Showa Highpolymer to Become Fully Owned Showa Denko K.K. (SDK) Subsidiary.Tokyo, Japan, May 16, 2006 - (JCN Newswire) - Showa Denko K.K. (SDK SDK - Software Development Kit SDK - Samahang Demokratiko Ng Kabataan (Philippines) SDK - Samurai Deeper Kyo (anime) SDK - Sandakan, Sabah, Malaysia (Airport Code) SDK - Sardaukar (Team Fortress 2 Clan) SDK - Schutzgemeinschaft Der Kleinaktionäre (German: shareholder association) SDK - Sekt, Dip and Knowledge Web SDK - Self-Development Kit SDK - ShrinkIt Disk (compressed disk image file format/extension) SDK - Skin Decontaminating Kit; TSE: 4004) and its consolidated subsidiary Showa Highpolymer Co., Ltd. (SHP SHP In currencies, this is the abbreviation for the St. Helana Pound.Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. See also: Currency, FOREX, Hard Currency, Money ) decided at their respective board meetings today that SHP
would become SDK's fully owned subsidiary through a share exchange
arrangement.Under the Passion Project, the new three-year business plan that started this year, SDK is laying the groundwork for long-term sustainable growth by working to accelerate the development of new "growth driver" businesses, expand profit continuously, and further improve financial strength. As part of the plan, SDK classifies its specialty polymers business in the category of "base businesses." The Company is seeking to strengthen earning power of the business by implementing various measures, including reorganization of subsidiaries and affiliates. SHP, a key player in SDK's specialty polymers operations, has continued to grow by fully utilizing its technical expertise accumulated throughout its history of 70 years and developing environment-friendly products that meet customer requirements. In particular, SHP has become a leader in the domestic markets for vinyl ester, biodegradable plastics, and emulsion. However, in order to ensure further growth of SHP amid intensifying competition and the diversification of customer needs in the specialty polymers market, SDK and SHP have agreed that SHP's business should be reinforced with SDK's full support, by making SHP a fully owned subsidiary of SDK. Specifically, the new setup will enable SHP to take advantage of SDK Group's overall resources and realize technical/marketing synergies with greater speed. SHP will maintain its name and continue marketing to fully utilize its established brands. The new setup will lead to further enhancement of SDK Group's corporate value, helping the Group better contribute to the sound growth of society. 1. Schedule SHP will hold a regular shareholders' meeting on June 29, 2006 for approval of the share exchange agreement. On August 28, 2006, the listing of SHP shares will be terminated. On September 1, 2006, the share exchange will take effect. Note: In accordance with Clause 3, Article 796, of the Commercial Code (simplified procedure for share exchange), SDK will not refer the issue to its shareholders' meeting. 2. Exchange Ratio For each share of SHP's common stock, 0.90 shares of SDK's common stock will be allocated. As for the 20,489,066 shares of SHP's common stock owned by SDK, there will be no allocation of SDK's common stock. The above ratio was decided based on calculations by third parties and after consultation between SDK and SHP. SDK appointed Mizuho Securities Co., Ltd. (Mizuho) and SHP appointed KPMG FAS for the calculation. Mizuho's calculation was based on the market price method, the similar-firms comparison method and a discounted cash flow (DCF DCF - Dansk Cricket Forbund (Denmark) DCF - Dansk Cyklist Forbund DCF - Data Capture Facility DCF - Data Clarification Form DCF - Data Collection Form DCF - Data Communication Facility DCF - Data Communication Function (ANSI) DCF - Data Correction Form DCF - Data Count Field DCF - Degradation Conversion Factor DCF - Department of Children and Families DCF - Design rule for Camera File system (JEITA) DCF - Developing Country Fund) analysis. Meanwhile, KPMG FAS's calculation was conducted using DCF analysis, the market price method, the price multiple method, and the modified net asset method. As a result of this share exchange, SDK will issue 30,551,428 new shares of its common stock in the allocation. 3. Outline of Showa Highpolymer
Company name: Showa Highpolymer Co., Ltd.
