiming to acquire all of the Target Company’s Shares (excluding the
Target Company’s Shares held by the Tender Offeror and the treasury
shares held by the Target Company) and make the Target Company a
wholly owned subsidiary of the Tender Offeror (the “Transaction to
Make the Target Company a Wholly Owned Subsidiary”) (hereinafter,
the Transaction to Make the Target Company a Wholly Owned Subsidiary
by way of the Tender Offer and the following procedures shall be
referred to as the “Transaction”). The Tender Offeror will implement
the Tender Offer subject to the Conditions of the Tender Offer being
satisfied.
 
As announced in the December 20, 2016 Press Release, each of the
Tender Offeror and the Target Company resolved at meetings of their
respective boards of directors held on December 20, 2016 to conduct
a share exchange (the “Share Exchange”) in order to make the Tender
Offeror the wholly owing parent company after the share exchange and
the Target Company a wholly owned subsidiary after the share
exchange, and both companies have executed the Share Exchange
Agreement. Since the Tender Offeror and the Target Company decided,
however, to change the scheme of the Transaction to Make the Target
Company a Wholly Owned Subsidiary and implement the Tender Offer by
the Tender Offeror as a part of such transaction, the Tender Offeror
and the Target Company resolved at meetings of their respective
boards of directors held today to terminate, by mutual agreement,
the Share Exchange Agreement, and, on the same day, both companies
terminated the Share Exchange Agreement by mutual agreement. For
details of the background to and reasons for the change in scheme
mentioned above, please refer to the section titled “(iii)
Background to the implementation of the Tender Offer by the Tender
Offeror after the execution of the Share Exchange Agreement,” under
a. Background to, purpose of and decision making process of the
Tender Offer,” of “(2) Background to, Purpose of and Decision Making
Process of the Tender Offer, and Management Policy After the Tender
Offer” below.
 
Since the Tender Offeror has not set a limit on the maximum or
minimum number of shares to be purchased through the Tender Offer,
the Tender Offeror will acquire all of the share certificates, etc.
tendered (the “Tendered Shares, Etc.”) in response to the Tender
Offer.
 
In addition, if the Tender Offeror fails to acquire all of the
Target Company’s Shares (excluding the Target Company’s Shares held
by the Tender Offeror and the treasury shares held by the Target
Company) through the Tender Offer, the Tender Offeror intends to
require that the Target Company perform each procedure set forth in
the section titled “(3) Policy for Organizational Restructuring,
etc. After the Tender Offer (Matters Relating to So-called ‘Two-tier
Acquisitions’)” below (the “Procedures for Making the Target Company
a Wholly Owned Subsidiary”) in order to make the Target Company its
wholly owned subsidiary.
 
According to the “Announcement of Termination by Mutual Agreement of
the Share Exchange Agreement with Panasonic Corporation, the
Controlling Shareholder of PanaHome, and PanaHome’s Opinion in Favor
of the Tender Offer for PanaHome’s Shares by Panasonic Corporation
and Recommendation to Tender Shares” which was announced by the
Target Company as of today (the “Target Company’s Press Release”),
the Target Company determined that (i) in order for the Target
Company to deal with medium to long term management challenges, it
is necessary to become a wholly owned subsidiary of the Tender
Offeror through the Transaction, and therefore the implementation of
the Transaction will contribute to increasing the Target Company’s
corporate value, (ii) with respect to the Tender Offer, changing the
scheme from the Share Exchange to the Transaction will not cause any
particular disadvantages to the Target Company’s shareholders other
than the Tender Offeror, and in fact the Target Company believes it
will make it possible to provide an opportunity for the Target
Company’s shareholders other than the Tender Offeror to enjoy even
greater premiums, and therefore the Transaction provides to the
Target Company’s shareholders a reasonable opportunity to sell the
shares, and has resolved at its board of directors meeting held
today, to terminate by mutual agreement the Share Exchange Agreement
as of today, and to express an opinion in favor of the Tender Offer,
and to recommend that the shareholders of the Target Company accept
the Tender Offer.
 
