note: this document has been translated from a …2019/12/22 · in the event of any discrepancy...

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Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect, or any other forms of damages arising from the translation.

December 22, 2019

Tetsuji Kosaki

President and CEO UNIZO Holdings Company, Limited 2-10-9, Hatchobori, Chuo-ku, Tokyo

(Securities Code: 3258 First Section, Tokyo Stock Exchange) Contact: Masato Yamamoto

Senior Managing Director and Senior Managing Executive Officer Tel: +81-3-3523-7534

Notice of Position Statement (Approval) Regarding Tender Offer by

Chitocea Investment Co., Ltd. for UNIZO Holdings Company, Limited Stock

UNIZO Holdings Company, Limited (“Company”) announces that the Board of Directors of the

Company held on December 22, 2019 has resolved to approve the tender offer (“Tender Offer”) for

the common shares of the Company (“Company Shares”) by Chitocea Investment Co., Ltd. (“Tender

Offeror”) and to issue its opinion to recommend that all shareholders tender their shares in the Tender

Offer. Details follows.

The foregoing Board of Directors resolution is on the premise that the Tender Offeror contemplates

to acquire the Company as its wholly owned subsidiary through the Tender Offer and subsequent

procedures, and that the Company Shares will be delisted.

1. Overview of the Tender Offeror

(1) Company Name Chitocea Investment Co., Ltd.

(2) Main Office 2-10-9, Hatchobori, Chuo-ku, Tokyo

(3) Title and Name of

Representative

Yuhei Yamaguchi, Representative Director

(4) Purpose of

Business

To acquire and own the Company Shares etc.

(5) Stated Capital JPY 10,000

(6) Incorporated Date December 13, 2019

(7)

Major Shareholder

and Ownership

Ratio

Chitocea Co., Ltd.

LSREF6 UNITED INVESTMENTS S.ÀR.L.

73.00%

27.00%

(8) Relation between the Company and Tender Offeror

Capital Relation

There are no capital relations to be stated between the

Company and Tender Offeror. There are no specific capital

relation between the interested parties of the Company and

the interested parties and affiliated of the Tender Offeror.

Personnel Relation

Two employees of the Company and one executive officer

(shikko yakuin) of the wholly owned subsidiary of the

Company also serves as directors of the Tender Offeror.

Business Relation

There are no particular business relation between the

Company and Tender Offeror. There are no particular

business relations between the interested parties of the

Company and the interested parties and affiliates of the

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Tender Offeror.

Applicability to

Related Parties

Tender Offeror is not a related party to the Company.

Interested parties and affiliates of the Tender Offeror are

not related parties to the Company.

2. Price of Tender Offer etc.

JPY 5,100 per common share

3. Position regarding the Tender Offer, and Basis and Reasons Thereof

(1) Details of the Opinion regarding the Tender Offer

The Board of Directors of the Company held on December 22, 2019 has resolved to

approved the Tender Offer to issue its opinion to recommend that all shareholders tender

their shares in the Tender Offer on the basis and reasons described in “(2) Basis and Reasons

of the Position regarding the Tender Offer” below.

Such decision of the Board of Directors has been resolved in the manner described in

“IV. Approval of All Members of the Board and No Objection From Any Audit and

Supervisory Board Members” of “(6) Measures to Secure Fairness of the Tender Offer such

as Measures to Secure Fairness of the Tender Offer Price and to Avoid Conflict of Interest”

below.

(2) Basis and Reasons of the Position regarding the Tender Offer

The description regarding the Tender Offeror in this “(2) Basis and Reasons of the

Position regarding the Tender Offer” is based on the explanation from the Tender Offeror.

I. Overview of the Tender Offer

Tender Offeror has decided to conduct the transaction (“Transaction”) by commencing

the Tender Offer aiming to acquire all issued and outstanding Company Shares (excluding

treasury shares owned by the Company) listed on the First Section of the Tokyo Stock

Exchange, Inc. (“TSE”) and to convert the Company into a wholly owned subsidiary of the

Tender Offeror.

As of today, the Tender Offeror does not own any Company Shares.

Tender Offeror sets the minimum number of shares to be acquired by the Tender Offer

at 22,813,400 shares (Ownership Ratio (Note 1): 66.67%) (Note 2), and will not acquire

any of the tendered shares etc. (“Tendered Shares”) if the total number of Tendered Shares

is less than 22,813,400 shares. The minimum number of shares to be acquired has been set

so that the total voting rights to be held by the Tender Offeror after the Tender Offer will

be two-thirds or more of the total voting rights of the Company. On the other hand, Tender

Offeror does not set any upper limit of shares to be acquired since it aims to acquire all

Company Shares (excluding the treasury shares), so insofar as the Tendered Shares reaches

the minimum number of shares to be acquired (22,813,400 shares), the Tender Offeror will

acquire all Tendered Shares. Further, if the Tender Offer successfully completes, as

described in “(5) Policy for Organizational Restructuring, Etc. After Tender Offer (Matters

Regarding the So-called “Two-Step Acquisition”)”, Tender Offeror will conduct the

procedures so that the Tender Offeror will be the sole shareholder of the Company.

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(Note 1): “Ownership Ratio” means the ratio (fractions to be rounded to the nearest unit to

the second decimal place) to the total issued and outstanding shares as of

September 30, 2019 (34,220,700 shares) indicated in the Quarterly Report for the

Second Quarter of the 43rd Fiscal Year of the Company submitted on October 30,

2019 (“Second Quarter Report”) less the treasury shares held by the Company as

of September 30, 2019 (574 shares) indicated in the “Summary of Accounts for

the Second Quarter of the Fiscal Year Ending March 2020 (Japan Standard)

(Consolidated)” (“Summary of Accounts for the Second Quarter of 43rd Fiscal

Year”) released on October 29, 2019. Hereinafter the same.

(Note 2): The minimum number of shares to be acquired (22,813,400 shares) equals to two-

thirds (228,134 votes) of the total voting rights (342,201 votes) for the total

issued and outstanding shares as of September 30, 2019 (34,220,700 shares)

indicated in the Second Quarter Report less the treasury shares held by the

Company as of September 30, 2019 (574 shares) indicated in the Summary of

Accounts for the Second Quarter of 43rd Fiscal Year (34,220,126 shares)

multiplied by 100 shares.

If the Tender Offer successfully completes, Tender Offeror contemplates to raise the total

necessary funds of JPY 174,826,099,900 by (i) contribution of up to JPY 45 billion through

subscription of the preferred shares (“Preferred Shares”) of the Company by LSREF6

UNITED INVESTMENTS S.ÀR.L., an entity invested by LSREF6 Affiliate Finance

(Cayman), LLC which is an affiliate of Lone Star Real Estate Fund VI, L.P. (“LSREF6),

one of the funds advised by Lone Star(“Lone Star” means Lone Star Global Acquisitions,

Ltd. (registered as investment advisor at U.S. SEC) or its subsidiaries and affiliates, and

the funds receiving investment advice from such entities, collectively), and (ii) loan of up

to 130 billion (“Loan”) from KF Solutions Co., Ltd., an investment company of LSREF6 in

Japan, and apply these funds for settlement of the Tender Offer. While the detailed terms

and conditions of the investment and loan with respect to the Preferred Shares and Loan

shall be separately discussed with Lone Star and provided in the investment agreement

regarding the Preferred Shares and the loan agreement regarding the Loan, the investment

agreement regarding the Preferred Shares is contemplated to provide that prior consent of

the shareholders of the Preferred Shares is necessary if the Tender Offeror (including the

Company and its subsidiaries after the settlement of the Tender Offer) intends to conduct

certain material actions such as reorganizations; if certain period surpasses after issuance,

if there is default in the investment agreement or loan agreement, or if there is forfeiture of

the benefit of time, the shareholder of the Preferred Shares may exercise the call right in

consideration of cash or common shares; and that the Tender Offeror may exercise the put

right in consideration of cash after certain period surpasses after issuance. While if all of

the call rights in consideration of common shares are exercised, LSREF6 will indirectly

hold 99.99% of the Tender Offeror’s voting rights, according to Lone Star, in this Tender

Offer, Lone Star’s aim is not to obtain the controlling ownership of the Tender Offeror so

the likeliness that LSREF6 will actually exercise such rights is not high. Further, according

to the agreement, the Company Shares to be acquired by the Tender Offeror will to be

pledged, and after the Tender Offeror becomes the sole shareholder of the Company through

the procedure discussed in “(5) Policy for Organizational Restructuring, Etc. After Tender

Offer (Matters Regarding the So-called “Two-Step Acquisition”)” below, the Company is

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expected to provide joint and several guarantee in connection with the Loan.

II. Background of Tender Offeror’s Decision to Execute the Tender Offer, its Purpose and

Decision Making Process, and Management Policy after Tender Offer

The background of the Tender Offeror’s decision to execute the Tender Offer, and its

purpose and decision making process is as described below. The description regarding the

Tender Offeror is based on the explanation from the Tender Offeror and the information

disclosed by the Tender Offeror.

(A) Overview of the Tender Offeror

Tender Offeror is a kabushiki kaisha incorporated for the purpose of acquiring and

holding the shares etc. of the Company. The sequence en route to the incorporation is as

follows.

At around the end of October 2019, according to the discussion between the Company

and another candidate sponsor, a structure was discussed where the Company will separate

part of its assets to be operated by a new company to be incorporated mainly by the

employees (who do not concurrently serve as directors, and to include manager (bucho)

class employees who are executive officers (shikko yakuin) within two years from

assumption of office, hereinafter “Employees”) of the Company Group (hereinafter

defined). The representative director of the Company confirmed on a rolling basis over

approximately one month with over twenty Employees (abovementioned manager class

executive officers within two year from assumption of office, management employees, and

employees with or without major career path) of the Company Group who were expected

to be assume the primary role of such operation (including to become officers of the new

company) whether they actually have the intent to assume such role, whereby

approximately half of such Employees manifested such intention. Those such Employees

themselves widely solicited investors from the Employees of the Company Group, and

incorporated three companies (kabushiki kaishas) where the applying Employees became

the shareholders, namely the Second Stock Ownership Company, Limited (whose

shareholders are employees with or without major career paths (sogo shoku, ippan shoku)),

Third Stock Ownership Company, Limited (whose shareholders are vice presidents (bucho)

and deputy vice presidents (jicho)) and Fourth Stock Ownership Company, Limited (whose

shareholders are executive officers (shikko yakuin)), depending on the position of each

Employee. (The purpose of each company is investment into shares and equity of

membership companies, management after investment, and business management with

regards to real estate and hotel businesses. These three separate companies were

incorporated so that each Employee may frankly express their opinions per position level

at decision making of each company. When Chitocea Co., Ltd., a single kabushiki kaisha

incorporated by the Second Stock Ownership Company, Limited, Third Stock Ownership

Company, Limited and Fourth Stock Ownership Company, Limited as incorporators, with

the business purpose to invest into shares or ownership membership of the membership

companies, post investment management, and business administration with respect to real

estate and hotel management, at the end of November 2019, the Company received the Lone

Star proposal (later discussed). The Company therefore communicated the Lone Star offer

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to the Employees who were about to incorporate Second Stock Ownership Company,

