Mitsubishi Corporation has announced that its Board of Directors today passed a resolution to make a tender offer for common shares of Nitto Fuji Flour Milling Co., Ltd. Details are as follows.
Mitsubishi Corporation has announced that its Board of Directors today passed a resolution to make a tender offer for common shares of Nosan Corporation. Details are as follows.
As of September 30, 2006, MC held 20.80% of the issued shares of the Target Company, which is an affiliated company accounted for by the equity method. The objective of the tender offer is to increase MC's stake in the Target Company to make it a consolidated subsidiary.
Guided by its medium-term management plan,INNOVATION 2007, and keeping a close eye on changes in external market conditions and other trends, MC has been building more powerful business foundations and making substantial investments in promising fields. The overriding goal is to achieve sustained growth over the medium and long term by 'Opening Up a New Era' as a new industry innovator.
In the food sector, MC is seeking to strengthen the value chain by building a comprehensive network spanning the entire chain, from sourcing of food materials at source to transportation and processing and distribution and retail sales of the final products. This strategy aims to accurately respond to the growing sophistication and diversification of consumer concern for stable food supplies as well as the quality and safety of those supplies.
The Target Company manufactures and consistently supplies quality animal feed in the animal feed and livestock industry. MC and the Target Company began their business relationship in the trade of animal feed ingredients and formulated feed. Subsequently, MC has worked with the Target Company to help it build a competitive production system. As a partner in businesses producing, processing and selling beef in Japan, MC has a longstanding, cordial business relationship with the Target Company.
In the animal feed and livestock industries in Japan, the market is gradually shrinking due to such dynamics as stagnant population growth, fewer farmers, differences between livestock prices in Japan and overseas and the improving quality of imported beef and processed products. At the same time, however, there is strongly rooted demand from consumers for home-grown beef from the perspective of safety and quality, meaning that the market is not expected to drop below a certain level in the future.
On the other hand, amid the expected rapid shift from the management of livestock businesses by farmers to corporations, competition in the animal feed and livestock industries will likely intensify. Companies operating integrated businesses from upstream to downstream are expected to enjoy a competitive edge in the marketplace.
By making the Target Company a consolidated subsidiary through this tender offer, MC and the Target Company will make greater use of each other's capabilities. The Target Company possesses animal feed technology development and production technology capabilities as well as production infrastructure, while MC has the ability to procure raw materials for animal feed, meat production and processing technology capabilities and expertise in selling meat.
By leveraging the advantages of each business, the two companies will further strengthen the integrated business structure from upstream to downstream. MC believes that such collaboration offers the potential for further strengthening the earnings base and increasing the corporate value of both companies.
The Target Company is also developing core businesses other than the animal feed business. In the business fields of aqua feed, eggs and pet food, MC believes that it can capture greater synergies by leveraging its retail sales capability and its proven track record in developing businesses in overseas markets. The Target Company is presently listed on the First Section of the Tokyo Stock Exchange and First Section of the Osaka Securities Exchange.
Following the Tender Offer, MC intends for the Target Company's listings to be maintained. MC has set an upper limit on the number of shares to be acquired through the Tender Offer and in doing so took into consideration the holdings of the principal shareholders of the Target Company and the forecast number of tendered shares for this Tender Offer.
In addition, MC has set no minimum for the number of shares to be acquired, and expects to purchase all shares that are tendered up to the scheduled upper limit.
The board of directors of the Target Company approved the Tender Offer in a meeting held today.