April 25, 2016 Definitive Agreement Concerning the Business Integration Mebuki Financial Group, Inc. Ashikaga Holdings Co., Ltd. The share exchange described in this press release involves securities of a foreign company. This share exchange is...
April 25, 2016 Definitive Agreement Concerning the Business Integration Mebuki Financial Group, Inc. Ashikaga Holdings Co., Ltd. The share exchange described in this press release involves securities of a foreign company. This share exchange is subject to disclosure requirements of Japan that are different from those of the United States. Financial information included in this notice has been prepared in accordance with generally accepted Japanese accounting standards and may not be comparable to the financial statements of United States companies. It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuer is located in a foreign country, and some or all of its officers are residents of a foreign country. You may not be able to sue a foreign company or its officers in a foreign court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its affiliates to subject themselves to a U.S. court’s judgment. This document has been translated from the Japanese-language original for reference purposes only. While this English translation is believed to be generally accurate, it is subject to, and qualified by, in its entirety, the Japanese-language original. Such Japanese-language original shall be the controlling document for all purposes.
* Mebuki Financial Group, Inc. Our wish implied in the company name Mebuki, or green shoots, means “new leaves sprouting from the trees.” This word is used in the Group name to express how fresh ideas and new values will be continually brought about by bringing the Group companies’ knowledge and ingenuity together.The company name implies its wish to sprout new value and vital energy in local communities and realize sustainable growth of the company togetherwith local communities. １．Name of the Holding Company Company Name * Note: Ashikaga Holdings Co., Ltd. will change its name to the above.
* 2．Outline of the Holding Company Location of Headquarters (Registered Address) 0-0, Xxxxx 0-xxxxx, Xxxx-xx, Xxxxx Location of Head Offices Mito Head Xxxxxx0-0, Xxxxxx-xxxxx 0-xxxxx, Xxxx, Xxxxxxx Representatives and Officers (planned) Representative Director and President Xxxxxxxxx Xxxxxxxx(currently, President of Joyo Bank) Capital 117.4 billion yen Stock exchange on which stock is listed The Tokyo Stock Exchange(Note) The current stock name is Ashikaga Holdings, which will be changed. (Note) The headquarters of Ashikaga Holdings Co., Ltd. will be relocated to the above address. The locations of Joyo Bank and Ashikaga Bank will not change. Representative Director and Executive Vice President Xxxxxxx Xxxxxxxxxx (currently, President and Chief Executive Officer of Ashikaga Holdings and President and Chief Executive Officer of Ashikaga Bank) The Holding Company plans to appoint 12 directors, including representative directors, three of whom will be appointed from outside the Holding Company. Utsunomiya Head Office1-00, Xxxxxx 0-xxxxx, Xxxxxxxxxx, Tochigi (Note) The head office functions of Mebuki Financial Group, Inc. will comprise its full-time officers and employees as well as concurrent officers and employees of Joyo Bank or Ashikaga Bank, and will be located in Mito, Ibaraki and Utsunomiya, Tochigi.
* ３．Outline of the Business Integration Through the share exchange, under which Joyo Bank will become a wholly-owned subsidiary and Ashikaga Holdings will become the wholly owning parent company, Mebuki Financial Group (currently, Ashikaga Holdings) will hold 100% of the shares of Joyo Bank and Ashikaga Bank. Joyo Bank shareholders will receive 1.170 shares of Mebuki Financial Group common stock for each share of Joyo Bank common stock. After Integration Company name to be changed Mebuki Financial Group 100％ ownership 100％ ownership (Joyo Bank shareholders)Number of shares issued and outstanding Note722.869 million shares×1.170 (Ashikaga HD shareholders)Number of shares issued and outstanding Note333.25 million shares Execution of the Share Exchange Agreement 100％ ownership (Ashikaga HD shareholders)Number of shares issued and outstanding Note333.25 million shares Joyo Bank shareholders will receive 1.170 shares of Mebuki Financial Group common stock for each share of Joyo common stock. (Joyo Bank shareholders)Number of shares issued and outstanding Note722.869 million shares (Note) The above number has been calculated based on the total number of issued and outstanding shares of Joyo Bank and Ashikaga Holdings as of December 31, 2015. The total number of issued and outstanding shares of Joyo Bank as of December 31, 2015 is 766.231 million. However, Joyo Bank plans to cancel all of its treasury shares (43.362 million shares as of December 31, 2015) immediately before the share exchange takes effect. Accordingly, treasury shares held by Joyo have not been included in calculating the above number. The number of newly issued Mebuki Financial Group shares to be delivered through the share exchange may change if the number of Joyo Bank’s treasury shares as of December 31, 2015 changes before the share exchange takes effect. April 25, 2016 (today) Resolution of the board of directors of the Companies; Execution of the Share Exchange Agreement and the business integration agreement June 28, 2016 (planned) General shareholders meetings of the Companies September 27, 2016 (planned) Last trading day of the shares of Joyo Bank September 28, 2016 (planned) Date of delisting of Joyo Bank shares October 1, 2016 (planned) Effective date of the Share Exchange [Schedule of the Share Exchange] Ashikaga Holdings Co., Ltd.