Limited, Third Stock Ownership Company, Limited and Fourth Stock Ownership Company,

Limited. In reaction, the Employees incorporated the three kabushiki kaishas, i.e. Second

Stock Ownership Company, Limited, Third Stock Ownership Company, Limited and Fourth

Stock Ownership Company, Limited, and further, Second Stock Ownership Company,

Limited, Third Stock Ownership Company, Limited and Fourth Stock Ownership Company,

Limited incorporated Chitocea Co., Ltd on December 10, 2019 (For information purposes,

currently, Second Stock Ownership Company, Limited has 57 shareholders, Third Stock

Ownership Company, Limited has 13 shareholders, and Fourth Stock Ownership Company,

Limited has 3 shareholders, totaling to 73 individuals which all are Employees of the

Company Group. Second Stock Ownership Company, Limited, Third Stock Ownership

Company, Limited and Fourth Stock Ownership Company, Limited respectively own 37.3%,

60.6% and 2.1% of the voting rights of Chitocea Co., Ltd.). Thereafter, upon discussion

with Lone Star, Chitocea Co., Ltd. incorporated Chitocea Investments Co., Ltd. (the Tender

Offeror) as the SPC to launch the Tender Offer. Upon discussion between Chitocea Co.,

Ltd. and Lone Star, Chitocea Co., Ltd. decided to accept Lone Star affiliates as the sponsor

of the funds necessary for the Tender Offer and as the indirect minority shareholder owning

27% of the total issued and outstanding shares of Tender Offeror, in expectation of funds

for the Tender Offer and management support after the Tender Offer, and agreed that

Chitocea Co., Ltd will own common shares representing 73% of the total issued and

outstanding common shares of the Tender Offeror and LSREF6 will indirectly own common

shares representing 27% thereof. Thereafter, for prompt incorporation, Chitocea Co., Ltd.

incorporated the Tender Offeror as the sole incorporator on December 13, 2019, and

subsequently Chitocea Co., Ltd. transferred part of the common shares of Tender Offeror

it owns (27% of the issued and outstanding common shares) to LSREF6 UNITED

INVESTMENTS S.ÀR.L. As a result, as of today, common shares representing 73% of the

Tender Offeror’s issued and outstanding common shares are owned by Chitocea Co., Ltd.,

and 27% thereof is owned by LSREF6 UNITED INVESTMENTS S.ÀR.L., respectively. In

addition, currently, Lone Star has appointed one director of the Tender Offeror.

LSREF6, which invests in LSREF 6 United which owns common shares consisting 27%

of the total and outstanding common shares of the Tender Offeror, is an affiliate of

investment fund incorporated by John Grayken in 1995 in Dallas, Texas, U.S.A., and is a

global private equity fund investing in corporations, real estate, credit, financial products,

asset securitized products, etc. Since launching the first fund in 1995, Lone Star has

launched 20 funds, raising an aggregate capital of US$ 83.9 billion (approx. JPY 9 trillion)

from investors. Major investors of each fund are pension funds, sovereign wealth funds,

university funds, foundations, and fund of funds. Currently at Lone Star, Lone Star Real

Estate Fund VI, L.P. (raised capital of US$ 4.6 billion in June 2019) is actively investing

based on investment advice from Lone Star Global Acquisitions, Ltd. (registered as

investment advisor at the U.S. SEC, hereinafter “LSGA”).

Lone Star has 16 offices in the U.S., Europe and Asia, and has invested an aggregate of

US$ 212 billion (approx. JPY 22.9 trillion) to over 500 projects as of the end of March

2019. The basic investment strategy of Lone Star is execution of prompt investments backed

up by its rich financial resources, global network, and inter-group due diligence, valuation

and asset management capabilities.

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Lone Star, having commenced its investment activities in Japan in 1997, is one of the

global private equity funds with the longest history of over 20 years of investing in Japan.

With approximately 40 personnel throughout its group in Japan, Lone Star has affiliated

teams to support investment activities and management of companies and assets locally. In

Japan, Lone Star has a track record of approximately 50 corporate investment deals, and its

investment amount into real assets aggregates to approx. JPY 1.5 trillion. Such rich track

record includes the investment into The Tokyo Star Bank, Limited and PGM Holdings K.K.

Certain Lone Star funds has been selected as the sponsor for former The Tokyo Sowa Bank

in 2001, commenced the operation of The Tokyo Sowa Bank’s business at The Tokyo Star

Bank, Limited, additionally acquired multiple credit associations and bank branches, and

re-listed The Tokyo Star Bank, Limited to the First Section of the TSE in 2005. Separately,

Certain Lone Star funds had started investing in golf courses in Japan from 2000, expanded

its business through acting as sponsor for golf companies, engaged in additional acquisition

and operational contractor of golf courses, and has newly listed PGM Holdings K.K., the

holding company of such golf course operation companies and asset management

companies to the First Section of the TSE in 2005. After the listing, certain Lone Star funds

continued to support the growth of PGM Holdings K.K. as the major shareholder until 2013.

In the real estate business, Lone Star advised funds has a rich track record of investing

in various types of real estate in both the U.S. and Japan including offices, hotels and houses

(for example, investment to Meguro Gajoen which owns offices and hotels in Japan, and to

Home Properties which operates multi-dwelling complexes in the U.S.). Supported by its

deep knowledge and operational know-how of real estate and real estate business cultivated

through such investment experience, Lone Star has always been aggressively investigating

all types of corporate, regardless of listed or non-listed, and real estate investment

opportunities.

Lone Star advised funds has a compiled track record as sponsor for de-listing transactions

in the real estate business comparable to the Tender Offer. For example, in October 2015,

Lone Star advised funds has acquired Home Properties, Inc., a U.S. listed REIT (a REIT

which owns 121 buildings, or 41,917 housings, of multi-dwelling complexes in suburbs of

the metropolitan areas basically in the U.S. east coast) at the total amount of approx.

US$ 7.6 billion. The acquisition price offered by Lone Star advised funds was based on the

market price immediately before the acquisition was reported plus certain premium, where

all directors unanimously affirmed Lone Star’s proposal, and the transaction was approved

at the extraordinary shareholders meeting gathering affirmative votes of 73.9% among all

voting rights and 97.0% among the valid votes. The de-listing transaction was completed

without any counter proposals being submitted. In addition, in March 2016, Lone Start

advised funds acquired all properties of the Singapore listed Saizen REIT (a REIT which

owns 136 buildings, or 5,421 housings, of residential properties basically in the rural

regions of Japan) at the total acquisition price of JPY 44.7 billion. The asset acquisition

price of Lone Star advised funds exceeded the immediately prior valuation, and the stock

price calculated based on Lone Star advised funds’ asset acquisition price was a price based

on the market price immediately before the acquisition was announced plus certain premium.

All directors of Saizen REIT unanimously affirmed the Lone Star offer, and the transaction

was approved at the extraordinary shareholders meeting by affirmative votes of 92.6%

among the valid votes.

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(B) Business Overview, Business Environment, and Business Challenges of the Company

The Company was established as Daisho Fudosan Company, Limited in September 1959,

listed the Company Shares at the Second Section of the TSE in June 2009 and transferred

the Company Shares to the First Section of the TSE in October 2011, formed a group

comprised of the Company and nineteen consolidated subsidiaries (“Company Group”), and

today it runs the real estate business where it owns, leases and manages office buildings, as

well as the hotel business where it owns and operates lodging-focused hotels.

Regarding income and expenditure by segment, in the fiscal year ended March 31, 2019,

the real estate business accounted for JPY 43,363 million among the Company’s

consolidated operating revenue of JPY 56,053 million, and JPY 16,405 million among the

Company’s consolidated operating income of JPY 17,622 million, placing the business as

the Company’s primary business segment. Additionally, in the fiscal year ended March 31,

2019, the hotel business accounted for JPY 12,974 million of the consolidated operating

revenue and JPY 1,981 million of the consolidated operating income, placing the business

as the Company’s secondary business segment. (Please note that for the purpose of the

Company’s consolidated operating revenue and consolidated operating income, the total

amount of the real estate business segment’s total revenue and total operating income as

well as the total amount of the hotel business segment’s total operating revenue and total

operating income are adjusted to account for intersegment eliminations and corporate

expenses that are not allocated to individual reportable segments.)

In the real estate business - the Company’s largest business segment - the Company owns,

leases, and manages office buildings in Tokyo and in the greater Tokyo area in Japan, and

in the United States. In particular, UNIZO Real Estate Company, Limited - in addition to

leasing 62 office buildings that it owns in Japan (as of December 22, 2019) - is responsible

for real estate asset management and property management; and the consolidated

subsidiaries in the United States, including with UNIZO Holdings U.S., LLC, owns 6 office

buildings (as of December 22, 2019) and is entrusted with lease and management of such

buildings; and UNIZO Facilities Company, Limited is entrusted with building management

including cleaning and other services for office buildings.

Furthermore, in the hotel business, UNIZO Hotel Company, Limited operates 26 lodging

focused hotels (as of December 22, 2019) under the three brands of “HOTEL UNIZO”,

“UNIZO INN”, and “UNIZO INN Express” in outstanding locations in the central areas of

major cities and regional hub cities.

Looking at the business environment the UNIZO Group as described above confronts, in

the office building market in Japan, vacancy rates in Tokyo’s five central wards remains

below the 2% level, and the upward rate in rents continues to slow down in some areas

including central Tokyo. The market appears to have peaked out. In the hotel market in

Japan, the pace of growth in number of hotel guests from abroad has slowed down, and the

number of Japanese guests is on a downward trend. However, new or expanded hotel

capacity continues to increase, deteriorating the supply/demand balance. Turning to the

foreign office building market, in the United States, vacancy rates remain flat in some cities,

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rents are declining in some cities, and the real estate prices are also in downward trend.

Amid this outlook, the Company formulated and announced the new three-year Fourth

Medium-Term Management Plan “STRONGER FOOTHOLD 2021 - Strengthening the

Management Structure” (“Medium-Term Management Plan”) on April 16, 2019, and based

on this plan, aiming towards global growth and advancement, the UNIZO Group is

strengthening its management structure as its fundamental policy.

Furthermore, from the third quarter of the fiscal year ended March 31, 2019, the

Company has developed its policy to promote the management of its portfolio through

capital recycling* and has been accelerating initiatives to replace its assets to form a more

durable asset portfolio that is resilient to risk and even more profitable. The Company has

clearly specified these policies in its Medium-Term Management Plan. In the fiscal year

ending March 31, 2020, after a decrease in revenue from operations and income due to the

sale of assets, the Company aims to improve its financial structure so as to realize regrowth.

Similarly, in the fiscal years covered in the Medium-Term Management Plan, the Company

will manage its portfolio mainly through capital recycling, and unless there is a change in

the business environment, for the time being, the Company will not raise capital via new-

share issuance by public offering, and assets will be acquired within the extent of cash

inflows from investment activities.

*Capital recycling refers to replacement of assets for the purpose of increasing risk resilience

and improving profitability.

(C) Circumstances of the Discussion between Tender Offeror and Company, and Decision

Making Process of Tender Offeror, etc.

