Panasonic Corporation (NYSE:PC)(TOKYO:6752)("Panasonic") and
Panasonic Electric Works Co., Ltd. (TOKYO:6991)("Panasonic Electric
Works") resolved to conduct a share exchange (the "Share Exchange")
in order to make Panasonic a wholly-owing parent company and
Panasonic Electric Works a wholly-owned subsidiary at a meeting of
each respective company's Board of Directors held today, and a
share exchange agreement (the "Share Exchange Agreement") has been
executed between Panasonic and Panasonic Electric Works.
The Share Exchange is scheduled to be implemented after the
Share Exchange Agreement is approved by resolution of an
extraordinary general meeting of shareholders of Panasonic Electric
Works that is scheduled to be held on March 2, 2011. Also,
Panasonic plans to implement the Share Exchange in the form of a
summary share exchange (kani kabushiki kokan) pursuant to the
provisions of Article 796, Paragraph 3 of the Companies Act,
without obtaining the approval by resolution of the general meeting
of its own shareholders.
Also, shares of Panasonic Electric Works are scheduled to be
delisted as of March 29, 2011 (the last trading date of the shares
is scheduled to be March 28, 2011) which is prior to the scheduled
effective date (April 1, 2011) of the Share Exchange.
1. Purpose of Making Panasonic Electric
Works a Wholly-owned Subsidiary of Panasonic through the Share
Exchange
As described in the press release, "Panasonic Announces
Commencement of Tender Offer for Shares of Common Stock of
Panasonic Electric Works" dated July 29, 2010, and the press
release regarding the amendment to the prior press release,
'Panasonic Announces Additional Information regarding "Commencement
of Tender Offer for Shares of Common Stock of Panasonic Electric
Works"' dated August 20, 2010, (collectively the "Press Releases of
the Tender Offer"), Panasonic conducted a tender offer (the "Tender
Offer") targeting all shares of Panasonic Electric Works from
August 23, 2010, to October 6, 2010, in order to make Panasonic
Electric Works its wholly-owned subsidiary. As a result, as of
today, Panasonic holds 621,037,219 shares of Panasonic Electric
Works, which equates to 82.69% of the shareholding percentage of
issued shares of Panasonic Electric Works (751,074,788 shares as of
September 30, 2010).
As described in the Press Releases of the Tender Offer,
Panasonic planned to make Panasonic Electric Works its wholly-owned
subsidiary. Since Panasonic failed to acquire all shares of
Panasonic Electric Works (excluding treasury shares held by
Panasonic Electric Works) through the Tender Offer, Panasonic and
Panasonic Electric Works have decided to make Panasonic Electric
Works a wholly-owned subsidiary of Panasonic through the Share
Exchange.
The purposes of making Panasonic Electric Works a wholly-owned
subsidiary of Panasonic have already been explained in the Press
Releases of the Tender Offer and the press release released by
Panasonic Electric Works titled "Announcement Concerning Expression
of Opinion in Favor of Tender Offer by Panasonic Corporation, the
Controlling Shareholder of the Company, for the Common Stock of the
Company and Recommendation to Tender Shares" dated July 29, 2010,
etc., and the details thereof are as described below.
Since its establishment in 1918, Panasonic has been conducting
business broadly in the electronics industry, guided by 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." On the other hand, Panasonic Electric Works spun off
into a separate company from Panasonic in 1935. Under the basic
philosophy shared with Panasonic, Panasonic Electric Works has been
developing its activities, such as manufacturing, sales,
maintenance and services, in the Electrical Construction Materials
Business Unit (lighting products and information equipment and
wiring products), the Home Appliances Business Unit (personal-care
products, health products and comfortable-life products), the
Building Products Business Unit (water-related equipment, modular
kitchen systems, interior furnishing materials and exterior
furnishing materials), the Electronic Materials Business Unit
(circuit board materials, semiconductor encapsulation materials and
plastic molding compounds), the Automation Controls Business Unit
(automation control components and automation control system
devices) and the Other Business Units.
Under these circumstances, Panasonic made Panasonic Electric
Works its consolidated subsidiary through the tender offer of
shares of Panasonic Electric Works that was conducted in 2004.
Thereafter, Panasonic has proceeded with construction of the
optimum structure from the customers' point of view, and has also
been involved in co-development of products from the planning
stage.
Furthermore, Panasonic made SANYO Electric Co., Ltd. ("SANYO")
its consolidated subsidiary in December 2009, and, as a result, the
Panasonic Group has become a company group with further reach and
expertise in the electronics industry with 6 segments: Digital AVC
Networks, Home Appliances, PEW and PanaHome, Components and
Devices, and Other, as well as SANYO.
On January 8, 2010, Panasonic announced the Annual Management
Policy Fiscal 2011 for the new Panasonic Group, and set out the
vision of becoming the "No. 1 Green Innovation Company in the
Electronics Industry" towards 2018, the 100th anniversary of its
foundation. Furthermore, on May 7, 2010, Panasonic announced its
three-year midterm management plan called "Green Transformation
2012" ("GT12"), which is the first step toward realizing the above
vision.
Under GT12, the entire Panasonic Group will make group-wide
efforts to shift its paradigm for growth and to lay a foundation to
become a Green Innovation Company, while integrating its
contribution to the environment and business growth. By the time
this plan is completed, the Panasonic Group should be a company
filled with significant growth potential. In particular, Panasonic
will drastically shift its management resources to energy systems,
heating/refrigeration/air conditioning, network AV, healthcare,
security, and LED, as the group's 6 key business areas. With regard
to these business areas, Panasonic expects energy systems,
heating/refrigeration/air conditioning, and network AV to be the
core businesses of the group and to drive sales and revenues of all
group companies, and Panasonic intends to significantly develop the
3 business areas of healthcare, security, and LED as the
next-generation key businesses. Furthermore, with those businesses
as the core of Panasonic's businesses, the Panasonic Group will
pursue a form of growth unique to it, through the provision of
"comprehensive solutions for the entire home, the entire building,
and the entire town."