For details of the Target Company’s opinion regarding the Tender
Offer and the decision making process of the Target Company, please
refer to the Target Company’s Press Release and the section titled
(iv) Background to the decision of the Target Company to support
the Tender Offer and reasons therefor,” under “a. Background to,
purpose of and decision making process of the Tender Offer,” of “(2)
Background to, Purpose of and Decision Making Process of the Tender
Offer, and Management Policy After the Tender Offer” below and the
section titled “e. Unanimous Approval of Directors and the No
Objection Opinion of All Company Auditors (Excluding Directors and
Company Auditors with Conflicts of Interest,” “(Measures to Ensure
the Fairness of the Tender Offer Such As Measures to Ensure the
Fairness of the Tender Offer Price and Measures to Avoid Conflict of
Interests)” under “(ii) Background of Calculation” of “(4) Basis of
Calculation, etc. of the Tender Offer Price,” of “2. Outline of the
Tender Offer” below.

(2)

   

Background to, Purpose of and Decision Making Process of the
Tender Offer, and Management Policy After the Tender Offer

 

a.

Background to, purpose of and decision making process of the
Tender Offer

 

(i)

Background to and reasons for the Tender Offer

 
The Tender Offeror was founded in 1918 as Matsushita Electric
Housewares Manufacturing Works (Matsushita Denkikigu Seisakusho) and
started to manufacture wiring devices. In December 1935, it was
reorganized as Matsushita Electric Industrial Co., Ltd. (the Tender
Offeror had used the trade name Matsushita Electric Industrial Co.,
Ltd. until it changed its trade name to the current name, Panasonic
Corporation, in October 2008). In May 1949, the Tender Offeror
listed its stock on the First Section of the Tokyo Stock Exchange
and the First Section of the Osaka Securities Exchange Co., Ltd.
(the “Osaka Securities Exchange”; in July 2013, the cash markets of
the Tokyo Stock Exchange and the Osaka Securities Exchange were
integrated, and as a result thereof, the shares of the Tender
Offeror have been allocated to the First Section of the Tokyo Stock
Exchange), and in September 1951, the Tender Offeror’ listed on the
First Section of the Nagoya Stock Exchange, Inc. Thereafter, the
Tender Offeror made Matsushita Electric Works, Ltd. (“Panasonic
Electric Works”) its subsidiary in April 2004, and made SANYO
Electric Co., Ltd. its subsidiary in December 2009, and, in order to
further strengthen the competitive power of the Panasonic Group, the
Tender Offeror made each company a wholly owned subsidiary in April
2011. In addition, in January 2012, the Tender Offeror absorbed
Panasonic Electric Works by way of an absorption-type merger and
restructured its organization based on the business model and
transformed its corporate structure to consist of 9 domains and 1
marketing section. Further, in April 2013, in order to recover the
competitive power of individual businesses, the Tender Offeror
gradually dissolved the 9 domains and reorganized the 88 business
units which had been placed under the 9 domains into 49 business
divisions (36 business divisions as of the end of March, 2017), and
established a structure consisting of four Divisional Companies
(Note 1), consisting of “Appliances Company,” “Eco Solutions
Company,” “AVC Networks Company” (as from April 1, 2017, “Connected
Solutions Company,” after having revised a part of the structure of
the AVC Networks Company) and “Automotive & Industrial Systems
Company”, which is the basis of the current structure. As of today,
the Panasonic Group, with the Tender Offeror at the top, continues
to expand development, manufacturing, sales and servicing activities
as a general electronics manufacturer. The Panasonic Group consists
of the Tender Offeror, 495 consolidated subsidiaries and 91
associated companies as of the end of March, 2017.

(Note 1) The outline of the four Divisional Companies of the
Tender Offeror is as set forth below.