On July 11, 2019, a tender offer ( “H.I.S. Tender Offer”) for the Company Shares was

launched by H.I.S. Co., Ltd. (“H.I.S.”). As announced in “Notice of Position Statement

(Opposition) Regarding Tender Offer by H.I.S. Co., Ltd. for UNIZO Holdings Company,

Limited Stock” (“Press Release as of August 6”) published by the Company on August 6,

2019, the Company expressed its position opposing to the H.I.S. Tender Offer because,

among other reasons, the H.I.S. Tender Offer may damage the Company’s corporate value.

On August 23, 2019, the H.I.S. Tender Offer ended without any Company Shares tendered

nor any Company Shares purchased.

On the other hand, as stated in the Press Release as of August 6, in reaction to the

commencement of the H.I.S. Tender Offer, in order to realize further increase in corporate

value with, among other purposes, the purpose of providing an opportunity for all Company

shareholders to sell their Company Shares at a fair price and in order to secure opportunities

for other potential bidders to offer superior acquisition proposals from the perspectives

above (“Market Check”), the Company conducted Market Check by, among other means,

seeking proposals from potential buyers by itself as well as through Mitsubishi UFJ Morgan

Stanley Securities Co., Ltd. and Daiwa Securities Co. Ltd., the Company’s financial

advisors from mid-July of 2019, and has explored the possibility of potential bidders

(“Potential Sponsors”) including Lone Star, Fortress (Fortress Investment Group LLC,

which invested in Sapporo GK through its affiliate, Sapporo Holdings I LLC, and its group;

hereinafter collectively “Fortress”. The same shall apply hereinafter.) and Blackstone

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Group (Blackstone Singapore Pte. Ltd. or funds operated or advised by Blackstone

Singapore Pte. Ltd.; collectively, “Blackstone”) which may submit takeover proposals

targeting the Company’s shares under superior conditions than the H.I.S. Tender Offer.

As the result, on August 19, 2019, the tender offer (“Fortress Tender Offer”) for the

Company Shares was launched by Sapporo GK, capitalized by Sapporo Holdings I LLC, an

affiliate of Fortress, which is one of the Potential Sponsors. Based on the explanation

provided by Fortress to the Company when the Fortress Tender Offer was launched, the

Company decided that the Fortress Tender Offer would help the Company to further

increase its corporate value and promote the common interests of its shareholders since, as

announced in “Notice of Position Statement (Approval) Regarding Tender Offer by Sapporo

GK for the Shares of UNIZO Holdings Company, Limited” published by the Company on

August 16, 2019, the Company had concluded that Fortress can support in completing and

accelerating the fourth three-year mid-term business plan “STRONGER FOOTHOLD 2021

– Strengthening of Management Structure” ahead of schedule, increase resilience against

downside risk, and result in contributing to the further improvement of the Company’s

corporate value. Based on the decision by the Board of Directors at the board meeting held

on the August 16, 2019, the Company expressed its position to approve of the Fortress

Tender Offer, and additionally, the Company expressed its opinion to recommend that all

shareholders tender their shares in the Fortress Tender Offer. However, as announced in

“Notice of Position Statement (Withholding of Opinion) Regarding Tender Offer by

Sapporo GK for the Shares of UNIZO Holdings Company, Limited” published by the

Company on September 27, 2019, the Company resolved to withdraw its opinion to approve

the Fortress Tender Offer and its recommendation that shareholders owning the Company

Shares tender their shares in the Fortress Tender Offer, and resolved to withhold its opinion

regarding the Fortress Tender Offer, and withhold the opinion as to whether or not to

recommend its shareholders to tender their shares in the Fortress Tender Offer. This was

because the Company had concerns on whether the Fortress Tender Offer will lead the

Company to further increase its corporate value and promote the common interests of its

shareholders, considering that the despite the Company requested to increase the tender

offer price to JPY 5,000 after the commencement of the Fortress Tender Offer, the Company

did not received any response from Fortress, and based on the explanation provided by

Fortress in discussions and negotiations with Fortress there was undeniable possibility that

Fortress was considering to divest part of the Company’s business and assets, and thereby

substantially dissolving the Company.

Also, as announced in “Notice of Result for Examination Regarding an Acquisition

Proposal for UNIZO Holdings Company, Limited by a Third Party” published by the

Company on September 27, 2019, “Notice of Result of Analysis Regarding Third-Party

Takeover Offer” published by the Company on October 10, 2019, and “Notice of Policy for

Handling Takeover Offer by Blackstone for UNIZO Holdings Company, Limited”

published by the Company on October 21, 2019, the Company received a legally binding

proposal dated September 17 and 25, 2019, from Blackstone for the purpose of, among

other things, commencing a tender offer (“Blackstone Tender Offer”), a globally

acknowledged, in the Company’s opinion, one of the largest investment funds of the world

and one of the Potential Sponsors. However, after taking into consideration the content of

the proposal, the Company had concerns whether the Blackstone Tender Offer will lead the

Company to further increase its corporate value.

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As apparent, in reaction to the publication of the H.I.S. Tender Offer, in order to increase

and maintain the Company’s corporate value and promote the common interests of its

shareholders, the Company has explored the possibility of receiving acquisition proposals

from Potential Sponsors from mid-July of 2019. However, considering the explanation and

proposal received from those Potential Sponsors on and after the beginning of September

2019, as a result of the exploration, the Company has recognized that there the value, which

the Company seeks to materialize through the acquisition of the Company by the Potential

Sponsors such as the common interests of shareholders and maintaining and increasing the

Company’s corporate value, may not have been understood correctly.

Thus, as announced in “Regarding Basic Policy for Handling Acquisition Proposals

Targeting the Company” published on September 27, 2019, for the purpose of clarifying

the value which the Company seeks to materialize through the acquisition of the Company

by part of sixteen (16) Potential Sponsors and multiple new Potential Sponsors as of the

beginning of August 2019, receiving acquisition proposals securing the common interests

of shareholders and maintaining or increasing the corporate value by clarifying the value,

and to be able to make fair decisions without arbitrariness on the acquisition proposals

thereby securing the common interests of shareholders and maintaining or increasing the

corporate value in the event a acquisition is commenced against or proposed to the Company,

the Company resolved at the Board of Directors meeting held on September 27, 2019 the

basic policies (“Basic Policies”) where, in essence, when a third party including Potential

Sponsor makes an acquisition proposal or an attempt of acquisition of the Company Shares

by means of tender offer etc. (“Acquisition Proposal”), the Company shall examine it taking

into account the following points and determine its position regarding the Acquisition

Proposal:

(a) Whether the Acquisition Proposal secures the common interests of shareholders.

(b) Whether the Acquisition Proposal maintains or increases the Company’s corporate

value.

As announced in “Notice Regarding Status of Discussions with Candidate Sponsors

Pertaining Tender Offer” published on November 24, 2019 (“Press Release as of November

24”), the Company has discussed with six (6) foreign funds including Lone Star (indicated

as “Foreign Fund C” in the Press Release as of November 24), Sapporo GK (Fortress) and

Blackstone, a Japanese fund, and a Japanese non-financial company as the Potential

Sponsors, and the Company has sought for proposals securing the common interests of

shareholders and maintaining or increasing the corporate value as set forth below from the

Potential Sponsors in such discussion pursuant to the Basic Policies.

(1) the tender offer price per Company Share shall be JPY 5,000 or more

(2) for maintaining and increasing the corporate value, acquisition offerors are prohibited

from dismantling the Company and excessively taking profits from the Company, and

“employee protection” is planned so that the Acquisition Proposals ensure the

employment of the Company’s employees so that the Company continues to be a

worthwhile workplace for the employees.

As announced in the Press Release as of November 24, since the tender offer price of

JPY 4,100 in the Fortress Tender Offer is well below the current stock price of the Company,

the Company has requested to increase the tender offer price to JPY 5,000. However,

11


Sapporo GK (Fortress) has merely extended tender offer period without any rational reasons,

and it has not offered any proposals maintaining and increasing the corporate value

including “employee protection” as well as securing the common interests of shareholders,

for example, by increasing the tender offer price, and there is no prospect of such proposal.

Furthermore, as announced in the Press Release as of November 24, Blackstone has

suggested JPY 5,000 as the expected tender offer price, which can be deemed to meet an

adequate level as the valuation of corporate value including potential value of the Company

from the perspective of the common interests of shareholders, and the Company considered

this proposal to be well worth discussing. On the other hand, the Company considered that

certain structure for “employee protection” which ensures the employment of employees so

that the Company continues to be a worthwhile workplace for the employee should be

implemented after acquisition of the Company by Blackstone from the perspective of

maintaining and increasing corporate value. Accordingly, the Company has been actively

and sincerely negotiating with Blackstone on concrete terms and contract contents in order

to secure the items above. However, while the structure discussed between Blackstone was

to separate part of the Company Group’s assets to a new company to be operated by the

employees of the Company Group, during the discussion regarding the conditions to

implement such structure, the Company did not reached an agreement which guarantees

initiatives for “employee protection” that ensures the employment of employees of the

Company and ensures that the Company continues to be a worthwhile workplace for the

employees, as the Company was not able to believe the certainty of implementation of the

structure discussed with Blackstone.

On the other hand, Lone Star was one of the parties which the Company consulted about

the possibility of acquisition proposal targeting the Company Shares at the earliest timing

during Market Check in the beginning of July 2019, considering that Lone Star and the

Company Group had business relationships, including the purchase from 2012 to 2013 by

the Company Group of two hotels in Nagoya and Sendai which Lone Star owned and

operated at the time and which accelerated the nationwide expansion by Unizo Hotel

Company, Limited, and the sales of logistics facility in Oi, Ota-ku, Tokyo, owned by the

Company Group to Lone Star in 2016. Lone Star started to analyze upon consultation by

the Company about the possibility of submitting an acquisition proposal targeting the

Company Shares at an early stage of the Market Check by the Company in the beginning

of July 2019, and Lone Star contacted the Company when the Company switched its opinion

to the Fortress Tender Offer from approval to withholding, and has continued intensive

discussions with the Company since mid-October. Lone Star has offered multiple proposals

to the Company with regards to how to realize the Basic Policies and has advanced mutual

understanding between the Company. In particular, Lone Star offered the first proposal in

mid-July of 2019 which included the idea that Lone Star exits under certain circumstances,

then offered the next proposal in mid-October of 2019 which included the idea that Lone

Star provides finance to employees who desires to develop as an independent entity. Lone

Star has discussed with the Company based on such proposals and has come to believe

through such discussions that proposing tender offer by a company capitalized jointly by

employees and Lone Star will match the idea purported in the Basic Policies as the most

appropriate method to maintain and increase the corporate value including “employees

protection” based on the Basic Policies and as a method to secure common interests of

12


shareholders. Therefore, Lone Star, believing that (i) a tender offer for the Company Shares

and creation of wholly owned subsidiary by an SPC with employees as substantial

shareholders and (ii) capitalization or finance of funds necessary for the tender offer to the

SPC so that the tender offer can be commenced at a tender offer price of JPY 5,000 or more

shall secure the common interests of shareholders and contribute to maintaining and

increasing the corporate value, offered in late November 2019 a proposal (“Lone Star

Proposal”) to the Company and employees of the Company Group through the Company,

taking into account that the Company is requesting (i) and (ii) above to the Potential

Sponsors based on the Basic Policies. Lone Star is in belief that its proposal contributes to

maintaining and increasing the corporate value of the Company since it enables the Tender

Offeror through subscription by Lone Star of common shares and preferred shares of the

Tender Offeror to discuss with Lone Star regarding the selection, to take place six (6)

months after the starting date of the settlement of the Tender Offer, of either to (i) jointly

operate the Company Group by continuously receiving management support such as know-

how and network of Lone Star as the sponsor, or (ii) redeem or obtain the common shares

and preferred shares of the Tender Offeror owned by Lone Star and operate as an

independent entity, and to allow the Tender Offeror to discuss with Lone Star.