* 4. Group Management Philosophy and Ideal The new financial group will provide high-quality comprehensive financial services to continue creating a prosperous future with local communities. Mission Develop and grow with local communities and contribute to them Vision As an “open” financial group, work to expand business areas, regions and size Growthdriver Expand local economy by utilizing the Group’s networkAccelerate and expand commercial and information distribution and corporate interaction by utilizing the Group’s wide-area network that involves major companies in the central region. Development and provision of advanced servicesDevelop and provide advanced financial services by utilizing IT and working with companies in other industries Training of professionalsTrain professionals who can respond to diverse and sophisticated financial needs and are familiar with local circumstances Reinforcement of revenue base through integrationBuild a solid revenue base by streamlining operations and strategically reallocating business resources Business platform Solid trust relationships with local communitiesRegional financial institutions having the top market share in the region Value One-stop comprehensive financial services with a structure to provide leasing, securities, think tank functions and information technology services Comprehensive financial service group that will create the future of local communitiesThe new Group will maintain and promote the relationships with customers and local communities as well as deep understanding of local communities that the Banks have developed over the years. At the same time, the new Group will seek to expand the economic interaction zone by utilizing its wide-area network, endeavor to increase the size and range of comprehensive financial services and work toward the “development of local industries, revitalization of local economy and creation of new markets” for the growth of the company together with local communities. Group Ideal(Strategic Target) Structure of Group Philosophy(= Fundamental ideas on which Group activities will be based) We will bring the Group’s ingenuity together to contribute to sustainable growth of local communities. We will endeavor to resolve challenges of local communities by providing high-quality comprehensive financial services to create a prosperous future with local communities. Group Management Philosophy
* ５．The New Group’s Fundamental Strategies for the Business Integration As the main player in the efforts for regional revitalization, the new financial group will implement activities toward the development of local industries and creation and stimulation of markets by expanding its comprehensive financial services and utilizing its wide-area network. The new financial group will also ensure appropriate staffing and personnel training through operational reforms to build highly efficient operational structure and appropriate management structure with a view to achieve sustainable growth of the company together with local communities. By utilizing primary sales bases and networks which will expand through the business integration, the new financial group will jointly implement a wide range of support measures based on industrial characteristics of the primary sales bases, and contribute to regional revitalization and stimulation by bringing the new financial group’s ingenuity together. Consolidation of ingenuity for regional revitalization The new financial group will organically combine its functions to “expand scale and scope” and “improve quality”, and provide one-stop services with higher added value that can respond to diversifying customer needs. While keeping an eye on the developments of deregulation and other changes, the new financial group will look to achieve various synergy effects by sharing securities investment knowhow and considering integrated operations. Expansion of comprehensive financial services The entire group will optimize business resources and make efforts to further develop its wide-area network for increased convenience for customers and regional revitalization and stimulation.The new financial group will strengthen its direct channels such as the Internet and ATMs by utilizing enhanced data-based marketing functions, which will be increased through the business integration, so it can provide timely information and financial services to more customers. Expansion of area and channels The new financial group will enhance business resources to achieve cost reduction, improve customer services and contribute to regional development by unifying and integrating administration and systems.The new financial group will invest in systems related to new or growing business areas such as FinTech in order to achieve improved customer service. In addition to effective corporate governance to achieve benefits of integration, the new financial group will build an appropriate management structure in light of the size and characteristics of the Banks. The new financial group will develop more sophisticated risk management, enhance smooth financial intermediary functions and build an internal audit system and other frameworks to contribute to the sound operation and efficient achievement of management objectives. Operational reform Building of the new financial group’s management structure