Appliances Company     Development, manufacturing and sale of consumer electronics (such as
TVs, refrigerators, washing machines, personal-care products, micro
wave ovens, video equipment, home audio equipment, vacuum cleaners
and rice cookers), air-conditioners and related products (such as
room air-conditioners and large-sized air-conditioners), cold chain
equipment (such as showcases) and other devices (such as compressors
and fuel cells)
Eco Solutions Company     Development, manufacturing and sale of lighting fixtures, lamps,
wiring devices, solar photovoltaic systems, water-related products,
interior furnishing materials, exterior materials, ventilation and
air-conditioning equipment, air purifiers, nursing-care-related
products and bicycle-related products
Connected Solutions Company     Development, manufacturing, sale of, and providing services relating
to, products such as aircraft in-flight entertainment systems, PCs
and tablets, projectors, surveillance cameras,
electronic-component-mounting machines and welding equipment

Automotive & Industrial
Systems Company

    Development, manufacturing and sale in connection with Automotive
products (such as automotive infotainment-related equipment and
electrical components), the Energy products (such as dry batteries
lithium-ion batteries and automotive batteries,) and the Industrial
products (such as electronic components, automation controls,
electronic materials, semiconductors and LCD panels)
   

Since its establishment, the Tender Offeror has been developing
business globally as a general electronics manufacturer under its
basic management philosophy, which states that “the mission of an
enterprise is to contribute to the progress and development of
society and the well-being of people worldwide through its
business activities.” In recent years, the Tender Offeror has been
operating its businesses in the automobile (Note 2), housing and
B2B (Note 3) business fields, in addition to the consumer
electronics field, under its brand slogan, “A Better Life, A
Better World” to expand its business fields to serve customers and
society.

(Note 2)   The products of the automotive business include general equipment
and systems to be installed in cars. In the Panasonic Group, the
automotive business is mainly operated by the Automotive &
Industrial Systems Company. By seamlessly integrating the image
processing, downsizing, optics, heat radiation, sensing, and other
technologies used in the Group’s digital consumer electronic
products with the infotainment-related technologies that have been
developed over many years and are typically used in its car AVC
equipment as well as its battery technologies, the Automotive &
Industrial Systems Company is targeting further business growth.
(Note 3) At the Panasonic Group, the B2B business is the Tender Offeror’s
solutions business mainly to service industry customers. In the B2B
business, the Panasonic Group has focused on key fields including
“retail/logistics,” “entertainment,” “public,” and “avionics” and,
by becoming a service industry expert in these fields, the Tender
Offeror has been providing value-oriented solutions that integrate
core products and services with end users.
 

The Target Company was established in 1963 as National House
industrial Co., Ltd. (National Juutaku Kenzai Kabushiki Kaisha)
through the joint investment of Matsushita Electric Industrial
Co., Ltd. (currently, the Tender Offeror), Matsushita Electric
Works, Ltd. (subsequently, Panasonic Electric Works), and other
parties (investment ratio of 50.00% by Matsushita Electric
Industrial Co., Ltd. and 49.87% by Matsushita Electric Works,
Ltd.) with founder Konosuke Matsushita’s strong sense of mission
that “creating optimal houses to provide the most important
foundation for human lives”. Thereafter, in October 1971, the
Target Company listed its stock on the Second Section of the Tokyo
Stock Exchange and the Second Section of the Osaka Securities
Exchange, and in August 1972, its stock was allocated to the First
Section of the Tokyo Stock Exchange and the First Section of the
Osaka Securities Exchange. In addition, in August 1982, the Target
Company changed its trade name to National House Industrial Co.,
Ltd. (National Juutaku Sangyou Kabushiki Kaisha, no change
was made to the English translation of the trade name); and in
October 2002, it merged with 28 major consolidated subsidiaries
that handled marketing, logistics, construction and services and
also changed its trade name to PanaHome Corporation, the same name
as its product brand. As Panasonic Electric Works became a
subsidiary of the Tender Offeror in April 2004, the Target Company
became a consolidated subsidiary of the Tender Offeror. In January
2012, as a result of an absorption-type merger of Panasonic
Electric Works by the Tender Offeror, the Tender Offeror succeeded
to the Target Company’s Shares that had been held by Panasonic
Electric Works, and the number of the Target Company’s Shares held
by the Tender Offeror has been 91,036,634 shares since then.