Also, Panasonic Electric Works, sharing the vision as the
Panasonic Group and the concept of GT12, formulated its midterm
management plan from fiscal 2011. In that plan, Panasonic Electric
Works set as its goal for the 100th anniversary that of being a
"Leading global company in Asia combining comfort and
eco-friendliness." As the first stage of efforts, Panasonic
Electric Works will work on "Penetration into AC&I (Asia, China
& India) as priority areas" and "Development of new growth
businesses." Specifically, in order to realize "Penetration into
AC&I as priority areas," Panasonic Electric Works aims to
expand business vigorously in the high-volume segments in those
areas, as well as to promote ongoing efforts to develop products
dovetailing with local needs, which efforts can be carried out
independently within each area, and aims to strengthen the
competitiveness of its products, to expand and improve production
sites and to reorganize its sales operation structure. Moreover, in
order to realize the "Development of new growth businesses,"
Panasonic Electric Works intends to create new value and to promote
the development of new growth businesses by formidably leading in
the new markets, represented by the LED Lighting Products Business
and the Energy Management Business through its mobilization of the
strengths of the Panasonic Electric Works group: the ability to
come up with creative ideas and suggestions required to realize
"comfort," and the technological ability required to realize
"eco-friendliness."
Although Panasonic and Panasonic Electric Works have already
shared a management strategy as group companies and have
implemented various measures, the business environment surrounding
the Panasonic Group continues to change dramatically and rapidly.
While business expansion opportunities have been presented by the
rapidly expanding environment-related and energy-related markets
and the burgeoning emerging markets, competition with Korean,
Taiwanese and Chinese companies as well as Japanese, U.S. and
European companies, etc. has intensified not only in the Digital
AVC Networks segment, but also in the fields of rechargeable
battery, solar cell and electric vehicle-related business, etc. It
has become difficult for companies to prevail over the global
competition in the expanding market without speeding up the
strategy execution and implementing all measures to demonstrate
further group-wide potential.
In such circumstances, taking the proposal of Panasonic as an
opportunity, Panasonic and Panasonic Electric Works have, since
around the end of June 2010, continuously discussed and considered
various measures to further increase the corporate value of both
companies. As a result, Panasonic and Panasonic Electric Works came
to the conclusion that realizing the acceleration of
decision-making and maximization of the group synergies by making
Panasonic Electric Works a wholly-owned subsidiary of Panasonic
through the Tender Offer and transactions thereafter and
accelerating efforts toward becoming the "No. 1 Green Innovation
Company in the Electronics Industry" are significantly beneficial,
not only to expand the corporate value of Panasonic Electric Works
but also to expand the corporate value of the entire Panasonic
Group. Along with such discussions and considerations, Panasonic
has been discussing and considering with SANYO, and has also come
to the conclusion that making SANYO a wholly-owned subsidiary of
Panasonic is highly beneficial not only to expand the corporate
value of SANYO but also to expand the corporate value of the entire
Panasonic Group.
Furthermore, the three companies - Panasonic, Panasonic Electric
Works and SANYO - resolved, at their respective Board of Directors
meetings held on July 29, 2010, to pursue a plan of Panasonic's
acquisition of all shares of Panasonic Electric Works and SANYO in
order to make them wholly-owned subsidiaries of Panasonic (the
"Acquisition of All Shares of the Subsidiaries") by around April,
2011 and released the "Announcement of the Agreement toward
Panasonic's Acquisition of All Shares of Panasonic Electric Works
and SANYO."
In future, Panasonic, Panasonic Electric Works and SANYO will
pursue the establishment of the new Panasonic Group, under which
the three companies will be genuinely integrated, and will make
efforts to (i) maximize value creation by strengthening contacts
with customers, (ii) realize speedy and lean management, and (iii)
accelerate growth businesses by boldly shifting management
resources.
Furthermore, in order to realize these objectives, the Panasonic
Group's business organization is scheduled to be restructured by
around January 2012. From the perspective of "maximization of
customer value," the basic policy of such restructuring is to
integrate and reorganize the business and marketing divisions of
the three companies into three business sectors: "Consumer,"
"Components and Devices" and "Solutions," and to design optimal
business models that are most suitable for the character of each
business. Panasonic will make efforts to establish a business
organization under which it can effectively compete against global
competitors in each business and in each industry.
The direction of the reorganization of each business sector will
be as follows:
- Consumer business sector:
The Panasonic Group will reorganize its marketing function on a
global basis. Under the reorganization, the Panasonic Group will
enhance the function of its frontline business and accelerate the
creation of customer-oriented products. Also, the Panasonic Group
will work to strengthen, among others, its overseas consumer
business by strategically distributing its marketing resources in
Japan and overseas.
- Components and Devices business sector:
The Panasonic Group will strengthen the cooperation among the
development, production and sales functions for each component and
device having a common business model. By combining marketing and
technology, the Panasonic Group will strengthen its
"proposal"-style business, which foresees the potential needs of
customers and aim to expand the business as an independent business
that does not rely on internal needs. Particularly in this business
sector, the Panasonic Group will continue to make maximum use of
the strengths of SANYO, such as its rechargeable batteries business
and solar business, as well as its customer network.
- Solutions business sector:
The Panasonic Group will unify the development, production and
sales functions for each solution for business customers. The
Panasonic Group aims to offer the most suitable products, services
and solutions as quickly as possible, grasping customers' needs in
as timely a fashion as possible. In addition, the "comprehensive
solutions for the entire home, the entire building and the entire
town" that encompass these solutions will be accelerated.