* ６. New Financial Group’s Corporate Governance and Management Structure The Integrated Holding Company will take initiative in intragroup collaboration in mapping out the new financial group’s management policies and strategies and working to maximize synergy. It also has a role to improve corporate value of the entire Group through management of the Group companies’ operations. The Integrated Holding Company will have Regional Revitalization Department, which will take the initiative in intragroup collaboration for regional revitalization and stimulation of local economy and make efforts toward regional revitalization of wide areas. Company with audit and supervisory committee Banks under the group Group Strategy Committee Audit and Supervisory Committee Office The Integrated Holding Company, which is a company with an audit and supervisory committee, will appoint multiple outside directors to secure a transparent and fair decision-making function and an audit and supervisory function. At the same time, the Integrated Holding Company will delegate numerous operational decision-making authorities to directors, who are board members. By doing so, the Integrated Holding Company will realize prompt and strong-minded decision-making and business execution.The Banks, which are to implement important strategies, will also appoint multiple outside directors. Moreover, the Corporate Governance Committee, which mainly comprise outside directors of the Integrated Holding Company and the Banks, will be established as an advisory organ for the board of directors of the Integrated Holding Company with such roles as appointing director candidates and deliberating directors’ compensation. Under such framework, the Integrated Holding Company will enhance corporate governance efficiency. The Integrated Holding Company will also have Executive Sessions of only outside directors to allow outside directors to exchange information and share an understanding with each other, so that the Integrated Holding Company may actively incorporate diverse opinions. New financial group’s management structure While maintaining and exerting its originality to deepen relationships with local communities that it has developed, each Bank will closely collaborate with the other as members of the new financial group and work as a pioneer who conduct business based on the Group strategies and lead synergy to stimulation and promotion of local economy. Company with audit and supervisory committee
* ７. (1) Consolidation of Ingenuity for Regional Revitalization ～ Outline of Measures for Regional Revitalization and Stimulation ～ The business integration will allow the Banks to “expand the core markets” which are their primary bases and “expand networks” due to the proximity to the Tokyo metropolitan area where a number of diverse companies are located. The new financial group will utilize these expanded markets and networks and collaborate with each other in implementing a broad range of support measures, taking industrial characteristics of the primary bases into account with the aim of contributing to the regional revitalization and stimulation. Support measures to customers Support measures to customers Support measures to customers Resources of the Banks Manufacturing Food, agriculture, tourism and commerce Medical and nursing care People/knowhow/finance Geographical expansion and diversification of industrial development Creation of new businesses and expansion of business domain Expansion of corporate networks Branding of regional resources Promotion of settlement and regional development Evaluation of technical capabilitiesTechnological standardizationSupport in obtaining licenses Support in matching businesses/M&A partnersProposal of business successionJoint hosting of business awardsSupport in market expansion and starting operations overseas Attracting Tier 1 and Tier 2 companiesPackaged support for attracting companies Support in developing a tourist golden routeSupport in sixth industrialization of agriculture and food industries Attraction of companies adding value using local resources as resourcesSupport in promotion and management of DMOs Support in promoting regional revitalization businesses under the Continuing Care Retirement Community (Japanese CCRC) program, etc. Support in utilizing advanced technologies such as robots Support in market expansion to the Tokyo metropolitan area and overseas Support in creation of investment/collaboration business by domestic and foreign companies in the food, agriculture or tourism industries Mutual utilization of technical coordinators Development of joint loan products to support wide-area promotion through collaboration with multiple local governmentsSupport of customers in improving their added value with the aim of improving their sales and profits Entering the crowd funding business Active utilization of external technical coordinators Sharing knowhow of new product development that utilizes local resources Provision of relocation plans and vacant-house utilization plans using new-type reverse mortgages, xxx.Xxxxxxx in promoting settlement using PPP, PFI and project finance Support of regional revitalization and stimulation through support of corporations, etc.Development of wide-area collaboration support Support in utilizing existing facilities (e.g. remains of large-scale commercial facilities and vacant stores)