 

As a core company in the Panasonic Group’s housing business, by
utilizing the Tender Offeror’s know-how and technologies for home
construction centered on the housing equipment business, in
addition to the housing design and architecture technologies and
the materials and construction quality management know-how that
the Target Company has developed over many years, the Target
Company has been aiming to become a company that is able to move
people and generate creativity in life and constantly provide
optimum comfort, health and joy based on its basic policy,
“Customers First”. In recent years, the Target Company has placed
four business areas, “custom-built housing,” “urban development,”
“residential stock,” and “overseas businesses,” at the heart of
its business operations and has promoted its growth strategy by
strengthening its partnership with each company of the Panasonic
Group.

 

In addition, recently, as one of the engagements by Tender Offeror
and the Target Company covering “Remodeling Business,” “New
Construction and Urban Development Business,” “Age-Free
(elderly-care) Business,” “Home Energy Management Business” and
“Overseas Business” as major areas in the housing business
strategies of the Panasonic Group, the Tender Offeror subscribed
the capital increase of PanaHome Reform Co., Ltd., which is a
subsidiary of the Target Company, in December 2015 (the paid-in
amount by the Tender Offeror was 19,200,000,000 yen, and, since
the capital increase, the investment ratio of the Tender Offeror
has been 49%, and the investment ratio of the Target Company has
been 51%), and PanaHome Reform Co., Ltd. changed its name to
Panasonic Home Renovation Co., Ltd. in April 2016. Accordingly,
the Tender Offeror and the Target Company have integrated the
brand in the remodeling business, the market of which is expected
to grow going forward, into “Panasonic Reform” and strengthened
the customer connection in the remodeling business within the
Panasonic Group as a whole, and the Tender Offeror and the Target
Company have thus engaged in further enforcing the capacity to
propose designs and construction service system, etc. in aiming
for providing more comfortable housing spaces. Including the
foregoing measures, the Tender Offeror and the Target Company have
shared their management strategies as group companies in order to
expand their businesses.

 

On the other hand, the Tender Offeror and the Target Company
realize that the business environment surrounding the Target
Company has been changing at an accelerating pace. In the domestic
housing market, a decrease of new housing starts is expected due
to demographic movement, and therefore the transformation and
diversification of their business model for the urban development
business, remodeling business, overseas business, etc. is urgently
needed in the increasingly competitive market.

(ii)

 

Background to the execution of the Share Exchange Agreement

 

Under the circumstances set forth above, the Tender Offeror has
come to believe that, in order to cause the housing business, as a
business of the Panasonic Group, to grow even faster than the
average growth level of the other companies operating housing
businesses in the market, it is effective to address customer
needs swiftly and precisely, by sharing and utilizing management
resources of both the Tender Offeror and the Target Company,
thereby making it possible to further enhance the value of the
Panasonic Group in the housing market. The Tender Offeror has been
considering a method to make the Target Company its wholly owned
subsidiary since the beginning of October 2016. As a result of the
consideration, the Target Company has come to believe that it
should make the Target Company its wholly owned subsidiary under a
scheme where the consideration will be paid in shares, taking into
consideration, among other things, that, a scheme of delivering
cash to shareholders of the Target Company as consideration will
not be eligible for a tax deferral upon the Target Company’s entry
into the consolidated taxation structure of the Tender Offeror.
Thus, the Tender Offeror proposed the Share Exchange to the Target
Company in early November 2016.