After the Company switched its opinion from approval to withholding as to the Fortress

Tender Offer, the Company was in negotiations with multiple Potential Sponsors where the

structure to separate part of the Company’s assets and to operate a new company to be

established by the employees of the Company Group was being discussed between part of

such Potential Sponsors, and while the preparation to incorporate Second Stock Ownership

Company, Limited, Third Stock Ownership Company, Limited, and Fourth Stock

Ownership Company, Limited was in process by the employees who had the intent to take

the lead role of such operation, those such employees, upon receipt of the Lone Star

Proposal via the Company, approved it for the reasons set forth below in the beginning of

December 2019:

(i) Lone Star is a global fund which has thorough knowledge of real estate industry,

abundant capital and high credibility. Lone Star has rich experience leading

Japanese and international delisting cases to success and is thought to be the best

partner to successfully complete the Tender Offer. It is expected that, with Lone

Star’s over twenty years of history of investment to corporations and real estate,

a management structure which allows to make flexible decisions in a mid-to-long

term perspective will be established even if there is fluctuation in the Company’s

performance in the short term. It is also expected that, with Lone Star’s advice to

the Company, further increase of the Company’s corporate value will be achieved

by increase in value of Company’s real estates, manifestation of intrinsic value of

the Company’s assets through redevelopment of the real estate, and improvement

of business efficiency in real estate management and hotel businesses. Especially,

the know-how and network Lone Star has in Japanese and international real estate

and business investment is expected to highly contribute to increasing the

Company’s corporate value.

(ii) Since the real estate business and the hotel business, which are the Company’s

main businesses, are always in circumstances where frequent changes occur.

Enabling prompt decision making through the acquisition all Company Shares and

13


delisting the Company is considered to be the most appropriate option to swiftly

and steadily change the huge asset portfolio through the capital recycling strategy.

(iii) In light of business environment surrounding the real estate business and the hotel

business, which are the Company’s main businesses, and variability of short-term

cash flow accompanied by the capital recycling, conducting the Transaction at

this time will offer the Company’s shareholders reasonable opportunities to sell

the shares without causing them to bear the risk of uncertainty of the future

business environment and thereby contribute to the interests of the Company’s

shareholders.

Subsequently, Chitocea Co., Ltd. which became the incorporator of the Tender Offeror,

made the proposal for the Transaction (“Proposal”) to the Company. As a result of

discussion and negotiation between the Tender Offeror and the Company, the Tender

Offeror, on December 23, 2019, decided to execute the Agreement as provided in “V.

Important Agreements regarding the Tender Offer” below, and to initiate the Tender Offer

at the offered price of JPY 5,100 per share of the Company (herein “Tender Offer Price”).

III. Decision-Making Process to the Company’s Approval to the Tender Offer and Reasons

Thereof

The Company, as stated above, had discussed with six (6) foreign investment funds

including Lone Star, Sapporo GK (Fortress) and Blackstone, a Japanese investment fund

and a Japanese non-financial company as Potential Sponsors. As stated in “(C)

Circumstances of the Discussion between Tender Offeror and Company, and Decision

Making Process of Tender Offeror, etc.” above, in discussing with the Potential Sponsors,

the Company had requested Potential Sponsors to submit offers which ensures common

interests of shareholders and maintains and increases the Company’s corporate value based

on the Basic Policy.

Under such circumstance, the Company received the Proposal described in “ (C)

Circumstances of the Discussion between Tender Offeror and Company, and Decision

Making Process of Tender Offeror, etc.” above by the Tender Offeror, and as a result of

comparison with proposals by multiple other Potential Sponsors, concluded that conducting

the Transaction contributes to further increase of the Company’s corporate value and

common interests of shareholders and leads to the Company’s mid-to-long-term growth

since the Proposal from the Tender Offer was superior to proposals from other multiple

Potential Sponsors in the following aspects:

(i) As stated above, the Tender Offer Price was the highest among the prices offered

by the six (6) foreign investment funds including Sapporo GK (Fortress) and

Blackstone, the Japanese investment funds and the Japanese non-financial

company and was the most favorable price to shareholders (although there was

one other candidate who offered the same price, the candidate was not able to

raise the funds necessary for a tender offer). The Tender Offer Price, as stated in

“I. Obtaining Share Valuation Reports from Third-party Valuators Independent

from the Company” of “(6) Measures to Secure Fairness of the Tender Offer such

as Measures to Secure Fairness of the Tender Offer Price and to Avoid Conflict

14


of Interest” below, is a price higher than share price range calculated by the

discounted cash flow (DCF) method as shown in the share price valuation reports

(herein “Share Valuation Reports”) obtained from KPMG FAS Co., Ltd. (herein

“KPMG”), ZECOO Partners Inc. (herein “ZECOO”) and Benedi Consulting Co.,

Ltd. (herein “Benedi”), all of which are share valuation advisors, and is the price

which contributes to common interests of shareholders in light of the Company’s

corporate value reflecting the financial situation, the business performance and

Mid-term Business Plan;

(ii) Lone Star is a global fund which has thorough knowledge of real estate industry,

abundant capital and high credibility. Lone Star has rich experience in leading

Japanese and international delisting cases to success and is thought to be the best

partner to successfully complete the Tender Offer. It is expected that, with Lone

Star’s over twenty years of history of investment in corporations and real estates,

a management structure which allows to make flexible decisions in a mid-to-long-

term perspective will be established regardless of the fluctuation in the

Company’s performance in the short term. It is also expected that, with Lone

Star’s advice to the Company and capital strength, further increase of the

Company’s corporate value will be achieved by increase in value of the

Company’s real estate, manifestation of intrinsic value of the Company’s assets

through redevelopment of the real estate and improvement of business efficiency

in real estate management and hotel businesses. Especially, the know-how and the

network Lone Star has in Japanese and international real estate and business

investment is expected to highly contribute to increase of the Company’s

corporate value;

(iii) In the discussion and negotiation with other Potential Sponsors, there was

undeniable possibility that Fortress was considering to divest part of the

Company’s business and assets, and thereby substantially dissolving the Company,

as well as with Blackstone the Company was forced to negotiate on the premise

that part of the Company Group’s asset will be separated. However, the Lone Star

Proposal allowed to basically maintain the structure of the Company without

dissolving or separating the Company or separating part of the Company’s assets,

and therefore was thought to be the proposal which contributes to ensuring that

the Company continues to be a worthwhile workplace for the employees, and to

continue to grow as a going concern while maintaining the integrity with the

previous business, thereby maintaining and increasing the Company’s corporate

value; and

(iv) The Company, in order to maintain and increase the corporate value, considers

extremely important to implement “employees protection” which ensures the

employment of the Company’s employees and ensures that the Company

continues to be a company in which the employees find their jobs rewarding. If

Lone Star directly acquires the Company, even if there is an agreement between

Lone Star and the Company that Lone Star will protect the Company employees

in connection with the tender offer, the possibility that Lone Star will not respect

such agreement after Creation of Wholly Owned Subsidiary cannot be completely

denied, whereas the financing arrangement between Lone Star is between the

Tender Offeror whose substantial shareholders are the Company employees.

15


Therefore, the Tender Offeror is expected to achieve the “employees protection”

after the Creation Of Wholly Owned Subsidiary, for example the employees

themselves will be able to demand to comply with the agreement after the after

execution of the Transaction, which shall contribute to further increasing the

Company’s corporate value.

Furthermore, as stated in “II. Establishment of Independent Special Committee” of “(6)

Measures to Secure Fairness of the Tender Offer such as Measures to Secure Fairness of

the Tender Offer Price and to Avoid Conflict of Interest” below, the Company consulted

with the Special Committee as described in “II. Establishment of Independent Special

Committee” of “(6) Measures to Secure Fairness of the Tender Offer such as Measures to

Secure Fairness of the Tender Offer Price and to Avoid Conflict of Interest” below

regarding the Consultation Matters defined in “II. Establishment of Independent Special

Committee” of “(6) Measures to Secure Fairness of the Tender Offer such as Measures to

Secure Fairness of the Tender Offer Price and to Avoid Conflict of Interest” below. The

Company received a report dated December 22, 2019 (herein “Findings Report”) from the

Special Committee. For the outline of the Findings Report and specific activities of the

Special Committee, please see “II. Establishment of Independent Special Committee” of

“(6) Measures to Secure Fairness of the Tender Offer such as Measures to Secure Fairness

of the Tender Offer Price and to Avoid Conflict of Interest” below.

IV. Management Policies after the Tender Offer

The Tender Offeror plans to choose either to continue to manage the Company Group

with management support from Lone Star including the know-how and use of its network,

or to become an independent company by redeeming or acquiring the Tender Offeror’s

preferred shares and common shares held by Lone Star six (6) months from the

commencement date of settlement of the Tender Offer. The choice will be made taking into

consideration the economic trends in the future, the real estate market and discussion with

Lone Star.

As for the management after the Creation Of Wholly Owned Subsidiary, the Tender

Offeror assumes that it will nominate new directors to replace current directors. The details

will be decided upon discussion with the Company after completion of the Tender Offer.

Further, Lone Star will be sending one director to the Company.

V. Important Agreements regarding the Tender Offer

(A) Tender Offer Agreement

In connection with the Tender Offer, the Tender Offeror entered into a Tender Offer

Agreement (“Agreement”) between the Company on December 22, 2019. Please see the

attached “Tender Offer Agreement” for the details of the Agreement.

(B) Shareholders Agreement

Chitocea Co., Ltd. and LSREF6 UNITED INVESTMENTS S.ÀR.L., the shareholders

of the Tender Offeror, and the Tender Offeror, intends to enter into a shareholders

agreement as of December 24, 2019. The shareholders agreement is contemplated to

provide that, among other matter, LSREF6 UNITED INVESTMENTS S.ÀR.L. has the

16


right to appoint one director of the Tender Offeror and the right to appoint one director

of the Company after the Completion of Wholly Owned Subsidiary, restriction of transfer

of the Tender Offeror’s shares until the redemption date of the Preferred Shares and first

refusal right after the transfer restriction period. In addition, Chitocea Co., Ltd. which is

the shareholder of the Tender Offeror, LSREF6 UNITED INVESTMENTS S.ÀR.L. and

the Tender Offeror has entered into an agreement as of December 22, 2019 which

provides that during a certain period after all investments regarding the Loan and the

Preferred Shares is repaid or redeemed, the Tender Offeror is entitled to obtain all or part

of the Tender Offeror’s common shares held by LSREF6 UNITED INVESTMENTS

S.ÀR.L.