Particularly in this business sector, the Panasonic Group will
continue to make maximum use of the strength and customer network
of Panasonic Electric Works.
In addition to the reorganization, the head office will aim for
a "lean and speedy" global head office by strengthening its
strategic functions, while integrating and streamlining the three
companies' organizations.
The details of the reorganization will be announced as soon as
they are determined.
Further, together with this reorganization, Panasonic Group will
consider integrating "SANYO" brands, in principle, into "Panasonic"
in the future. However, "SANYO" will continue to be partially
utilized, depending on the particular business or region.
Panasonic believes that the Acquisitions of All Shares of the
Subsidiaries and business reorganization mentioned above will
promote the integration of the three companies' advantages and the
"proposal" capabilities for "comprehensive solutions," and will
enable a rapid increase in global competitiveness especially in the
"energy systems," "heating/refrigeration/air conditioning" and
"network AV" business, which are indicated in the GT12 as core
businesses to lead sales and profits of the entire group companies.
Also, in each business such as "healthcare," "security," and "LED,"
which is positioned as the "key business for the next generation",
Panasonic will make efforts to accelerate the growth of such
business by combining the capacities of the three companies for
research and development as well as market development.
Additionally, Panasonic intends to realize further reinforcement
of management structure and cost competitiveness through business
integration and unification of the business sites of the three
companies, and through optimizing and streamlining the head office
organization.
Through these measures, Panasonic aims to ensure the achievement
of the targets of the midterm management plan, GT12, which
Panasonic announced on May 7, 2010: "10 trillion yen in sales, 5
percent or more in operating profit to sales ratio, 10 percent in
ROE, a three-year accumulative total of over 800 billion yen in
free cash flow, and 50 million ton reduction in CO2 emissions
compared to the estimated amount of emissions (using the fiscal
year ended March 2006 as the base)" targeted for the fiscal year
ending March 2013, and further aims to exceed these targets.
2. Outline of the Share
Exchange
(1) Schedule for the Share Exchange
Date on which the execution of the
ShareExchange Agreement is resolved at the Boardof Directors
meeting(Panasonic and Panasonic Electric Works,respectively)
Tuesday, December 21, 2010
Date on which the Share Exchange
Agreementis executed(Panasonic and Panasonic Electric
Works,respectively)
Tuesday, December 21, 2010
Date on which the public notice of the
recorddate for the extraordinary general meeting ofshareholders
will be given(Panasonic Electric Works)
Wednesday, December 22, 2010 (scheduled)
Record date for the extraordinary
generalmeeting of shareholders (Panasonic ElectricWorks)
Wednesday, January 12, 2011 (scheduled)
Date on which the extraordinary
generalmeeting of shareholders to approve the ShareExchange
Agreement will be held (PanasonicElectric Works)
Wednesday, March 2, 2011 (scheduled) Last trading date (Panasonic
Electric Works) Monday, March 28, 2011 (scheduled) Delisting date
(Panasonic Electric Works) Tuesday, March 29, 2011 (scheduled)
Scheduled date of the Share
Exchange(effective date)
Friday, April 1, 2011 (scheduled) (Note 1) Panasonic
will implement the Share Exchange in the form of a summary share
exchange pursuant to the provisions of Article 796, Paragraph 3 of
the Companies Act, without obtaining the approval by resolution of
the general meeting of shareholders. (Note 2) The scheduled date of
the Share Exchange (effective date) may be subject to change upon
the agreement between Panasonic and Panasonic Electric Works.
(2) Method of the Share Exchange
In the Share Exchange, Panasonic shall become the wholly-owning
parent company in share exchange and Panasonic Electric Works shall
become the wholly-owned subsidiary in share exchange. Panasonic
plans to implement the Share Exchange in the form of a summary
share exchange pursuant to the provisions of Article 796, Paragraph
3 of the Companies Act, without obtaining the approval by
resolution of the general meeting of shareholders. Panasonic
Electric Works plans to implement the Share Exchange after the
Share Exchange Agreement is approved by resolution of the
extraordinary general meeting of shareholders that is scheduled to
be held on March 2, 2011.
(3) Allotment in the Share Exchange
Company name
Panasonic Corporation(wholly-owning
parentcompany in share exchange)
Panasonic Electric WorksCo.,
Ltd.(wholly-owned subsidiary inshare exchange)
Contents of allotment in theShare
Exchange
1 0.925
Number of shares to bedelivered upon the
ShareExchange
Common shares: 109,549,152 shares (scheduled) (Note 1) Share
allotment ratio 0.925 shares of Panasonic will be allotted and
delivered in exchange for each share of Panasonic Electric Works;
provided, however, that no shares will be allotted in the Share
Exchange for the shares of Panasonic Electric Works held by
Panasonic (621,037,219 shares as of today). (Note 2) Number of
shares to be delivered upon the Share Exchange Upon the Share
Exchange, Panasonic shall deliver the number of shares of Panasonic
calculated by multiplying the total number of shares of Panasonic
Electric Works held by the shareholders of Panasonic Electric Works
(excluding Panasonic) at the time immediately preceding the time
Panasonic acquires all shares of Panasonic Electric Works
(excluding shares of Panasonic Electric Works held by Panasonic)
through the Share Exchange (the "Base Time") by 0.925 to such
shareholders of Panasonic Electric Works in exchange for the shares
of Panasonic Electric Works held by such shareholders. In
accordance with a resolution of the meeting of the Board of
Directors of Panasonic Electric Works that will be held by the day
immediately preceding the effective date of the Share Exchange,
Panasonic Electric Works will cancel, by the Base Time, all of its
treasury shares held by Panasonic Electric Works and those to be
held by Panasonic Electric Works by the Base Time (including the
treasury shares to be acquired through the share purchase in
response to the exercise of the dissenters' appraisal right
stipulated in Article 785, Paragraph 1 of the Companies Act in
connection with the Share Exchange). Moreover, all of the shares to
be delivered by Panasonic are scheduled to be sourced from the
treasury shares held by Panasonic, and Panasonic does not plan to
issue new shares upon the allotment in the Share Exchange. In
addition, the number of shares to be delivered by Panasonic may be
subject to change in the future due to reasons such as the
cancellation of the treasury shares by Panasonic Electric Works.