 

Under the rapidly changing business environment as set forth
above, the Target Company is facing the following major management
challenges: to improve its market share in Japan; to further
expand its business operations in overseas markets and to solve
its shortage of human resource necessary therefor; and to further
reduce its costs such as selling, general and administrative
expenses. In order to resolve these challenges and enhance its
competitive advantage and grow in the housing business, after
having carefully considered the Tender Offeror’s proposal for the
Share Exchange, the Target Company has recognized that it is
essential for the Tender Offeror and the Target Company to have a
stronger collaborative relationship and realize the following
synergies as the Panasonic Group.

 

As a result of the Transaction to Make the Target Company a Wholly
Owned Subsidiary, specifically, the Tender Offeror and the Target
Company believe that both companies will realize the following
synergies. The Tender Offeror and the Target Company believe that
these synergies would be realizable only if the Target Company
becomes a wholly owned subsidiary of the Tender Offeror (i)
through promoting business strategies that maximize the use of the
management resources of both the Tender Offeror and the Target
Company by fully integrating the capital and businesses of both
companies, and (ii) through flexible and prompt decision-making,
and innovative management of the Target Company based on a
long-term perspective that will be unaffected by its short-term
operating results after the Tender Offeror becomes the only
shareholder of the Target Company.

i)

 

It will become possible to promote the effective use of the
management resources held by the Tender Offeror, such as its brands,
thereby making it possible to not only enhance customer awareness
but also enhance the quality of services provided to customers in
the major businesses, such as the Remodeling Business, the New
Construction and Urban Development Business, the Age-Free
(elderly-care) Business, the Home Energy Management Business and the
Overseas Business. In particular, it will become possible to create
housing space having Panasonic brand characteristics through the
integration of consumer electronics equipment and housing
technologies and strengthen IoT technical developments in smart
houses (Note), based on integrated Panasonic brand strategies. In
addition, the Tender Offeror believes that, by integrating the
overseas network and global personnel held by the Tender Offeror
with the Target Company’s design and architecture know-how, the
development of overseas businesses mainly in the ASEAN region will
accelerate.

ii)

 

It will become possible to effectively utilize the Tender Offeror’s
creditworthiness, thereby making it possible to enhance the
potential for the implementation of mergers and acquisitions as well
as capital and business alliances and the potential for the
implementation of large-scale investments that were difficult for
the Target Company to implement alone.

iii)

 

It will become easy to appropriately and promptly carry out the
re-distribution of management resources across the companies of
the Panasonic Group, thereby making it possible to focus on
investment of resources into the major businesses of the Panasonic
Group.

(Note) Smart houses are houses that enable comfortable and energy-efficient
living by enhancing housing heat insulation and airtightness, and by
combining a system to “generate” and “accumulate” electricity (such
as solar power generation, household fuel cells, batteries, etc.)
and a home energy management system (HEMS), that enables the
efficient control and use of energy.
 

Furthermore, the Target Company will also be able to accelerate
the collaborative projects between the two companies in order to
implement cost reductions in indirect business units and
efficiently operate indirect business units through the
integration of management resources, reinforcing the recruitment
activities of the Panasonic Group companies for new graduates and
the specialized human resource of the Panasonic Group, and
increasing the introduction of large-scale projects utilizing the
Tender Offeror’s domestic and overseas sales channels.
Accordingly, the Tender Offeror and the Target Company believe
that both companies can maximize the group’s synergies at an early
stage.

