| August 16, 2001 |
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HONEN CORPORATION
(Stock exchange listings: Tokyo, Osaka, Nagoya
(First Sections), Sapporo, Fukuoka; Code # 2601)
2-3, Otemachi 1-chome
Chiyoda-ku, Tokyo
President and COO: Etsuo Nomura
Ajinomoto Oil Mills Co., Inc.
19-5, Kyobashi 1-chome
Chuo-ku, Tokyo
President: Shinji Sasaki
Ajinomoto Co., Inc.
(Stock exchange listings: Tokyo, Osaka, Nagoya
(First Sections), Sapporo, Fukuoka; Code # 2802)
15-1, Kyobashi 1-chome
Chuo-ku, Tokyo
President: Kunio Egashira |
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Notice of Memorandum on Management Integration
Between HONEN CORPORATION and Ajinomoto Oil Mills |
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| At the respective meetings of the board of directors of HONEN CORPORATION, Ajinomoto Oil Mills Co., Inc., and Ajinomoto Co., Inc. of August 16, 2001, it was approved to integrate the management of HONEN CORPORATION and Ajinomoto Oil Mills in a spirit of equality through the establishment of a joint stock holding company, effective from April 1, 2002. Details of the memorandum signed by the two companies are as follows. |
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| 1. Background and Objectives of the Management Integration |
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(1) Background of Management Integration
At present, the edible oil manufacturing industry in Japan is facing two key issues: strengthening international competitiveness to deal with the lowering of import tariffs on oils and fats, and creating new value with vegetable oils to cope with the maturing market.
Tariffs on oils and fats have been reduced by 36% compared with 1996, and are expected to come down further. An important issue, therefore, is strengthening product and cost competitiveness to combat the projected increase in imported oil and fat products.
The initiative is also aimed at improving customer satisfaction. It is recognized as an obligation of edible oil manufacturers to strengthen development of and proposal capabilities for products that win the favor of general consumers and users.
The planned integration of management between HONEN CORPORATION and Ajinomoto Oil Mills is aimed at solving the issues outlined above by bringing together the expertise of the two companies.
(2) Objectives of Management Integration
The decision to integrate operations was made with the aim of creating a preeminent edible oil manufacturer that can also compete overseas by leveraging the respective strengths and complementing the weaknesses of these two companies, both of which have long histories in the oil manufacturing industry.
Specifically, the two companies will strengthen product development, streamline operations and raise the efficiency of production, distribution and raw material procurement, as well as establish cooperative relationships in the area of marketing to leverage the brand equity they have cultivated up to now. Through these measures, the companies will achieve the primary objective of the management integration — providing edible oil products that exactly conform to the needs of general consumers and users. |
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| 2. Benefits of Management Integration |
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Details of strategies and concrete measures for achieving the benefits of management integration will be studied by an Integration Committee.
The following integration benefits are expected to be realized.
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| (1) Strengthening cost competitiveness |
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1. |
Optimization of production and shipping bases |
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2. |
Streamlining of distribution through joint deliveries, swaps, etc. |
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3. |
Reduction of raw material procurement costs through joint purchasing |
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4. |
Rationalization of overlapping indirect operations |
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5. |
Joint development of information systems aimed at efficiency of operations |
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| (2) Product development |
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1. |
Product development that is always focused on consumer needs |
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2. |
Development of high value-added products for the commercial market |
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| (3) Raising the level of public trust |
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The integration benefits will further raise the level of public trust and expand management resources such as people, goods and capital, and consequently will help establish a stronger business foundation. |
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| 3. Summary of Integration Benefits |
(1) Management Integration Scheme: Establishment of a Holding Company through a Stock Transfer
On April 1, 2002, as targeted, a joint stock holding company will be established through a stock transfer, and HONEN CORPORATION and Ajinomoto Oil Mills Co., Inc. will become wholly owned subsidiaries of the holding company.
(2) Procedures for Establishing the Holding Company
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Aug. 16, 2001 |
Signing of memorandum of agreement to establish holding company |
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Early Oct. 2001 (scheduled) |
Board of Directors resolution on stock transfer |
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Mid-late Dec. 2001 (scheduled) |
Approval of stock transfer at General Meeting of Shareholders |
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March 31, 2002 (scheduled) |
Stock transfer day (Date of public listing of holding company) |
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April 1, 2002 (scheduled) |
Stock transfer date, registration of establishment of new company |
(3) Basic Issues in Integrating Management
Basic issues such as the name of the holding company and the location of the head office will be decided in consultations between the two companies. The number of shares of the holding company to be allocated for each share issued by HONEN CORPORATION and Ajinomoto Oil Mills Co., Inc., (the stock transfer ratio) will be decided according to the results of an appraisal by an outside institution.
A new public listing of the shares of the new holding company is scheduled to take place immediately following its establishment. The date of the public listing has been scheduled for March 31, 2002, the stock transfer day; however, it will be determined in accordance with the rules and regulations of the stock exchange. In association with the stock transfer, HONEN CORPORATION will delist its common shares from stock exchanges on March 26, 2002.
(4) Organization for Promoting Management Integration
In order to promote the smooth and speedy integration of the two companies' businesses, an Integration Committee will be organized, with HONEN CORPORATION Chairman and CEO Masaji Shima and Ajinomoto Oil Mills President Shinji Sasaki as co-chairmen. Function-based divisions will be established under the supervision of the committee to begin preparations for the integration.