(Note 3)
Treatment of shares constituting less than
one unit (tangen miman kabushiki)
The shareholders who will hold shares of Panasonic constituting
less than one unit upon the Share Exchange will be entitled to use
the following systems concerning shares of Panasonic. Shareholders
cannot sell shares constituting less than one unit in the financial
instruments exchange market. (i)
Further purchase (kaimashi) of shares
constituting less than one unit (purchase to reach a total of 100
shares)
A system whereby holders of shares of
Panasonic constituting less than one unit may purchase from
Panasonic the number of shares that will achieve a total of one
unit (tangen) together with the number of shares constituting less
than one unit held by such shareholder.
(ii)
Purchase (kaitori) by Panasonic of shares
constituting less than one unit (sale by a shareholder of shares
constituting less than one unit)
A system whereby holders of shares of Panasonic constituting less
than one unit may request Panasonic to purchase the shares
constituting less than one unit held by such shareholder. (Note 4)
Treatment of any fractions of less than one share
With respect to the shareholders of
Panasonic Electric Works who will receive the allotment of shares
including fractions of less than one share of Panasonic upon the
Share Exchange, Panasonic will pay cash to each of such
shareholders in proportion to the value of such fractions of less
than one share, pursuant to the provisions of Article 234 of the
Companies Act and other relevant laws and regulations.
(4) Treatment of share options and bonds with share options in
relation to the Share Exchange
Not applicable
3. Basis for Calculation of the
Allotment Concerning the Share Exchange
(1) Basis of Calculation
In order to ensure the fairness and the appropriateness of the
share allotment ratio described in 2.(3) "Allotment in the Share
Exchange" above (the "Share Exchange Ratio"), Panasonic and
Panasonic Electric Works, respectively and separately, decided to
request a third-party valuation institution independent of both
companies to calculate the share exchange ratio. Panasonic
appointed Nomura Securities Co., Ltd. ("Nomura Securities") as the
third-party valuation institution, and Panasonic Electric Works
appointed Daiwa Securities Capital Markets Co. Ltd. ("Daiwa
Securities Capital Markets"), as the third-party valuation
institution.
In the valuation of Panasonic, as shares of Panasonic are listed
on the financial instruments exchange and a market share price
exists, Nomura Securities adopted the average market price analysis
for calculation (in consideration of various conditions, with
December 20, 2010, which is the calculation base date, being the
base date, the analysis was based on the respective average closing
share prices for the period from October 8, 2010 (the business day
immediately following the day on which Panasonic released the press
release titled "Panasonic Announces Withdrawal of Shelf
Registration in Japan for Future Equity Offerings") to the
calculation base date; the period from November 1, 2010 (the
business day immediately following the day on which Panasonic
released its "Consolidated Financial Results for the Second Quarter
of Fiscal Year ending March 2011") to the calculation base date;
the most recent 1 month-period from November 22, 2010 to the
calculation base date; the 5 business days from December 14, 2010
to the calculation base date; and the closing share price on the
base date of the shares of Panasonic on the first section of the
Tokyo Stock Exchange).
In the valuation of Panasonic Electric Works, as shares of
Panasonic Electric Works are listed on the financial instruments
exchange and a market share price exists, the average market price
analysis (in consideration of various conditions, with December 20,
2010, which is the calculation base date, being the base date, the
analysis was based on the respective average closing share prices
for the period from October 8, 2010 (the business day immediately
following the day on which Panasonic released the press release
titled "Panasonic Announces Withdrawal of Shelf Registration in
Japan for Future Equity Offerings") to the calculation base date;
the period from November 1, 2010 (the business day immediately
following the day on which Panasonic released its "Consolidated
Financial Results for the Second Quarter of Fiscal Year ending
March 2011") to the calculation base date; the most recent 1
month-period from November 22, 2010 to the calculation base date;
the 5 business days from December 14, 2010 to the calculation base
date; and the closing share price on the base date of the shares of
Panasonic Electric Works on the first section of the Tokyo Stock
Exchange) was adopted for calculation. In addition, as there are
several comparable listed companies for which comparison to
Panasonic Electric Works is possible, and analogical inference of
share value is possible through the comparable company analysis,
the comparable company analysis was adopted for the calculation.
Furthermore, in order to take into account the state of future
business operations in the assessment, the discounted cash flow
analysis (the "DCF Analysis") was adopted for the calculation.
The following shows the assessment ranges when the share value
per share of Panasonic is set at 1.
Assessment method Calculation results
ofshare exchange ratio Average market price analysis 0.909-0.942
Comparable company analysis 0.363-0.904 DCF Analysis
0.939-1.227
Analyzing the facts, various conditions and the results of the
Tender Offer conducted prior to the Share Exchange, Nomura
Securities submitted to Panasonic the written opinion (fairness
opinion) dated December 21, 2010, stating that the Share Exchange
Ratio is proper for Panasonic from a financial viewpoint.