 

With this understanding, from the beginning of November 2016, the
Tender Offeror and the Target Company held consultations many
times during which both companies shared their knowledge about the
differences in the positions of the Target Company (as a housing
builder) and the Tender Offeror (which also has a role as a
supplier of the housing equipment such as building materials, air
conditioner and lighting fixtures) in the housing business, and
challenges to strengthening their competitive power in light of
such differences, and repeatedly discussed the form that both
companies should adopt in the future. The Target Company
independently considered advantages and risks and effects on
stakeholders caused by delisting. As a result, the Target Company
and the Tender Offeror came to mutually agree that it would be
highly beneficial for them to make the Target Company a wholly
owned subsidiary of the Tender Offeror, so that the Tender Offeror
would be able to strengthen its housing businesses, a key business
field, thereby contributing to an increase in the corporate value
not only of the Target Company but also of the entire Panasonic
Group. Thus, both companies resolved at meetings of their
respective boards of directors held on December 20, 2016 to
conduct the Share Exchange, and executed the Share Exchange
Agreement. For details of the Share Exchange, please refer to the
December 20, 2016 Press Release.

 

(iii)

Background to the implementation of the Tender Offer by the Tender
Offeror after the execution of the Share Exchange Agreement

 

As set forth in “(ii) Background to the execution of the Share
Exchange Agreement” above, the Tender Offeror was, before having
proposed the Share Exchange to the Target Company, considering a
scheme, as one of the options, to deliver cash to the Target
Company’s shareholders as consideration.  At that point, however,
the scheme of delivering cash as consideration was not favorable
to the Tender Offeror in terms of taxation, because, such scheme
would not be eligible for a tax deferral (Note) upon the Target
Company’s entry into the Tender Offeror’s consolidated taxation
structure.

(Note)

Prior to the relevant amendment by the 2017 Tax Reform (i.e., the
tax reform pursuant to the Act on Partial Revision, etc. of the
Income Tax Act, etc. promulgated on March 31, 2017; hereinafter
the same shall apply), when the Target Company becomes a wholly
owned subsidiary of the Tender Offeror and enters into the Tender
Offeror’s consolidated taxation structure through the scheme where
cash is delivered to the Target Company’s shareholders as
consideration, some assets (certain fixed assets, lands,
securities, monetary claims and deferred assets) are required to
be revalued to fair market value at the time of the Target
Company’s entry into the Tender Offeror’s consolidated taxation
structure.  Resultantly, taxable gain would be recognized.  In
contrast, after the relevant amendment by the 2017 Tax Reform,
when making the Target Company a wholly owned subsidiary of the
Tender Offeror on and after October 1, 2017 through the scheme
where cash is delivered to the Target Company’s shareholders as
consideration, such revaluation of these assets to fair market
value at the time of the Target Company’s entry into the Tender
Offeror’s consolidated taxation structure will not be required,
and thus, taxable gain would not be recognized at that time to the
extent certain requirements are met.  The language “tax deferral”
used herein describes the effect that the timing of recognition of
unrealized taxable gain on the assets is to be later than the
timing when the Target Company becomes a wholly owned subsidiary
of the Tender Offeror, as explained above.

However, the 2017 Tax Reform, including an amendment to the
Corporate Tax Act to the effect that a scheme under which a party
makes another party its wholly owned subsidiary by delivering cash
to such other party’s shareholders as consideration will be
eligible for a tax deferral upon the other party’s entry into its
consolidated taxation structure, was approved in a Cabinet meeting
on December 22, 2016 after the announcement of the December 20,
2016 Press Release.  Therefore, even after the execution of the
Share Exchange Agreement, the Tender Offeror continued to consider
the positioning of the Share Exchange within the Panasonic Group’s
capital strategies and financial strategies, while assessing the
status and movements of deliberations with respect to the tax
reform.  Thereafter, the certainty of the scheme delivering cash
as consideration being eligible for the tax deferral was increased
to a satisfactory level based on relevant circumstances including
the fact that a bill for the Act on Partial Revision, etc. of the
Income Tax Act was submitted to the Diet on February 3, 2017.  In
consideration of the circumstances above, the Tender Offeror has
come to believe that, if the scheme of delivering cash as
consideration will be eligible for the tax deferral, the scheme
under the Transaction will be more favorable than the scheme under
the Share Exchange for the following reasons: (i) in terms of the
financial strategies of the Panasonic Group, by adopting the
scheme under the Transaction, the Tender Offeror will be able to
receive financial benefits such as the reduction of cost of equity
capital and enhancement of return on equity by maintaining the
capital composition of the Tender Offeror and (ii) the scheme
under the Transaction will contribute to the benefit of
shareholders of the Tender Offeror by anticipating an increase of
net income per share of Tender Offeror’s common shares (“Tender
Offeror’s Shares”) by preventing a dilution of their shares.  In
early March 2017, the Tender Offeror proposed to the Target
Company a change in scheme from the Share Exchange to the
Transaction.