* ７. (2) Consolidation of Ingenuity for Regional Revitalization ～ Development of wide-area collaboration support ～ Wide-area collaboration support Resolve challenges of local communities Local governments Support of regional revitalization in its primary sales base mainly in Tochigi Prefecture Support of regional revitalization in its primary sales base mainly in Ibaraki Prefecture Universities and research institutions Various economic organizations Licensed professionals Focused activities Developing industries/creating new businessesUnifying industrial development and new business support plansUtilizing technical coordinatorsSupporting market expansion to the Tokyo metropolitan area and overseasAttracting and retaining companiesBusiness awards Supporting regional brandingSupporting creation of investment and collaboration of businesses in the food, agriculture or tourism industrySupporting development of new products that utilizes local resources Collaborating with local governmentRevitalizing local shopping streetsProposing measures to promote relocation and settlement Promoting utilization of a wide-area networkEnhancing and improving coordinating abilityBusiness matching in broader areasCollaborating with external experts The Banks will provide “wide-area collaboration support” utilizing the networks in Ibaraki and Tochigi Prefectures and the Tokyo metropolitan area, which cannot be realized by a single bank. The Banks will focus on the following four activities in allocating human resources.(1) Promoting utilization of a wide-area network (2) Developing industries/creating new businesses (3) Supporting regional branding (4) Collaborating with local governmentsThe Banks will also utilize knowhow and networks of the new financial group and support customers in improving their added value by way of consulting with the aim of improving their sales and profits.
* Medium-sized companies SMEs Venture companies Support in matching businesses/M&A partners and proposal of business succession utilizing the Banks’ strengths and characteristics of their bases Tochigi Prefecture Ibaraki Prefecture Medium-sized companies SMEs Venture companies Universities and research institutions Universities and research institutions Ashikaga Bank’s strengthsBroad customer base, including the automobile and aviation industriesKnowhow of tourism promotion support ７. (3) Consolidation of Ingenuity for Regional Revitalization ～ Notion of wide-area collaboration ～ The Banks will utilize their expanding primary bases and networks to discover regional resources and technologies and collaborate with each other in their support measures taking industrial characteristics of their primary bases into account. Accelerating and expanding commercial and information distribution and corporate interaction utilizing transportation infrastructure such as Kita-Kanto Expressway Startup support Development support × × Provision of sophisticated consulting services; support of companies’ growth through financial products such as funds (e.g. equity) and mezzanine finance (e.g. subordinated loans, subordinated bonds and preferred stock) Joyo Bank’s strengthKnowhow of evaluation of technical capabilities of manufacturing companiesKnowhow of supporting agricultural businesses Tochigi Ibaraki Expansion of capital flow and capital stock Expanded flow of goods, people and information Traffic volume of Kita-Kanto Expressway and the capital flow in Ibaraki and Tochigi H23 H24 H25 H26 H27 FY2011 Special factors due to the Great East Japan Earthquake Characteristics of Tochigi and Ibaraki PrefecturesTechnical and research capabilitiesTourism resources and agricultural productsTransportation network FY2015 FY2014 FY2013 FY2012 Traffic volume Amount of domestic funds handled(total of inbound and outbound)
* The Banks will organically combine the Group functions such as banking, leasing, securities, IT and think tank functions to “expand scale and scope” and “improve quality”, and provide one-stop services with higher added value that can respond to diversifying customer needs. Expansion of comprehensive financial services by combining the New Group’s abilities Think tank Joyo Industrial Research InstituteAshigin Research Institute Asset sales Joyo Securities IT solutions Joyo Computer ServiceAshigin Research Institute Settlement Joyo CreditAshigin Card Provision of one-stop financial function Leasing Joyo LeaseAshikaga CreditGuarantee (Leasing Business Department) As a financial concierge, providing sophisticated services and supporting asset building, management and succession “Expanding areas in which security services are provided”דContact with generations of people and corporations” Detailed advice and fulfilling support for customers’ growth “Expanding areas in which the leasing function is provided”דNetworks rooted in the region and sales structure and knowhow for businesses” Providing solutions that can contribute to streamlining customers’ businesses by mutually utilizing the functions of the Banks’ IT companies “IT planning and development capabilities”דConsulting knowhow” Enhancing solutions to prepare for an increased flow of capital into the region “Overwhelming regional share”דEconomies of scale through business integration” 」 Providing various wide-area business information and providing interaction-promotion opportunities and consulting services in new fields “Information of Ibaraki Prefecture and its surrounding areas”×「“Information of Tochigi Prefecture and its surrounding areas” ８. (1) Expansion of Comprehensive Financial Services ～ One-stop Financial Services ～
* ８. (2) Expansion of Comprehensive Financial Services ～ Providing Added Value ～ The Banks will appropriately and accurately capture diverse needs of customers that will arise at each stage of life and provide comprehensive financial services that are more convenient and have higher added value. Providing higher value and convenience to customers Efficiently and promptly resolve immediate matter for consultation Providing comprehensive financial services overcoming geographical/time restrictions Providing solutions to specialized and complicated issues Enhancing direct channels(Increasing menus and improving quality) Enhancing consulting functions of head offices and sales branches Input of business resources to identify customer needs ＋ Expansion and enhancement of channels ＋ Providing a consultation system that utilizes new technologies and other means Combine direct channels and face-to-face channels to provide consistent services Providing a sophisticated consultation system covering matters such as M&A, business succession, inheritance and asset succession Making proposals in a timely manner by utilizing big data analysis, etc. Big data analysis using AI Accountaggregation Investmentin systems Collaboration withcompaniesin other sectors Improved usability Improvedaccessibility Collaboration among branches Settlement(electronicmoney/points) and others One-stop financial function Employing experts Marketers Industryexperts and others Robo-advisor Utilizing Fin Tech andothers
* ９．Expansion of Area and Channels The Banks will aim to expand its customer base and broaden and stimulate economic interaction (corporate interaction through distribution of commerce, information and funds) zone by optimizing business resources, developing a wide-area network and strengthening direct channels. Approx. 15 new branches to open (including leasing and securities branches) Approx. 150 employees to be reallocated Enhanced contact with customers Expand customer base and broaden and stimulate economic interaction zone Optimizing business resources Streamlining the head office and sales branchesReallocating employees for an enhanced consulting function and improved service quality Developing a wide-area network Utilizing human and other resources resulting from the reallocationNew branches to open in growing areas with the aim of increasing economic interaction opportunitiesNew branches to open with the aim of enhancing group functionsConsidering utilizing the agency bank systemMutually utilizing overseas networks (including consideration of making overseas locations branches) Strengthening direct channels Jointly working toward more sophisticated marketing activities such as Event Based Marketing (EBM) and providing timely information and financial servicesSharing knowhow about information provision utilizing the Internet and telemarketing in order to improve information provision services that can satisfy customers’ needsJointly utilizing non-face-to-face channels such as the Internet and ATMs to improve products and services (Total of 336 locations, including overseas locations; as of April 25, 2016) New York Shanghai Hong Kong Singapore
* 10．Improved Value for Stakeholders Retail customers Environment in which retail customers can use the Banks more closely and convenientlyAdvice and support to realize prosperous life stagesOptimal solutions based on long-term relationships Shareholders Improved corporate value and XXX medium to long termReturn to shareholders (stable dividends and shareholder special benefit program)Prompt and appropriate information disclosure and explanations Network of an overwhelming number of braches and wealth of product lineupsAppropriate and timely information tailored to each stage of lifeSophisticated service knowhow as a financial concierge Revenues as a result of synergyPerformance evaluation of officers of the integrated Holding Company based on ROEAppropriate corporate governance structure which utilizes outside director functionsComprehensive IR Employees Rewarding work that realizes employees’ passion for local communitiesMore opportunities to play active rolesImproved skills and growth through personnel exchanges Penetration of the new financial group’s management philosophy through joint trainingExecution of strategies formulated