On the other hand, in the valuation of Panasonic and Panasonic
Electric Works, Daiwa Securities Capital Markets, after analyzing
the facts, various conditions, results, etc. of the Tender Offer
that was conducted prior to the Share Exchange, adopted the market
price analysis for calculation (in consideration of various
conditions, with December 20, 2010 being the calculation base date,
the analysis was based on the respective average closing share
prices for the period from July 30, 2010 (the business day
immediately following the announcement day of the Tender Offer) to
the calculation base date; the period from October 8, 2010 (the
business day immediately following the day on which the result of
the Tender Offer was announced) to the calculation base date; the
most recent 1 month-period from November 22, 2010 to the
calculation base date; the period from December 1, 2010 (the
business day immediately following the day on which SANYO released
the press release titled "Amendments to the Purchase Agreement
regarding the Transfer of Stock and Loan Receivables of Subsidiary
(SANYO Semiconductor Co., Ltd.)") to the calculation base date; and
the 5 business days from December 14, 2010 to the calculation base
date of the shares of Panasonic and Panasonic Electric Works on the
first section of the Tokyo Stock Exchange), as shares of both
companies are listed on the financial instruments exchange and a
market share price exists. In addition, as there are several listed
companies with businesses similar to each of the companies and
analogical inference of share value is possible through the
comparable company analysis, the comparable company analysis was
adopted for the calculation. Furthermore, in order to take into
account the state of future business operations in the assessment,
the DCF Analysis was adopted for the calculation. The profit
planning of Panasonic Electric Works, which was used as the premise
of the DCF analysis by Daiwa Securities Capital Markets, is based
on the profit planning that had been used as the premise of the
calculation at the time of the Tender Offer.
The following shows the assessment ranges when the share value
per share of Panasonic is set at 1.
Assessment method Calculation results
ofshare exchange ratio Market price analysis 0.910-0.954 Comparable
company analysis 0.689-0.913 DCF Analysis 0.660-0.872
As described in 3.(5) "Measures to Ensure the Fairness" below,
Panasonic Electric Works received the written opinion (fairness
opinion) from Daiwa Securities Capital Markets on December 21,
2010, stating that the Share Exchange Ratio is fair from a
financial point of view to the holders of Panasonic Electric Works
shares other than the controlling shareholders, etc. of Panasonic
Electric Works (meaning "Controlling Shareholders and other parties
set forth in the Enforcement Regulations" provided for in Article
441-2 of the Securities Listing Regulations of Tokyo Stock Exchange
and Article 436-3 of the Ordinance for Enforcement of the
same).
(2) Process of Calculation
Panasonic and Panasonic Electric Works have referred to and
carefully reviewed the calculation results of the share exchange
ratio submitted by their respective third-party valuation
institutions , and continuously negotiated and consulted with each
other on the valuation of shares of Panasonic Electric Works based
on the same price as the purchase price of the Tender Offer, taking
into account various conditions and results of the Tender Offer
conducted prior to the Share Exchange, market share price level of
shares of Panasonic and other various factors. As a result,
Panasonic and Panasonic Electric Works came to a decision that the
Share Exchange Ratio is proper and does not undermine the interests
of their respective shareholders. Therefore, Panasonic and
Panasonic Electric Works executed the share exchange agreement
between themselves based on the resolutions of the Board of
Directors meetings of Panasonic and Panasonic Electric Works held
today with respect to the implementation of the Share Exchange
based on the Share Exchange Ratio.
In accordance with the Share Exchange Agreement, the Share
Exchange Ratio may be subject to change upon the consultation
between Panasonic and Panasonic Electric Works in the case of any
material changes to the conditions that form the basis of the
calculation.
(3) Relationship with Valuation Institution
All of Nomura Securities, which is acting as a third-party
valuation institution of Panasonic, and Daiwa Securities Capital
Markets, which is acting as a third-party valuation institution of
Panasonic Electric Works, are valuation institutions independent of
Panasonic and Panasonic Electric Works, are not related parties,
and do not have any material interest to be noted in connection
with the Share Exchange.
(4) Prospects for Delisting and Reasons Therefore
Upon the Share Exchange, Panasonic Electric Works will become
the wholly-owned subsidiary of Panasonic on the effective date
(scheduled to be April 1, 2011), and shares of Panasonic Electric
Works will be delisted as of March 29, 2011 (the last trading date
will be March 28, 2011). After the delisting, it will be impossible
to trade shares of Panasonic Electric Works on the Tokyo Stock
Exchange and the Osaka Securities Exchange.
Even after the delisting of shares of Panasonic Electric Works,
shares of Panasonic that will be allotted to each of the
shareholders of Panasonic Electric Works upon the Share Exchange
will remain listed on the Tokyo Stock Exchange, the Osaka
Securities Exchange and the Nagoya Stock Exchange, and they will be
tradable on the financial instruments exchange markets on and after
the effective date of the Share Exchange. Therefore, Panasonic and
Panasonic Electric Works believe that for each shareholder of
Panasonic Electric Works who holds not less than 109 shares of
Panasonic Electric Works and will receive, upon the Share Exchange,
an allotment of not less than 100 shares of Panasonic, which is the
number of shares constituting one unit of Panasonic, liquidity of
shares will continue to be provided.
On the other hand, each shareholder of Panasonic Electric Works
who holds less than 109 shares of Panasonic Electric Works will
receive the allotment of shares of Panasonic in the number less
than 100 shares, which is the number of shares constituting one
unit of Panasonic. Although shareholders cannot sell such shares
constituting less than one unit on the financial instruments
exchange markets, each shareholder who will hold shares
constituting less than one unit may request Panasonic to purchase
the shares constituting less than one unit held by such
shareholder. In addition, such shareholders may purchase from
Panasonic the number of shares that will achieve a total of one
unit together with the number of shares constituting less than one
unit held by themselves. For the details of such treatment, see
(Note 3) "Treatment of shares constituting less than one unit" in
2. (3) above. For the details of the treatment of any fractions in
the case where the number of shares of Panasonic to be delivered
upon the Share Exchange includes any fractions of less than one
share, see (Note 4) "Treatment of any fractions of less than one
share" in 2. (3) above.