Scope of business: Production and sale of plastics (unsaturated polyester
resins, synthetic resin emulsions, industrial phenolic
resins, etc.) and secondary products thereof
Establishment: November 30, 1937
Head office: 20, Kanda-Nishiki-cho 3-chome, Chiyoda-ku, Tokyo
President: Kunio Kashiwada
Capital: 10,951 million yen (as of Mar. 31, '05)
Shares issued: 54,435,098 (as of Mar. 31, '05)
Stckhldrs' equity: 25,072 million yen (as of Mar. 31, '05)
Total assets: 36,127 million yen (as of Mar. 31, '05)
Accounting term: Ending March 31
No. of employees: 498 (as of Mar. 31, '05)
Major customers: Sato Shoko Co., Ltd; Shoko Co., Ltd.;
Major shareholders: Showa Denko: 37.6%
The Master Trust Bank of Japan: 2.4%
Shoko: 2.2%
Sumitomo Mutual Life Insurance: 1.8%
Shinsei Bank: 1.6% (as of Mar. 31, '05)
Main banks: Mizuho Corporate Bank, Sumitomo Mitsui Banking
Relationship: Showa Denko currently owns 37.6% of Showa
Highpolymer's outstanding shares.
2 employees of Showa Denko are concurrently serving as
auditors of Showa Highpolymer.
Showa Denko sells its products to Showa Highpolymer an
purchases Showa Highpolymer's products, and vice
versa.
3. Financial Results for the Past Three Years
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(millions of yen, except for per-share values)
Showa Denko K.K. Showa Highpolymer Co., Ltd.
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Fiscal year 2003 2004 2005 2003 2004 2005
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Net sales 461,994 525,801 568,086 26,625 27,135 28,085
Op. income 22,911 44,074 36,014 1,061 1,001 729
Ord. income 12,967 35,200 34,950 1,104 1,066 665
Net income 5,020 9,602 956 333 491 347
Net income/share 4.41 8.42 0.84 6.14 9.04 6.39
Div./share year 2.00 3.00 3.00 8.00 8.00 8.00
Shlds'eq./shre 5.92 168.83 176.21 452.29 455.84 461.46
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4. Accounting Method The transaction is classified as "Transactions under joint control, etc." The transaction will not have material influence on SDK's profit and loss situation. 5. After Share Exchange There will be no change in SHP's company name, scope of business, head office location or president. SDK's capital will not change. However, SDK's capital surplus will increase by the amount equal to the change of paid-up capital prescribed in Article 68, Paragraph 1, Item 1(b) of Ordinance for Corporate Calculation. Since SHP is already a consolidated subsidiary of SDK, SDK's consolidated performance for fiscal 2006 will not be influenced materially by SHP becoming SDK's fully owned subsidiary. About Showa Denko K.K. Showa Denko ('SDK'/TSE: 4004/OTC: SHWDF) is a major manufacturer and marketer of chemical products serving a wide range of fields ranging from heavy industry to the electronic and computer industries. SDK makes petrochemicals (ethylene, propylene), aluminum products (ingots, rods) electronic equipment (hard disks for computers), and inorganic materials (ceramics, carbons). The company has overseas operations and a joint venture with Netherlands-based Montell and Nippon Petrochemicals to make and market polypropylenes. In March 2001, SDK merged with Showa Denko Aluminum Corporation to strengthen the high-value-added fabricated aluminum products operations, and is today developing next-generation optical communications-use wafers. For more information, please visit www.sdk.co.jp. Source: Showa Denko K.K. Contact: Showa Denko K.K. Nobuhiro Kato nobuhiro_kato@sdk.co.jp +81-3-5470-3235 Copyright [c] 2006 JCN Newswire. All rights reserved. A division of Japan Corporate News Network K.K. |
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