(3) Matters Regarding Valuation

I. Names of Valuation Institutes and the Relation between the Company and Tender Offeror

The Company, in examining the tender offer price of the H.I.S. Tender Offer, engaged

KPMG, ZECOO and Benedi, third-party valuation advisors that are independent from

H.I.S. and the Company to valuate the Company Shares while excluding arbitrariness in

the decision-making process of the Board of Directors and to ensure fairness and

transparency.

The Company, also in relation with the Tender Offer, decided to refer to the Share

Valuation Reports obtained each from KPMG, ZECOO and Benedi to ensure fairness in

the decision-making process of the Board of Directors.

Please note that the Company has not obtained a fairness opinion concerning the

Tender Offer Price.

II. Overview of Valuation

(A) Overview of Share Valuation Report Obtained from KPMG

After examining the valuation methods in the H.I.S Tender Offer, KPMG chose the

DCF method as its main valuation method considering this method to be one of the most

logical valuation methods for properly reflecting the Company’s business growth and

endogenous business risks in its share value. The value-per-share range for the

Company’s shares from KPMG’s analysis is the following:

DCF method ¥3,640～¥4,537

In its DCF analysis, KPMG estimated the Company’s free cash flow for the fiscal year

ending March 31, 2020 and onward, taking into account the business plan the Company

has formulated for the fiscal years ending March 31, 2020 to March 31, 2022, recent

trends in the Company’s business, general information the Company has publicly

released, and other items. The estimated free cash flow was discounted to present value

using a certain discount rate, and upon analyzing the corporate value and share value,

the share price was calculated to be in the range between JPY 3,640 and JPY 4,537 per

share. However, this DCF analysis did not include the future fiscal years in which the

business results were forecasted to increase or decrease by a significant amount. Also,

the Company’s business plan did not predicate the H.I.S Tender Offer being commenced.

From an interest of examining the Company’s share value from different perspectives,

KPMG also performed auxiliary analysis using the sum-of-parts method and the stock

17


market price method. The value-per-share range for the Company’s shares from these

methods are the following:

Sum-of-parts method ¥4,498～¥5,215

Stock market price

method

¥1,893～¥2,002

In its sum-of-parts analysis, KPMG estimated the business value of the Company’s

real estate business based on the appraised value of its investment and rental properties,

combined this with an estimate for the business value of the Company’s hotel business

based on DCF analysis, and analyzed the corporate value and share value of the Company.

The result ranged in the share value of between JPY 4,498 and JPY 5,215 per Company

Share.

Finally, for the stock market price method, taking July 9, 2019 - the final business day

before the announcement of the H.I.S Tender Offer - as a base date, the closing price of

the Company Shares traded at the First Section of the TSE was JPY 1,990 on the base

date, the average closing price for the trailing one month before the base date was JPY

1,894, the average closing price for the trailing three months before the base date was

JPY 1,893, and the average closing price for the trailing six months before the base date

was JPY 2,002. Based on these figures, KPMG estimated the range for the Company’s

share value to be between JPY 1,893 and JPY 2,002.

(B) Overview of Share Valuation Report Obtained from ZECOO

After examining valuation methodologies in the H.I.S Tender Offer, ZECOO chose

the DCF method as its valuation method because DCF reflects the Company’s

profitability and other fundamentals well, considering that the Company is a going

concern. The value-per-share range for the Company’s shares from ZECOO’s analysis is

the following:

DCF method ¥3,680～¥4,420

In its DCF analysis, ZECOO estimated the Company’s free cash flow for the fiscal

year ending March 31, 2020 and onwards, taking into account the business plan the

Company has formulated for the fiscal years ending March 31, 2020 to March 31, 2022,

recent trends in the Company’s business, general information the Company has publicly

released, and other items. The free cash flow was then discounted to present value using

a certain discount rate, and upon analyzing the corporate value and share value, the share

price was calculated to be in the range between JPY 3,680 and JPY 4,420 per share.

However, this DCF analysis did not include the future fiscal years in which the business

results were forecasted to increase or decrease by a significant amount. Also, the

Company’s business plan did not predicate the H.I.S Tender Offer being commenced.

Also, for reference, ZECOO estimated the share value of the Company’s shares using

the comparable companies method and the adjusted net assets method. The value-per-

share range for the Company’s shares from these methods are the following:

Comparable companies ¥1,596～¥4,614

18


Adjusted net assets

method

¥7,856

In the comparable companies analysis, ZECOO examined the stock market price and

financial indicators that show profitability and other factors of listed companies engaged

in businesses that are relatively similar to the Company’s businesses. The result was a

range of estimated value per share of between JPY 1,596 and JPY 4,614 per Company

Share.

Finally, in its adjusted net assets analysis, ZECOO added unrealized gains on real

estate and investment securities held by the Company to the book value of net assets on

the Company’s consolidated balance sheet as of March 31, 2019 to arrive at an estimate

for adjusted net assets, which translates to a share value of JPY 7,856 per common share.

However, from the perspective of remaining a going concern, reasonable assessment is

impossible based only on the market value of individual assets at liquidation, and this

does not appropriately reflect the value on the basis of long-term operation, thus such

share value was treated as for reference only.

(C) Overview of Share Valuation Report Obtained from Benedi

After examining valuation methods in the H.I.S Tender Offer, Benedi chose the DCF

method as it considers the best way in theory to value an asset, including stocks, is to

discount future cash flows generated by that asset to the present, and considers the DCF

method as the most practical way of completing this analysis. The value-per-share range

for the Company’s shares from Benedi’s analysis is the following:

DCF method ¥3,565～¥4,705

In its DCF analysis, Benedi estimated the Company’s free cash flow for the fiscal year

ending March 31, 2020 and onwards, taking into account the business plan the Company

has formulated for the fiscal years ending March 31, 2020 to March 31, 2022, recent

trends in the Company’s business, general information the Company has publicly

released, and other items. The free cash flow was then discounted to present value using

a certain discount rate, and upon analyzing the corporate value and share value, the share

price was calculated to be in the range between JPY 3,565 and JPY 4,705 per share.

However, this DCF analysis did not include the future fiscal years in which the business

results were forecasted to increase or decrease by a significant amount. Also, the

Company’s business plan did not predicate the H.I.S Tender Offer being commenced.

Also, as an analysis auxiliary to the DCF method, Benedi estimated the share value of

the Company’s shares using the adjusted net assets method. Further, while Benedi also

estimated the share value of the Company Shares using the stock market price method

since the Company Shares are listed on the TSE, the stock market price method is not

necessarily considered as appropriate as a valuation method for a Tender Offer aimed for

acquiring control. The ranges of the value-per share results for the Company’s shares

from these methods are the following:

Adjusted net assets

method

¥7,631

19


Stock market price

method

¥1,893～¥2,002

For the stock market price method, taking July 9, 2019 - the last business day before

the announcement of the H.I.S. Tender Offer as a base date, the closing price of the

Company Shares traded at the First Section of the TSE was JPY 1,990 on the base date,

the average closing price for the trailing one month before the base date was JPY 1,894,

the average closing price for the trailing three months before the base date was JPY 1,893,

and the average closing price for the trailing six months before the base date was JPY

2,002. Based on these figures, Benedi estimated the range for the Company’s share value

to be between JPY 1,893 and JPY 2,002.

In its adjusted net assets analysis, Benedi added unrealized gains on properties for

lease, hotels, and investment securities held by the Company to the book value of net

assets on the Company’s consolidated balance sheet as of March 31, 2019 to arrive at an

estimate for adjusted net assets, which translates to a share value of JPY 7,631 per

Company Share. However, the adjusted net assets analysis is a static evaluation for the

enterprise and does not necessarily reflect the earning capacity that is important for

enterprise evaluation, such analysis is considered only as a supplement to the DCF

analysis.

(4) Prospects of and Reasons for Delisting

Company Shares are listed on the First Section of the TSE as of the date hereof. However,

as the Tender Offeror has not set a maximum limit on the number of shares to be purchased

in the Tender Offer, Company Shares may be delisted through prescribed procedures in

accordance with the delisting criteria of the TSE, depending on the results of the Tender

Offer. Further, even in the event that the delisting standards are not met upon completion

of the Tender Offer, if the procedures stated in “(5) Policy for Organizational Restructuring,

Etc. After Tender Offer (Matters Regarding the So-called ‘Two-Step Acquisition’)” below

is conducted, Company Shares will be delisted because the delisting standards will be met.

After delisting, Company Shares may no longer be traded on the First Section of the TSE.

(5) Policy for Organizational Restructuring, Etc. After Tender Offer (Matters Regarding the

So-called “Two-Step Acquisition”)

As noted in “I. Overview of Tender Offer” of “(2) Basis and Reasons for Position

regarding the Tender Offer” above, the Tender Offeror intends to take over the Company

as a wholly owned subsidiary. If the Tender Offer is successful but the Tender Offeror is

not able to acquire all issued shares of the Company (excluding treasury shares held by the

Company) via the Tender Offer, then after the Tender Offer, the Tender Offeror plans to

implement the methods stated below for the purpose to acquire all remaining Company

Shares.

I. Demand for sale of shares

Upon completion of the Tender Offer, if the voting rights controlled by the Tender

Offeror is 90% or more of total voting rights of the Company, and the Tender Offeror

becomes a Special Controlling Shareholder as stipulated in Article 179, Paragraph 1 of

the Companies Act (Act No. 86 of 2005, including amendments, hereinafter the same, the

20


“Companies Act”), promptly after settlement of the Tender Offer, as stipulated in

Companies Act Part 2, Chapter 2, Section 4-2, the Tender Offeror intends to demand for

sale “Demand for Sale Order”) to all shareholders (excluding the Tender Offeror and the

Company) for all remaining Company Shares. The Tender Offeror intends to pay the same

amount as the Tender Offer Price per share to all shareholders (excluding the Tender

Offeror and the Company) as the price per share for the Demand for Sale Order. In this

case, the Tender Offeror will inform the Company of its intent to issue a Demand for Sale

Order, and request for the Company’s approval. If the Company’s Board of Directors

approves of the Demand for Sale Order, via procedures stipulated in the related laws,

without the approval of each shareholder, on the date specified in the Demand for Sale

Order, the Tender Offeror will acquire all remaining Company Shares from all

shareholders (excluding the Tender Offeror and the Company). The Tender Offeror will

pay the same amount as the Tender Offer Price to the relevant shareholders as

consideration for each common share of the Company owned by such shareholders. Please

note that the Company’s Board of Directors plans to approve of a Demand for Sale Order

issued by the Tender Offeror, if the Company receive notice from the Tender Offeror of

its intention to issue a Demand for Sale Order and the matters stipulated in Companies

Act Article 179-2, Paragraph 1 Shareholders that receive a Demand for Sale Order may

file a motion in court for a determination of the price per share pursuant to Companies

Act Article 179-8 and other related laws.