(5) Measures to Ensure Fairness
Since Panasonic already owns 82.69% of the number of issued
shares of Panasonic Electric Works, in implementing the Share
Exchange, it requested Nomura Securities, acting as a third-party
valuation institution, to calculate the share exchange ratio in
order to ensure the fairness of the share exchange ratio in the
Share Exchange. Referring to such calculation results, Panasonic
negotiated and consulted with Panasonic Electric Works, and
resolved to implement the Share Exchange based on the share
exchange ratio at the Board of Directors meeting held today.
Panasonic received the written opinion (fairness opinion) dated
December 21, 2010, from Nomura Securities, stating that the Share
Exchange Ratio is proper for Panasonic from a financial
viewpoint.
On the other hand, Panasonic Electric Works, in implementing the
Share Exchange, requested Daiwa Securities Capital Markets, acting
as a third-party valuation institution, to calculate the Share
Exchange Ratio in order to ensure the fairness of the Share
Exchange Ratio in the Share Exchange. Referring to such calculation
results, Panasonic Electric Works negotiated and consulted with
Panasonic, and resolved to implement the Share Exchange based on
the Share Exchange Ratio at the Board of Directors meeting held
today.
Panasonic Electric Works received a share exchange ratio
calculation report dated December 21 from Daiwa Securities Capital
Markets, which was subject to certain assumptions and reservations.
In addition, on December 21, 2010, as an opinion that shows the
view that the Share Exchange Ratio is not disadvantageous to the
minority shareholders, the Board of Directors of Panasonic Electric
Works received from Daiwa Securities Capital Market a written
opinion (fairness opinion) that, subject to certain assumptions and
reservations, the Share Exchange Ratio is fair from a financial
point of view to the holders of Panasonic Electric Works shares
other than the controlling shareholders, etc. of Panasonic Electric
Works (meaning "Controlling Shareholders and other parties set
forth in the Enforcement Regulations" provided for in Article 441-2
of the Securities Listing Regulations of Tokyo Stock Exchange and
Article 436-3 of the Ordinance for Enforcement of the same).
Panasonic Electric Works selected Kikkawa Law Offices as its
legal advisor, and received legal advice on methods, processes,
etc. of making decisions by the Board of Directors including
various procedures for the Share Exchange from the legal
advisor.
(6) Measures to Avoid Conflicts of Interest
In light of the above-mentioned share exchange ratio calculation
report and written opinion (fairness opinion) provided by Daiwa
Securities Capital Markets, and the above-mentioned legal advice,
etc. given by Kikkawa Law Offices, Panasonic Electric Works
carefully reviewed the terms and conditions regarding the Share
Exchange at the Board of Directors' meeting held today. As a
result, Panasonic Electric Works has judged that (i) the Share
Exchange would contribute to enhance corporate value of Panasonic
Electric Works and (ii) the terms and conditions of the Share
Exchange were reasonable, and the resolution to execute the Share
Exchange Agreement was passed unanimously by all directors
participating in the resolution of the meeting. In addition, all
corporate auditors participating in such deliberation opined that
they had no objections to the execution of the Share Exchange
Agreement by the Board of Directors of Panasonic Electric
Works.
Among the 15 directors of Panasonic Electric Works (including 2
outside directors), Mr. Koshi Kitadai, an outside director, also
serves as a corporate advisor of Panasonic. Therefore, in order to
prevent conflict of interests, he has not participated in any
deliberations or resolutions regarding the Share Exchange held by
the Board of Directors of Panasonic Electric Works, nor has he
participated in any negotiations or discussions with Panasonic on
behalf of Panasonic Electric Works. In addition, among the 4
corporate auditors of Panasonic Electric Works (including 2 outside
corporate auditors), Mr. Yutaka Maehashi, an outside corporate
auditor, also serves as an employee of Panasonic. Therefore, in
order to prevent conflict of interests, he has not participated in
any deliberations regarding the Share Exchange held by the Board of
Directors of Panasonic Electric Works.
4. Outline of the
Parties Involved in the Share Exchange
Wholly-owning parent companyin the share
exchange
Wholly-owned subsidiaryin the share
exchange
(1)
Corporatename
Panasonic Corporation Panasonic Electric Works Co., Ltd. (2)
Head office
1006, Oaza Kadoma,Kadoma City, Osaka,
Japan
1048, Oaza KadomaKadoma City, Osaka,
Japan
(3)
Name and titleofrepresentative
PresidentFumio Ohtsubo
President and
RepresentativeDirectorShusaku Nagae
(4)
Descriptionof business
The manufacture and sale ofelectric and
electronicequipments, etc.
The manufacture and sale ofelectrical and
electronicequipments, etc.
(5) Paid-in capital 258,740 million yen 148,513 million yen (6)
Dateestablished
December 15, 1935 December 15, 1935 (7)
Number ofshares issued
2,453,053,497 shares 751,074,788 shares (8)
Fiscal yearend
End of March End of March (9)
Number ofemployees
385,243 (consolidated) 58,471 (consolidated) (10)
Major businesspartners
Companies, etc. domesticallyand abroad
Companies, etc. domestically andabroad
(11)
Main financingbank
Sumitomo Mitsui BankingCorporation
Sumitomo Mitsui BankingCorporationResona
Bank, Limited.The Bank of Tokyo-Mitsubishi UFJ,Ltd.
(12) Major The Master Trust
5.15%
Panasonic Corporation
51.
00%
shareholders Bank of Japan, Ltd. Japan Trustee Services
2.
64%
and (trust account)
Bank, Ltd. (trust shareholding Japan Trustee
4.50%
account)
ratio Services Bank, Ltd. Daiwa Securities Capital
1.
96%
(trust account)
Markets Co. Ltd. MOXLEY AND
3.96%
The Master Trust Bank
1.