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| Reference 1: Outline of Companies Involved in the Stock Transfer |
| (1) Company name |
HONEN CORPORATION |
Ajinomoto Oil Mills Co., Inc. |
| (2) Type of business |
Production, processing and sale of
food, oils, fats, and cornstarch |
Research, development, production and sale of oils & fats |
| (3) Established |
April 1922 |
February 1968 |
| (4) Head office location |
Chiyoda-ku, Tokyo |
Chuo-ku, Tokyo |
| (5) Representatives |
Chairman & CEO: Masaji Shima
President & COO: Etsuo Nomura |
Chairman: Sadakazu Miyamoto President: Shinji Sasaki |
| (6) Paid-in capital |
¥10,038 million |
¥12,240 million |
| (7) Shares issued and outstanding |
90,268,000 shares
(¥50 par value) |
1,968,000 shares
(¥5,000 par value) |
| (8) Shareholders’ equity |
¥30,638 million |
¥16,185 million |
| (9) Total assets |
¥65,322 million |
¥31,197 million |
| (10) Fiscal year end |
March |
March |
| (11) Number of employees |
547 |
350 |
| (12) Major transaction partners |
| Suppliers: |
Mitsui & Co., National Federation of Agricultural Cooperative Associations |
| Customers: |
National Federation of Agricultural Cooperative Associations, Mitsui & Co. |
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| Suppliers: |
Itochu Corp., National Federation of Agricultural Cooperative Associations |
| Customers: |
Ajinomoto Co., Inc. |
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| (13) Major shareholders and percentage of shares owned |
Mitsui & Co., Ltd.
6.7%
The Tokio Marine & Fire Insurance Co., Ltd.
5.1%
The Fuji Bank, Ltd.
4.6%
Nissho Iwai Corp.
3.1%
The Sumitomo Marine & Fire Insurance Co., Ltd.
2.7%
Norin Chuo Kinko
2.6% |
Ajinomoto Co., Ltd.
100.0% |
| (14) Main banks |
The Fuji Bank, Ltd., Norin Chuo Kinko, The Bank of Tokyo-Mitsubishi, Ltd. |
The Bank of Tokyo-Mitsubishi, Ltd., The Dai-Ichi Kangyo Bank, Ltd. |
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| Reference 2: Results for Three Most Recent Fiscal Years |
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HONEN CORPORATION
(Consolidated) |
(Former) Ajinomoto Oil Mills Co., Inc. (Non-consolidated) |
Fiscal year ended
March 31 |
1999 |
2000 |
2001 |
1999 |
2000 |
2001 |
Net sales
(Million yen) |
101,468 |
89,367 |
85,990 |
27,615 |
39,868 |
36,795 |
Operating income
(Million yen) |
243 |
3,096 |
3,056 |
103 |
221 |
648 |
Ordinary income
(Million yen) |
95 |
3,022 |
3,006 |
151 |
218 |
776 |
Net income (loss)
(Million yen) |
(99) |
1,133 |
1,431 |
46 |
34 |
168 |
Net income (loss)
per share (Yen) |
(1.1) |
12.7 |
15.9 |
117.2 |
21.4 |
105.0 |
Cash dividends
per share (Yen) |
3 |
5 |
5 |
-- |
-- |
-- |
Shareholders’ equity
per share (Yen) |
316 |
323 |
332 |
8,439 |
7,397 |
7,502 |
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Kumazawa Seiyu Sangyo Co., Ltd. (Non-consolidated) |
Ajinomoto Co., Inc. Edible Oils Business (Non-consolidated) |
Fiscal year ended
March 31 |
1999 |
2000 |
2001 |
1999 |
2000 |
2001 |
Net sales
(Million yen) |
4,825 |
987 |
4,683 |
68,893 |
58,647 |
56,447 |
Operating income
(Million yen) |
113 |
30 |
204 |
-- |
-- |
-- |
Ordinary income
(Million yen) |
130 |
31 |
200 |
*In April 2001, Kumazawa Seiyu Sangyo Co., Ltd. and the edible oils business of Ajinomoto Co., Inc. were integrated into Ajinomoto Oil Mills Co., Inc. Net sales for the year ending March 31, 2002 are estimated at ¥56,000 million. |
Net income (loss)
(Million yen) |
59 |
16 |
(41) |
Net income (loss)
per share (Yen) |
12.48 |
3.44 |
(8.67) |
Cash dividends
per share (Yen) |
5 |
1.25 |
5 |
Shareholders’ equity
per share (Yen) |
200 |
219 |
207 |
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| Reference 3: Overview of the New Company (Holding Company) |
| (1) Company name |
To be decided in consultations between the two companies |
| (2) Business description |
Holding the stock of subsidiaries involved in development, production, processing and sale of oils, foods, cornstarch, etc., thereby controlling and managing the business activities of these subsidiaries. |
| (3) Head office location |
Chiyoda-ku, Tokyo (planned) |
| (4) Representatives (planned) |
President: Masaji Shima(currently Chairman & CEO of HONEN CORPORATION)Vice President: Shinji Sasaki (currently President of Ajinomoto Oil Mills Co., Inc.) |
| (5) Capital |
To be decided in consultations between the two companies |
| (6) Number of shares to be issued |
To be decided in consultations between the two companies |
| (7) Fiscal year end |
March |
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For further information:
Public Relations Office
HONEN CORPORATION
Phone: 03-3211-6677
Public Relations Department
Ajinomoto Co., Inc.
Phone: 03-5250-8180 |