II. Reverse share split

If, after the completion of the Tender Offer, the voting rights controlled by the Tender

Offeror is less than 90% of total voting rights of the Company, promptly after settlement

of the Tender Offer, the Tender Offeror intends to request the Company to execute a

reserve share split of Company Shares pursuant to Article 180 of the Companies Act

( “Reverse Split”) and to hold an extraordinary meeting of shareholders ( “Extraordinary

Meeting”) for, among other purposes, the amendment of the Company’s Articles of

Incorporation to abolish the provisions of trading unit, conditional to the effectuation of

the Reverse Split. The timing of the Extraordinary Meeting etc. will be determined

through consultation between the Tender Offeror and the Company, and once determined,

the Company will to promptly make an announcement. Furthermore, the Tender Offeror

intends to vote to approve these resolutions at the Extraordinary Meeting.

If the proposal of Reverse Split is approved at the Extraordinary Meeting, on the

effective date of the Reverse Split, shareholders of the Company becomes to own the

number of shares reduced by the split ratio approved at the Extraordinary Meeting.

Should there be fractional holdings of less than one share upon the Reverse Split, via

procedures stipulated in Companies Act Article 235 and other related laws, the relevant

shareholders of the Company will receive cash in the amount equivalent to the sum of

consideration if all such fractional shares (fractional number of less than one in the total

number of such fractional shares shall be rounded off, hereinafter the same) was sold or

tendered to the Company or Tender Offeror. This amount of consideration for the total

number of fractional shares of the Company will be determined by setting forth the

amount to be paid to the shareholders of the Company who did not tender their shares to

be equivalent to the Tender Offer Price multiplied by the number of Company Shares

owned by each shareholder, and the Tender Offeror will request the Company to file a

21


motion in court that would compel shareholders to sell their shares. As of today, the split

ratio of the Reverse Split has not yet been determined. However, the Tender Offeror

intends to acquire all issued Company Shares (excluding treasury shares held by the

Company), and as such intends to set the split ratio so that the shareholdings of all

shareholders (excluding the Tender Offeror and the Company) shall be reduced to

fractional holding of less than one share.

As stipulated in Companies Act Article 182-4, Article 182-5, and other related laws,

if the shareholdings are reduced via the Reverse Split to fractional holdings of less than

one share, to ensure all shares are acquired at a fair price, relevant shareholders may

request the Company to purchase their Company Shares at a fair price and such

shareholders may file a motion in court for a determination of the price per share.

The Tender Offer is not intended to solicit the votes of shareholders in favor of the

resolutions to be proposed at the Extraordinary Meeting.

For procedures stated in I and II above, depending on the amendments to, enforcement

of and interpretation by authorities of the relevant laws, additional time may be required

or alternative methods may be utilized to implement such procedures (including to follow

the procedure mentioned in II even if the voting rights controlled by the Tender Offeror

is more than 90% of total voting rights of the Company after successful completion of

the Tender Offer instead of the procedure mentioned in I above). In any event, insofar as

the Tender Offer is complete, the Tender Offeror intends to choose a method to cash out

the shareholders who did not tender shares in the Tender Offer (excluding Tender Offeror

and the Company). The amount shall be the equivalent to the Tender Offer Price per

share of each Company Share held by relevant shareholders. It should be noted that if a

motion for the determination of the price per share in the case of Demand for Sale Order

or a motion for the determination of the price per share in the case of Reserve Split is

filed, the price per share will ultimately be determined by the court.

The Company will make a public announcement regarding specific methods and time

frames related to the above promptly after the Tender Offeror makes a decision upon

consultation with the Company.

Also, concerning tax effects relating to tendering the shares in the Tender Offer or to

the above methods, shareholders are responsible for their own consultations with tax

professionals.

(6) Measures to Secure Fairness of the Tender Offer such as Measures to Secure Fairness of

the Tender Offer Price and to Avoid Conflict of Interest

As of now, the Tender Offeror does not own any Company Shares, and the Tender Offer

does not fall under a tender offer by the controlling shareholder. There is no plan for all or

part of the executive managers of the Company to directly or indirectly invest in the Tender

Offeror, and the Transaction including the Tender Offer is not a management buyout.

Further, the Company employees who are the substantial shareholders of the Tender Offeror

are not entitled to participate in the decision making of the Company, and in fact does not

participate, so a structural conflict of interest comparable to a management buyout does not

exist. Nonetheless, the Tender Offeror and the Company has implemented certain measures,

22


mainly the following, considering that the Tender Offer is part of the Transaction intended

to take over the Company as a wholly owned subsidiary, so as to exclude arbitrariness in

the decision-making process of the Board of Directors and to ensure fairness and

transparency. The following descriptions related to the Company is based on the

information provided by the Company or released by the Company.

I. Obtaining Share Valuation Reports from Third-party Valuators Independent from the

Company

In the course of examining the tender offer price of the H.I.S. Tender Offer, in order to

exclude arbitrariness in the decision-making process of the Board of Directors and to ensure

fairness and transparency, the Company engaged KPMG, ZECOO, and Benedi, all third-

party valuators independent from the Company and H.I.S. for the valuation of the Company

Shares.

In relation with the Tender Offer, the Company decided to refer to each such Share

Valuation Reports obtained from KPMG, ZECOO, and Benedi to evaluate the Tender Offer

Price so as to ensure fairness and transparency.

Please note that the Company has not obtained a fairness opinion concerning the Tender

Offer Price.

Please see “(3) Matters Regarding Valuation” above for details of the Share Valuation

Reports” obtained from KPMG, ZECOO, and Benedi.

II. Establishment of Independent Special Committee

In expressing the Company’s position on the H.I.S. Tender Offer and to eliminate the risk

of arbitrariness and ensure fairness and transparency in the decision-making process of the

Board of Directors, the Company established a Special Committee on July 16, 2019,

consisting entirely of five outside members of the Board of Directors independent from the

Company and H.I.S.

Also in connection with issuing the Company’s opinion regarding the Fortress Tender

Offer, on August 15, 2019, the Company has also consulted with its Special Committee

consisting of five outside members of the Board of Directors who are independent not only

from the Company and H.I.S. but also from Fortress for the purpose of eliminating the risk

of arbitrariness and ensuring fairness and transparency in the decision-making process of

the Board of Directors.

The Tender Offeror, through the Transactions including this Tender Offer, intends to take

over the Company as a wholly owned subsidiary. In this context, in order to eliminate the

risk of arbitrariness and ensure fairness and transparency in the decision making process of

the Board of Directors regarding the Transactions including the Tender Offer, the Board

consulted with the Special Committee, which consists entirely of five outside members of

the Board of Directors independent from not only the Company and H.I.S. but also from

the Tender Offeror and Lone Star, on December 21, 2019 with respect to the following

matters: (a) legitimacy of the purpose of the Transactions; (b) fairness of the process of the

Transactions; (c) appropriateness of the consideration to be paid through the Transactions

to the Company’s shareholders; (d) considering items (a) to (c), as well as other items,

whether the Transactions are disadvantageous to the minority shareholders; and (e)

considering items (a) to (d), whether or not the Transactions are beneficial to the Company

23


and its shareholders (such items, collectively, “Consultation Points”). The reason why the

consultation to the Special Committee was immediately before the resolution of the Board

of Directors of the Company was because the Company has been discussing and negotiating

in parallel between multiple Potential Sponsors, and it was only immediately before the

resolution of the Board of Directors of the Company when it was judgable that it was the

appropriate timing to consult regarding the Transactions.

The Special Committee regarding the Transaction was held on December 21 and 22, 2019,

which carefully examined and discussed the Consultation Points. The Special Committee

examined necessary materials including materials disclosed or provided by the Company,

interviewed directors of the Company and examined and discussed matters in connection

with the Consultation Points, such as details, background, development and purpose of the

Transaction, and measures to secure fairness of the Transactions implemented by the Tender

Offeror. The Special Committee is not involved in the negotiation between the Company,

Tender Offeror and Lone Star.

The Special Committee had retained Mr. Kimitoshi Yabuki (Partner of Yabuki Law

Offices) as an independent legal advisor for the Special Committee. As Mr. Yabuki is

independent from the Tender Offeror and Lone Star, the Special Committee continued

engagement of Mr. Yabuki after the proposal of the Transaction and obtained legal advise

on the specifics and procedure regarding the Consultation Points.

Mr. Yabuki is not related party of the Tender Offeror, Lone Star or the Company, and as

such there are no significant conflict of interest that should be reported in relation to the

Tender Offer.

Based on the above background and after careful examination and analysis, the Special

Committee submitted the report to the Board of Directors on December 22, 2019. Outline

of the report is as follows

(a) Legitimacy of Purpose of the Transactions

Based on the Basic Policies, the Company has discussed with the Potential Sponsors and

requested to offer proposals which ensures the common interests of shareholders and

contributes to maintaining and increasing the Company’s corporate value. The Company

has come to conclude that executing the Transaction by the Tender Offeror shall contribute

to further increasing the Company’s corporate value and common interests of shareholders,

leads to the Company’s mid-to-long-term growth, as the Proposal by the Tender Offeror is

superior to the proposals from other multiple Potential Sponsors in the following aspects:

The Company has conducted the Market Check, and the Tender Offer Price was the

highest among the prices offered by the Potential Sponsors, i.e. six foreign investment

funds including Sapporo GK (Fortress) and Blackstone, one Japanese investment fund,

and one Japanese non-financial company. (Although there was one other candidate

who offered the same price, the candidate was not able to raise the funds necessary

for the tender offer.)] Furthermore, the Tender Offer Price exceeds the range of share

value calculated by the discounted cash flow method as shown in the Share Valuation

Reports obtained from KPMG, ZECOO, and Benedi, as share valuation advisors, and

it is deemed a price contributing to the common interests of shareholders, considering

the Company’s corporate value based on the Company’s financial status and operating

results and the Mid-term Business Plan;

24


Lone Star is a global fund which has thorough knowledge of real estate industry,

abundant capital and high credibility. Lone Star has rich experience leading Japanese

and international delisting cases to success and is thought to be the best partner to

successfully complete the Tender Offer. It is expected that, with Lone Star’s over

twenty years of history of investment to corporations and real estate, a management

structure which allows to make flexible decisions in a mid-to-long term perspective

will be established even if there is fluctuation in the Company’s performance in the

short term. It is also expected that, with Lone Star’s advice to the Company, further

increase of the Company’s corporate value will be achieved by actualizing the value

of Company’s real estates, manifestation of intrinsic value of the Company’s assets

through redevelopment of the real estate, and improvement of business efficiency in

real estate management and hotel businesses. Especially, the know-how and network

Lone Star has in Japanese and international real estate and business investment is

expected to highly contribute to increasing the Company’s corporate value.;

While other Potential Sponsors discussed and negotiated with the Company on the

premise to separate the Company Group, the proposal by Lone Star will enable the

Company to basically maintain its current integrity without separating its assets, and

therefore thought to be the proposal which contributes to maintaining and increasing

the Company’s corporate value; and

The Company considers that for the purpose of maintaining and increasing corporate

value, it is extremely important that a certain structure for “employee protection”

which ensures the employment of employees and that the Company continues to be a

worthwhile workplace for the employees is implemented. The financing arrangements

between Lone Star will be between the Tender Offeror whose substantial shareholders

are the employees of the Company, so the Tender Offeror is expected to be able to

achieve the “employees protection” after the Creation Of Wholly Owned Subsidiary,

for example, the employees themselves will be able to demand to comply with the

agreement after execution of the Transaction, which shall contribute to further

increasing the Company’s corporate value.