78%
COMPANY of Japan, Ltd. (trust
Nippon Life Insurance
2.73%
account) Company Panasonic Electric
1.
60%
Sumitomo Mitsui
2.32%
Works Employees' Banking Corporation Shareholding
Association
(13) Relationships between the parties
Capitalrelationship
Panasonic owns 621,037,219 shares (82.69%)
of the number ofissued shares of Panasonic Electric Works
(751,074,788 shares) as oftoday.
Personnelrelationship
1 corporate advisor and 1 employee of
Panasonic assume office,respectively, as an outside director and as
an outside corporate auditorof Panasonic Electric Works.
Transactionrelationship
Panasonic conducts sales and purchase
transactions of finishedproducts, merchandise, material, etc. with
Panasonic Electric Works.
Status as arelated party
Panasonic Electric Works is Panasonic's
consolidated subsidiary, andtherefore, Panasonic Electric Works is
a related party of Panasonic.
(14) Operational results and financial conditions for the recent 3
years Fiscal year ended
Panasonic Corporation(Consolidated, U.S.
G.A.A.P.)
Panasonic Electric Works Co.,
Ltd.(Consolidated, Japan G.A.A.P.)
March2008
March2009
March2010
March2008
March2009
March2010
Net assets 4,256,949 3,212,581 3,679,773 734,709 685,607 685,720
Total assets 7,443,614 6,403,316 8,358,057 1,151,917 1,076,746
1,120,932
Shareholders'equity per share (yen)
1,781.11 1,344.50 1,348.63 934.87 869.47 871.23 Net sales 9,068,928
7,765,507 7,417,980 1,719,612 1,597,807 1,457,486 Operating profit
519,481 72,873 190,453 83,923 31,851 35,866 Ordinary income - - -
83,472 31,266 36,665
Net income (loss)attributable to
thecompany
281,877 (378,961) (103,465) 45,450 (13,845) 8,553
Net income (loss)attributable to
thecompany per share(yen)
132.90 (182.25) (49.97) 61.44 (18.72) 11.56
Dividend per share(yen)
35.00 30.00 10.00 25.00 18.75
12.50 (Note 1) As of September 30, 2010, unless
otherwise specified. (Note 2) In millions of yen, unless otherwise
specified. (Note 3) The item "Ordinary income" is omitted since it
does not exist under the United States Generally Accepted
Accounting Principles (U.S. G.A.A.P.), which have been adopted by
Panasonic. (Note 4) As for Panasonic Electric Works, the amount of
"Net assets per share" is stated instead of "Shareholders' equity
per share."
5. Status after
the Share Exchange
Wholly-owning parent company in the
share exchange (1) Corporate name Panasonic Corporation (2)
Head office 1006, Oaza Kadoma, Kadoma City, Osaka, Japan (3)
Name and title ofrepresentative
PresidentFumio Ohtsubo
(4) Description of business
The manufacture and sale of electric and
electronicequipments, etc.
(5) Paid-in capital 258,740 million yen (6) Fiscal
year end End of March (7) Net assets Not determined at
present (8) Total assets Not determined at present
6. Outline of Accounting
Treatment
With respect to Panasonic, the Share Exchange is expected to be
treated as a capital transaction in accordance with U.S. G.A.A.P.,
and goodwill is not expected to arise.
7. Future Outlook
The impact of the Share Exchange on the operating results of
both Panasonic and Panasonic Electric Works is expected to be
minor, since Panasonic Electric Works is already a consolidated
subsidiary of Panasonic.
8. Matters regarding Transaction, Etc.
with Controlling Shareholders
Since Panasonic owns 82.69% of the total number of issued shares
of Panasonic Electric Works, the Share Exchange constitutes a
transaction etc. with the Controlling Shareholder conducted by
Panasonic Electric Works.
The compliance of the Share Exchange with the descriptions in
"4. Other Special Circumstances that may Have a Material Impact on
Corporate Governance" presented in the Corporate Governance Report
disclosed by Panasonic Electric Works on July 20, 2010 (the
"Corporate Governance Report") is as follows:
As described in 3.(5) "Measures to Ensure Fairness" and 3.(6)
"Measures to Avoid Conflicts of Interest" above, Panasonic Electric
Works has taken certain measures to ensure the fairness of share
exchange rate in the Share Exchange and to avoid conflicts of
interest, and believes that such measures conform to the
descriptions in the Corporate Governance Report.
In addition, on December 21, 2010, as an opinion that shows the
view that the Share Exchange Ratio is not disadvantageous to the
minority shareholders, the Board of Directors of Panasonic Electric
Works received from Daiwa Securities Capital Markets a written
opinion (fairness opinion) stating that, subject to certain
assumptions and reservations, the Share Exchange Ratio is fair from
a financial point of view to the holders of Panasonic Electric
Works shares other than the controlling shareholders, etc. of
Panasonic Electric Works (meaning "Controlling Shareholders and
other parties set forth in the Enforcement Regulations" provided
for in Article 441-2 of the Securities Listing Regulations of Tokyo
Stock Exchange and Article 436-3 of the Ordinance for Enforcement
of the same).
Furthermore, the statement concerning protection of minority
shareholders in conducting transactions with the controlling
shareholder as indicated in "Measures for Protection of Minority
Shareholders in Conducting Transactions with the Controlling
Shareholder" in "4. Other Special Circumstances that may Have a
Material Impact on Corporate Governance," in the Corporate
Governance Report, is disclosed as follows:
"The Company has prevented transactions that benefit the parent
company and cause damages to the Company and eventually, its
minority shareholders by seeking opinions of outside directors and
outside corporate auditors other than those coming from the parent
company, among other means, in order to make management decisions
independently as a listed company and to enhance objectivity of
such decisions."