based on deep understanding of local communitiesMutual personnel exchanges and various joint planning Local communities More economic exchange opportunities that can contribute to regional revitalizationExchanges between Ibaraki and Tochigi, and between the Ibaraki/Tochigi area and the other areas such as neighboring areasAbility to make proposals that will help to boost local communities’ power, including proposals concerning the number of business establishments in the region or promotion of settlement Strong connections with local governments and other public institutions in the Ibaraki and Tochigi areasAbility to coordinate with important partners that will generate economic interactionEfforts toward the creation of new industries, and support system for growth of companies and development of core companies in the region Corporate customers In addition to smooth financial intermediary functions provided by the Banks,Broad business interaction opportunitiesHints and catalysts necessary for new businesses and business growthDetailed advice and fulfilling support for realization of growth Broader networks (e.g. employees, information and customer base)Strong connections with customers and local communities in the Ibaraki and Tochigi areasAmple capital-raising means and comprehensive financial service knowhow Value for stakeholders Business resources which will be the basis of improved value The new financial group will maintain and promote the relationships with customers and local communities as well as deep understanding of local communities that the Banks have developed over the years. At the same time, the new financial group will seek to expand the economic interaction zone by utilizing its wide-area network, endeavor to increase the size and range of comprehensive financial services, and work toward the “development of local industries, revitalization of local economy and creation of new markets” for the growth of the company together with local communities.
* 11．Outline of Synergy Measures Synergy Target(FY2021) ＋700 billion yen ＋ approx. 15 billion yen Approx. 150 employees Compared to FY2015 Increase in loan balance due to synergy Synergy on the top line and cost Shift of personnel to sales and strategy Consolidation of ingenuity for regional revitalization Expansion of comprehensive financial services Expansion of areas/channels Corporate customers Retail customers Local governments Integrating administrative procedures; unifying and integrating work concentrated in the head office Creation of investment and collaboration of businesses in the food, agriculture or tourism industries Optimization of business resources (streamlining of the head office and branches, and staff reallocation) Opening branches in growing areas and expand regional economic interaction opportunities Streamlining of administrative affairs and mutual utilization of services Reduction in property expenses through joint procurement Expansion of areas where leasing and securities services are provided Attraction of companies, comprehensive support to new entrant companies, and job creation Other customers Operational reform Group management Sharing of knowhow about investment in the market Strengthened efforts to resolve challenges of local communities Providing business matching services in broader areas, creating new industries by mutually utilizing coordinators, and providing support in business expansion Cost reduction through system integration Improved customer service using FinTech, etc. Improved arrangement capabilities in M&A, syndicate loans and derivative transactions Sharing of knowhow on publicly-owned property management support Further promotion of BPR by sharing knowhow Collaboration to enhance direct channels Collaboration to promote settlement and increase nonresident population Joint development and improvement of marketing such as EBM Joint implementation of personnel interaction and training Mutual utilization of Group companies such as think tanks Joint development of diverse and highly convenient products and services (loans and credits) Start collaboration on the fund business Advanced asset management proposals by sharing knowhow Attracting more settling customers by unifying interbank charges Support in developing a tourist golden route in collaboration with the regional tourist industry Sharing of knowhow about sales activities conducted at customers’ workplaces Wide-area collaboration support Support of starting operations overseas Joint extension of cross-boarder loans Mutually utilizing overseas networks (including consideration of making overseas locations branches) Improvement of credit risk management system Considering joint securities investment in light of deregulation Establishment of appropriate audit system of the new Group Establishing a low-cost, quality branch network by sharing knowhow about branch design and management Streamlining of credit and collateral appraisal work through integration New branch to open: approx. 15 branches(including leasing and securities branches) Efforts towardwide-area regional revitalization Enlarged scale and scope
* Mebuki Financial Group, Inc.