As described above, the Company has collected certain materials, obtained advices and

opinions from independent experts and specialists, thus is deemed to have individually

analyzed and verified whether or not the Transactions contribute to increasing the

Company’s corporate value and the common interests of shareholders. Furthermore, as

mentioned above, there are various merits in taking over the Company as a wholly owned

subsidiary of the Tender Offeror, thus expected to increase the Company’s corporate value.

Accordingly, the Special Committee believes that the purpose of the Transactions is

legitimate.

(b) The Fairness of the Process of the Transactions

Considering that (i) the Company referred to the Share Value Estimation Reports

obtained from KPMG, ZECOO, and Benedi, all of whom are third party valuators that are

independent from H.I.S. and the Company, and were engaged for reviewing the tender offer

price in the H.I.S. Tender Offer, (ii) the Company plans to make its decision taking into

consideration the Findings Report, (iii) the Company has received legal advice concerning

25


Japanese law issues from TMI Associates and Nishimura & Asahi, which are external legal

advisors independent from the Company and the Tender Offeror, and carefully reviewed the

Transactions based on such legal advice, and (iv) upon the announcement of the H.I.S

Tender Offer, from the perspective of seeking to increase the Company’s corporate value

and promoting the common interests of shareholders through fair procedures, the Company

has conducted Market Check that resulted in confirming with 16 potential bidders, and

thereafter, the Company enacted the Basic Policy and conveyed the Company’s attitude

towards acquisition proposals, and discussed with six (6) foreign investment funds

including Lone Star, Sapporo GK (Fortress) and Blackstone, a Japanese investment fund

and a Japanese non-financial company as Potential Sponsors in order to promote the

common interests of shareholders and maintain and increase the Company’s corporate value,

the process of the Transactions is considered to be fair.

(c) The Appropriateness of the Consideration to be Delivered through the Transactions

to the Company’s Shareholders

The Tender Offer Price, or the consideration payable to the Company’s shareholders

through the Transactions is considered to be appropriate for the following reasons:

(i) The Tender Offer Price was the highest among the prices offered, through the

Market Check conducted by the Company, by the six (6) foreign investment funds

including Sapporo GK (Fortress) and Blackstone, the Japanese investment funds

and the Japanese non-financial company, and was the most favorable price to

shareholders. Although there was one other candidate which offered the same

price, the candidate was not able to raise the funds necessary for a tender offer;

and

(ii) The Company obtained Share Valuation Report from valuators, which the

Company has engaged in order to examine the tender offer price of the H.I.S

Tender Offer independent from the Company and H.I.S., and in connection with

the Tender Offer, the Company referred to those Share Valuation Reports to

evaluate the Tender Offer Price so as to ensure fairness in the decision-making

process of the Board of Directors. The Tender Offer Price exceeds the range of

share value calculated by the discounted cash flow methods as shown in the Share

Valuation Reports obtained from the valuators. The Tender Offer Price represents

a premium of 4.08% (fractions to be rounded to the nearest unit to the second

decimal place, the same shall apply in this item) of the latest (December 20, 2019)

closing price in the market. The Tender Offer Price is 24.39% higher than the

tender offer price of the Fortress Tender Offer, where Fortress being an

independent party.

(d) Considering Items (a) to (c), as well as Other Items, whether the Transactions is

Disadvantageous to the Minority Shareholders or Not

Considering that the purpose of the Transactions is legitimate, that the process of the

Transactions is fair, that the consideration to be delivered to the Company’s shareholders

is appropriate, and that there are no other disadvantageous circumstances for the Company’s

26


minority shareholders caused by the Transactions, the Transaction does not harm the

interests of minority shareholders.

(e) Considering items (a) to (d), whether the Transactions are Beneficial to the Company

and its Shareholders or Not

Considering that the purpose of the Transactions is legitimate, that the process of the

Transactions is fair, that the consideration to be delivered to the Company’s shareholders

are appropriate, and that the Transaction does not harm the interests of minority

shareholders, it is considered that the Transactions are beneficial for the enhancement of

the Company’s corporate value and common interest of shareholders.

III. Legal Advice from Independent Legal Advisors

In expressing the Company’s position on the H.I.S. Tender Offer, in order to eliminate

the risk of arbitrariness and ensure fairness and transparency in the decision-making process

of the Board of Directors, the Company appointed external legal advisors, TMI Associates

and Nishimura & Asahi, who are independent from the Company and from H.I.S. As TMI

Associates and Nishimura & Asahi are also independent from the Tender Offeror, the

Company has continued the retainment concerning Japanese law issues relating to the

Transactions after the Proposal of the Transactions by the Tender Offeror, and has received

legal advice relating to the process, method, and other issues concerning decision making

for the Transactions. Considering these advice, the Company underwent careful

examination of the Tender Offer.

Each of the legal advisors is not a related party of the Tender Offeror or the Company,

and as such there are no significant conflict of interest that should be noted in relation to

the Tender Offer.

IV. Approval of All Members of the Board and No Objection From Any Audit and

Supervisory Board Members

At the Company’s Board of Directors meeting held on December 22, 2019, the Company

resolved unanimously that based on the reasons and basis set forth in ““III. Decision-

Making Process to the Company’s Approval to the Tender Offer and Reasons Thereof” of

“(2) Basis and Reasons of the Position regarding the Tender Offer”, the Company approves

the Tender Offer and expresses its opinion to recommend that all shareholders tender in the

Tender Offer.

Further, all Audit Board members (5 persons) attended the Board of Directors meeting,

and expressed their positions that they have no objections to the Board of Directors’

approval of the Tender Offer and expressing the opinion to recommend all shareholders to

tender in the Tender Offer.

V. Assurance of Objective Circumstances to Secure Fairness of the Tender Offer Price

Upon publication of the H.I.S. Tender Offer, for the purpose of increasing corporate value

of the Company and securing the common interests of the shareholders through due

procedures, the Company conducted Market Check, and confirmed with 16 Potential

Sponsors on and after mid-July 2019. The Company, as explained, also enacted the Basic

Policies thereby communicating the Company’s approach, and discussed with six (6)

27


foreign funds including Lone Star, Sapporo GK (Fortress) and Blackstone, a Japanese fund,

and a Japanese non-financial company as the Potential Sponsor to submit proposals which

secures the common interests of the shareholders and maintains and improves the corporate

value of the Company.

4. Important Agreements between Tender Offeror and Shareholders of the Company Pertaining to

Tendering in Tender Offer

Not applicable.

5. Profit Sharing Arrangements by Tender Offeror or Special Related Parties

Not applicable.

6. Initiatives Pertaining to Basic Policy Regarding Control of the Company

Not applicable.

7. Questions Directed to Tender Offeror

Not applicable.

8. Request for Extension of Tender Offer Period

Not applicable.

9. Future Outlook

Please see “II. Background of Tender Offeror’s Decision to Execute the Tender Offer, its

Purpose and Decision Making Process, and Management Policy after Tender Offer” of “(2) Basis

and Reasons of the Position regarding the Tender Offer”, “(4) Prospects of and Reasons for

Delisting” and “(5) Policy for Organizational Restructuring, Etc. After Tender Offer (Matters

Regarding the So-called “Two-Step Acquisition”) of “3. Position regarding the Tender Offer,

and Basis and Reasons Thereof”.

10. Others

(1) Amendment to the Prospective Dividends for Fiscal Year Ending 2020 and the Handling of

Shareholder Benefits

The Board of Directors held on December 22, 2019 resolved that the Company shall

revise its forecast for dividends for the fiscal year ending March 2020 announced on April

16, 2019, and that the Company will not distribute any interim dividends or annual

dividends for the fiscal year ending March 2020, and shall not grant shareholder benefits

for any date of record on and after March 31, 2020, respectively subject to the completion

of the Tender Offer. Please see “Notice Regarding Revision in Dividend Forecast for the

Fiscal Year Ending March 31, 2020, and Regarding Handling of Shareholder Benefits”

released by the Company on December 22, 2019.

(Reference) Summary of Tender Offer etc. (Attachment)

Please see attached “Notice Concerning Commencement of Tender Offer for Shares of UNIZO

Holdings Company, Limited (Securities Code: 3258)” released by the Tender Offeror today.

28


(Exhibit)

Tender Offer Agreement

Chitocea Investment Co., Ltd. (“X”) and UNIZO Holdings Co., Ltd. (“Y”) hereby enters into this

agreement (“Agreement”) in connection with the tender offer (“Tender Offer”) for the Y shares and the

operation, etc. of Y thereafter, as follows:

Article 1 Launch of the Tender Offer

1. X shall publicly announce on the execution date of this Agreement that X will commence the Tender

Offer in compliance with applicable laws and under the Terms and Conditions described below, and

shall commence the Tender Offer on December 24, 2019 under the Terms and Conditions described

below. X shall not, without prior written consent of Y, change any of the Terms and Conditions

described below; provided, that Y shall not unreasonably withhold, delay or refuse such consent. X

shall make reasonably best efforts to successfully complete the Tender Offer; provided, that X may,

after the commencement of the Tender Offer, withdraw the Tender Offer as long as permitted by

Financial Instruments and Exchange Act and other applicable laws and regulations.

(Terms and Conditions)

Tender Offer Price: JPY 5,100 per share

Upper Limit of Shares: None (100% tender offer)

Lower Limit of Shares: The number calculated by (i) multiplying (a) the number of voting rights of

the number of the issued and outstanding Y shares as of the date of the

launch of the Tender Offer after deducting the number of treasury shares

held by Y as of the same day, by (b) two-thirds (2/3), and by (c) 100 shares

which consists per share units, and then (ii) deducting the number of Y’s

shares held by X as of the same day.

Tender Offer Period: December 24, 2019 to February 4, 2020 (25 business days)

2. When the commencement of the Tender Offer is announced by X pursuant to the preceding

Paragraph, Y shall:

(a) express its opinion to approve the Tender Offer and recommend its shareholders to tender their

shares in the Tender Offer (“Approval Statement”), and provide cooperation, such as

recommendation to shareholders, necessary for obtaining as many shareholders’ applications as

possible in good faith; and maintain the Approval Statement until the end of Tender Offer Period;

and not resolve to withdraw or change the Approval Statement at the Board of Directors meeting;

(b) provide cooperation necessary for the successful completion of the Tender Offer, which is

reasonably required by X and includes, but is not limited to, promptly sending documents explaining

the Tender Offer to shareholders in good faith.

(c) to Fortress Japan Investment Holdings LLC (“Fortress”), in relation with the memorandum of

understanding between Fortress and Unizo, effective as of August 16, 2019, as amended or modified

(as applicable) (the “Fortress Agreement”), (i) upon the commencement of the Tender Offer, request

to terminate the Fortress Agreement; (ii) if Fortress does not agree or respond to such request, notify

termination pursuant to the Fortress Agreement (which shall be no later than within five (5) business

days from the commencement of the Tender Offer); and

29


(d) prohibit from conducting any actions which may frustrate the Tender Offer.