End
(Reference) Forecast of Consolidated Financial Results for
Current Fiscal Year and Consolidated Financial Results for Previous
Fiscal Year
Panasonic (forecast of consolidated
financial results for the current fiscal year as of July 29,
2010)
(in millions of yen)
Net sales
Operating profit
Income (loss)before incometaxes
Net income(loss)attributable
toPanasonicCorporation
Forecast of financialresults for current
fiscalyear(fiscal year endingMarch 2011)
8,900,000
310,000 210,000 85,000
Financial resultsfor previous fiscal
year(fiscal year ended March2010)
7,417,980
190,453 (29,315) (103,465)
Panasonic Electric Works (forecast of
consolidated financial results for the current fiscal year asof
July 23, 2010)
(in millions of yen)
Net sales Operating profit
Ordinaryincome
Net income
Forecast of financialresults for current
fiscalyear(fiscal year endingMarch 2011)
1,510,000 60,000 58,000 23,000
Financial results forprevious fiscal
year(fiscal year endedMarch 2010)
1,457,486 35,866 36,665 8,553
(Notice Regarding Registration on Form F-4)
Panasonic Corporation has filed a
registration statement on Form F-4 ("Form F-4") with the SEC in
connection with each of the proposed share exchange between
Panasonic Corporation and SANYO Electric Co., Ltd. (the "SANYO
Share Exchange") and between Panasonic Corporation and Panasonic
Electric Works Co., Ltd. (the "PEW Share Exchange"). The Form F-4
for each of the SANYO Share Exchange and the PEW Share Exchange
contains a prospectus and other documents. If each Form F-4 is
declared effective, the prospectus contained in the Form F-4 will
be mailed to U.S. shareholders of the subject company (SANYO
Electric Co., Ltd. or Panasonic Electric Works Co., Ltd.) prior to
the shareholders' meeting at which the relevant proposed share
exchange will be voted upon. The Form F-4 and prospectus contain
important information about the subject company and Panasonic
Corporation, the relevant share exchange and related matters. U.S.
shareholders of the subject company are urged to read the Form F-4,
the prospectus and other documents that have been filed and may be
filed with the SEC in connection with the relevant share exchange
carefully before they make any decision at the shareholders'
meeting with respect to the share exchange. Any documents filed
with the SEC in connection with the proposed share exchange will be
made available when filed, free of charge, on the SEC's web site at
www.sec.gov. In addition, upon request, the documents can be
distributed for free of charge. To make a request, please refer to
the following contact information.
1006, Oaza Kadoma, Kadoma City, Osaka 571-8501, Japan
Panasonic Corporation Corporate Finance & IR Group Masahito
Yamamura Telephone: 81-6-6908-1121
Email: irinfo@gg.jp.panasonic.com
URL: http://panasonic.net/
Disclaimer Regarding Forward-Looking
Statements
This press release includes forward-looking statements (within
the meaning of Section 27A of the U.S. Securities Act of 1933 and
Section 21E of the U.S. Securities Exchange Act of 1934) about
Panasonic and its Group companies (the Panasonic Group). To the
extent that statements in this press release do not relate to
historical or current facts, they constitute forward-looking
statements. These forward-looking statements are based on the
current assumptions and beliefs of the Panasonic Group in light of
the information currently available to it, and involve known and
unknown risks, uncertainties and other factors. Such risks,
uncertainties and other factors may cause the Panasonic Group's
actual results, performance, achievements or financial position to
be materially different from any future results, performance,
achievements or financial position expressed or implied by these
forward-looking statements. Panasonic undertakes no obligation to
publicly update any forward-looking statements after the date of
this press release. Investors are advised to consult any further
disclosures by Panasonic in its subsequent filings with the U.S.
Securities and Exchange Commission pursuant to the U.S. Securities
Exchange Act of 1934 and its other filings.
The risks, uncertainties and other factors referred to above
include, but are not limited to, economic conditions, particularly
consumer spending and corporate capital expenditures in the United
States, Europe, Japan, China and other Asian countries; volatility
in demand for electronic equipment and components from business and
industrial customers, as well as consumers in many product and
geographical markets; currency rate fluctuations, notably between
the yen, the U.S. dollar, the euro, the Chinese yuan, Asian
currencies and other currencies in which the Panasonic Group
operates businesses, or in which assets and liabilities of the
Panasonic Group are denominated; the possibility of the Panasonic
Group incurring additional costs of raising funds, because of
changes in the fund raising environment; the ability of the
Panasonic Group to respond to rapid technological changes and
changing consumer preferences with timely and cost-effective
introductions of new products in markets that are highly
competitive in terms of both price and technology; the possibility
of not achieving expected results on the alliances or mergers and
acquisitions including the acquisition of all shares of Panasonic
Electric Works Co., Ltd. and SANYO Electric Co., Ltd. through
tender offers and share exchanges; the ability of the Panasonic
Group to achieve its business objectives through joint ventures and
other collaborative agreements with other companies; the ability of
the Panasonic Group to maintain competitive strength in many
product and geographical areas; the possibility of incurring
expenses resulting from any defects in products or services of the
Panasonic Group; the possibility that the Panasonic Group may face
intellectual property infringement claims by third parties; current
and potential, direct and indirect restrictions imposed by other
countries over trade, manufacturing, labor and operations;
fluctuations in market prices of securities and other assets in
which the Panasonic Group has holdings or changes in valuation of
long-lived assets, including property, plant and equipment and
goodwill, deferred tax assets and uncertain tax positions; future
changes or revisions to accounting policies or accounting rules; as
well as natural disasters including earthquakes, prevalence of
infectious diseases throughout the world and other events that may
negatively impact business activities of the Panasonic Group. The
factors listed above are not all-inclusive and further information
is contained in Panasonic's latest annual reports, on Form 20-F,
and any other reports and documents which are on file with the U.S.
Securities and Exchange Commission.
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