 

In addition, when the Tender Offeror proposed a change in the
scheme of the Transaction to Make the Target Company a Wholly
Owned Subsidiary to the Target Company, it re-examined the amount
of consideration it could pay in terms of the Target Company’s
acceptability of the change in scheme from the Share Exchange to
the Transaction, while ensuring the reasonable ground for the
Tender Offeror’s business judgement taking into account the
financial benefit that will be received by the Panasonic Group and
the benefits of the shareholders of the Tender Offeror, in the
case of delivering cash as consideration under the new
scheme.  Upon such re-examination, the Tender Offeror has also
taken into account the prediction that by implementing the Tender
Offer with the tender offer price, on which a certain premium is
added to the valuation of the Target Company’s Shares, by giving
maximum consideration to the interest of shareholders of the
Target Company other than the Tender Offeror, it will be able to
gain the understanding and support of the Target Company’s
shareholders and further ensure the completion of the Transaction
to Make the Target Company a Wholly Owned Subsidiary.

 

After the foregoing, from the middle of March 2017 until the end
of that month, the Tender Offeror conducted due diligence on the
Target Company after obtaining the Target Company’s approval and,
from March 27, 2017 until April 10, 2017, the Tender Offeror has
continued to hold consultations and negotiations with the Target
Company with respect to the terms and conditions of the Tender
Offer, including the tender offer price per share of the Target
Company’s Shares (the “Tender Offer Price”) in the Tender
Offer.  In addition, the Tender Offeror has confirmed that, with
the promulgation of the Act on Partial Revision, etc. of the
Income Tax Act, etc. on March 31, 2017 in relation to the 2017 Tax
Reform, the scheme of delivering cash as consideration would be
eligible for the tax deferral, on the basis of consummating the
Procedures for Making the Target Company a Wholly Owned Subsidiary
on or after October 1, 2017.

 

Through the above consultations and negotiations, the Tender
Offeror has agreed, with the Target Company, on the termination of
the Share Exchange Agreement by mutual agreement and on the terms
and conditions of the Tender Offer, including the Tender Offer
Price.  As a result thereof, the Tender Offeror resolved, at the
meeting of its board of directors held today, to implement the
Tender Offer as a part of the Transaction, with the commencement
date of the Tender Offer being April 28, 2017 subject to the
Conditions of the Tender Offer being satisfied, and the Tender
Offeror and the Target Company terminated the Share Exchange
Agreement by mutual agreement as of today after each obtaining
approval at meetings of their respective boards of directors also
held today.

Contacts

Panasonic Corporation
Media Contacts:
Chieko
Gyobu (Japan)

Public Relations Department
(Tel:
+81-3-3574-5664)

Panasonic News Bureau (Japan)
(Tel:
+81-3-3542-6205)

Jim Reilly (U.S.)
(Tel:
+1-201-392-6067)

Anne Guennewig (Europe)
(Tel:
+49-611-235-457)

or
Investor
Relations Contacts:

Yasumichi Murase (Japan)
Corporate
Planning Department

(Tel: +81-6-6908-1121)
Yuko
Iwatsu (U.S.)

(Tel: +1-201-348-7000)
Noboru
Uchiyama (Europe)

(Tel: +44-1344-853135)

Read full story here

 

Category: BusinessWire, PRAsia

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