3. Notwithstanding the Paragraph 2 of this Article, in the event that:

(a) (i) any third party submits a legally binding proposal competing with the Tender offer for all of

the shares of Y, and as compared to the Tender Offer, taking into account various factors including

the purchase price and the other terms of the transaction, certainty of financing and certainty of

execution of the transaction, the Board of Directors of Y reasonably determines that such proposal

is more favorable to shareholders as a whole or would maintain or increase the corporate value

(including employees protection) (such third party proposal herein referred to as the “Third Party

Offer”), (ii) Y has provided X a written notice regarding the Third Party Offer and all material terms

thereof, and provided X an opportunity of five (5) business days to revise the terms of the Tender

Offer and submit the revised terms of the Tender Offer to Y, and (iii) taking into account such

revised terms of the Tender Offer, the Board of Directors of Y reasonably determines that the Third

Party Offer is still more favorable to shareholders as a whole or would maintain or increase the

corporate value (including employees protection) compared to the Tender Offer,

(b) (i) any third party commences a tender offer competing with the Tender Offer (“Third Party

Tender Offer”) for all of the shares of Y and if taking into account the tender offer price, certainty

of financing and certainty of execution of the transaction, the Board of Directors of Y reasonably

determines that the Third Party Tender Offer is more favorable to shareholders as a whole or would

maintain or increase the corporate value (including employees protection) compared to the Tender

Offer, (ii) Y has provided X a written notice, and provided X an opportunity of five (5) business

days to revise the terms of the Tender Offer and submit the revised terms of the Tender Offer to Y,

and (iii) taking into account such revised terms of the Tender Offer, the Board of Directors of Y

reasonably determines that the Third Party Offer is still more favorable to shareholders as a whole

or would maintain or increase the corporate value (including employees protection) compared to

the Tender Offer, or

(c) X, without prior consent of Y, changes any of the Terms and Conditions described in the

Paragraph 1 of this Article, other than to increase the Tender Offer Price or change the Terms and

Conditions described in the Paragraph 1 of this Article upon a two (2) business days prior notice to

Y (or upon a prior notice provided as soon as possible in case providing such a two (2) business

days prior notice is impossible or extremely hard from a practical perspective), and discussed in

good faith; provided, that Y shall not unreasonably withhold, delay or refuse such consent, then

Y may (i) withdraw the Approval Statement and (ii) accept such competing offer described in clause

(a) or (b) above; provided that, in the event of (a) or (b) above, (x) if Y withdraws the Approval

Statement and announced an opposition opinion, Y shall pay X 1% of JPY 174,522,642,600 within

five (5) business days of such an announcement, and (y) if the transaction regarding the competing

offer is executed after Y withdraws the Approval Statement, Y shall pay X JPY 150 million (herein,

collectively, the “Break-up Fee”) within 5 business days of the execution of such transaction (for

the avoidance of doubt, if (y) applies after (x), or (x) applies after (y), Y shall pay the amount

indicated in (x) as the total amount). X and Y acknowledge that once the Break-up Fee is paid, X

or its related parties are not entitled to claim any monetary payments in any form whatsoever

including but not limited to compensation for damages, based on this Agreement.

4. Upon execution of this Agreement, with regards to proposals competing with, or which may

30


compete with, the Tender Offer, Y will notify the respective proposers termination of the discussions

ongoing at the time of the execution of this Agreement. From and after the date of the execution of

this Agreement until the termination of this Agreement in accordance with Article 6, Y shall not

directly or indirectly continue, newly commence, or solicit engagement or any discussions with a

third party with respect to any competing transaction. For the avoidance of doubt, if Unizo had not

solicited after the execution of this Agreement and a third party newly proposes a competing

transaction, Y may engage in discussions or negotiations between such a third party; provided that,

in such a case, Y shall provide a notice to and discuss with X with regard to the proposal of the

third party to the extent that it does not constitute breach of the duty of a prudent manager (zenkan chui gimu) of Y’s directors.

5. Y represents and warrants that, as of the execution date of this Agreement, all Material Facts

Pertaining to Business or Other Matters (as defined in Article 166, Paragraph 2 of Financial

Instruments and Exchange Act) of Y, all Facts Concerning Launch of a Tender Offer, etc. (as defined

in Article 167, Paragraph 2 of Financial Instruments and Exchange Act), and all facts to disclose

according to Timely Disclosure Standards of Tokyo Stock Exchange have been disclosed.

Article 2 Creation of Wholly Owned Subsidiary

1. If, after the successful completion of the Tender Offer, X has failed to acquire all of Y’s shares

through the Tender Offer, X shall, as soon as practically possible after the conclusion of the Tender

Offer, take measures necessary to make Y a wholly owned subsidiary of X (this step, to make Y a

wholly owned subsidiary, shall hereinafter be referred to as the “Creation of Wholly Owned

Subsidiary”). Y shall cooperate at best efforts on the Creation of Wholly Owned Subsidiary and

report such sequence of measures and procedures for the Creation of Wholly Owned Subsidiary to

X to the extent that Y deems reasonably necessary.

2. Regardless of the method of the Creation of Wholly Owned Subsidiary, X shall purchase in cash all

of Y’s shares (excluding the shares held by X) at the price where the amount to be paid to the

remaining shareholders of Y will be equivalent to the number of Y shares held be each such

shareholder multiplied by the Tender Offer Price per share (including in the situation of compelled

sale of fractional shares in case of reverse share split); provided that if a motion for the

determination of the price per share pursuant to the Companies Act is filed, the price per share shall

be the price determined by the court.

Article 3 Covenants

1. From the execution date of this Agreement until the conclusion of the Creation of Wholly Owned

Subsidiary, Y shall, with the due care of a prudent manager, continue to, and shall cause its

subsidiaries to continue to, conduct its and their respective businesses in substantially the same

manner and within the ordinary course of its and their respective businesses as conducted prior to

the date of the execution of this Agreement (including compliance with laws); and shall not conduct nor resolve, agree or arrange to conduct (whether written or verbal), and shall cause its subsidiaries not conduct nor resolve, agree or arrange to conduct (whether written or verbal), unless otherwise agreed by X in writing, or if such action is explicitly provided in this Agreement; provided, however, such actions may be implemented if the directors of Y may be charged with a breach of its duty of care of a prudent manager (zenkan chui gimu) for failure to

31


take such actions:

(a) issue any stocks, stock options, stock acquisition rights or subscription warrants (including

corporate bonds with stock acquisition rights or subscription warrants);

(b) acquire, develop or dispose of assets (limited to assets worth over JPY 10,000,000 individually,

but excluding any assets in relation with hotels which Unizo or its subsidiaries had started to

construct or to prepare for opening), subsidiaries or treasury stocks, except for (x) acquisition of

treasury stocks when the right to request for purchase of shares of less than one unit is exercised

pursuant to the Companies Act, (y) acquisitions or disposals of real estate assets that have been

agreed to in legally binding and enforceable definitive documentation that has not been terminated

as of the date of this Agreement (and in accordance with such agreements in effect as of the date of

this Agreement), or (z) disposing assets stipulated in the Paragraph 3 of this Article;

(c) incur any interest bearing indebtedness (limited to indebtedness over JPY 10,000,000

individually) or repay any debt prior to the maturity thereof (except for repayment of debt prior to

maturity set forth in the Paragraph 2 of this Article);

(d) any stock splits, reverse stock splits or gratis allotments of stock or stock acquisition rights;

(e) declare or distribute dividends or distributions or other disposals of excess capital;

(f) enter into any agreement that would restrict dividends or distributions;

(g) encumber or place any security (limited to securities over JPY 10,000,000 individually) on any

assets;

(h) enter into or provide any guarantees or assumption of debt equivalent thereto for the benefit of

a third party;

(i) make any changes to employee compensation or benefits arrangements for Y employees, or (x)

hire any employees other than individuals who have received employment offers from the Y or its

subsidiaries as of the date hereof, replacements for individuals of Y or its subsidiaries retiring after

the execution of this Agreement, or reasonably necessary for new openings; or (y) hire any

employees that would have the title of vice president (bucho-shoku) or above or have an annual

compensation in excess of JPY 10,000,000;

(j) make any changes to compensation or benefits arrangements for, or payment of retirement

allowance to, directors, company auditors or executive officers of Y or its subsidiaries other than

as publicly disclosed in Y’s quarterly report dated October 30, 2019 (provided, that allocated

retirement allowances as provided in such Y’s quarterly report shall be paid at retirement);

(k) enter into, modify, terminate or waive any material rights under any contract, agreement or

legally binding arrangement having a value or involving payments of over JPY 10,000,000

(excluding future agreements in relation with hotels which Y or its subsidiaries plans to construct

or commenced preparation for opening, and further for the avoidance of doubt, payments based on

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agreements already executed by Y, and payments to advisors (including law firms) retained,

requested or asked by Y from prior to the date of this Agreement in connection with this Agreement

or the transaction contemplated in this Agreement, shall not apply) or with a term over twelve (12)

months or purporting to bind affiliates of X;

(l) settle any claims or lawsuits other than when the disputed amount is less than JPY 10,000,000

individually or for rental arrears in an amount less than JPY 10,000,000 in the aggregate;

(m) enter into any related party arrangements with any directors, company auditors, officers and/or

employees of Y or its subsidiaries or any other associated entity;

(n) enter into any transaction that is not on arms’-length terms;

(o) make any material change in tax/accounting elections or policies;

(p) take any action that would require shareholder approval per applicable law or Y’s governing

documents as in place on the date hereof;

(q) take any action that would result in a material change in the level of cash reserves or interest

bearing indebtedness of Y or its subsidiaries;

(r) repair portfolio assets or make capital expenditures (limited to assets or expenditures over JPY

10,000,000 individually)

(s) take any other actions that, individually or in the aggregate, would have a material adverse

effect on the respective fiscal condition, results of operations, cash flow, business, assets, or debt

of Y or any of its subsidiaries.

For the avoidance of doubt, without affecting the generality of the foregoing, Y shall not resolve,

declare or issue any dividends previously planned for September 30, 2019 or March 31, 2020 and

shall resolve by Board of Directors the cancellation of such planned issuances subject to the

successful completion of the Tender Offer.

2. Y may, after six (6) months from the execution date of this Agreement, apply the amount of Y’s and

its subsidiaries’ cash reserves to repayment of Y’s or its subsidiaries’ interest bearing debt prior to

maturity; provided, that Y shall maintain the level of cash reserves equivalent to no less than the

amount of principal repayment obligations scheduled within two (2) years from the execution date

of this Agreement (excluding the repayment by lump sum payment at the maturity and balloon

payment). Notwithstanding the previous sentence, Y may, after the execution date of this Agreement,

repay debt prior to maturity pursuant to the Paragraph 3 of this Article upon a prior notice to X, and

X shall not object to such repayment.

3. Notwithstanding the Paragraph 1 of this Article, Y may, from the execution date of this Agreement

to completion of Creation of Wholly Owned Subsidiary, sell assets regarding Japanese offices if the

sale price is equal to or higher than the appraisal price (in case Y sells multiple assets, the total

amount of the sale price shall be equal to or higher than the total amount of the appraisal price);

33


sell assets regarding Japanese hotels if the sale price is equal to or higher than the book value (in

case Y sells multiple assets, the total amount of the sale price shall be equal to or higher than the

total amount of the book value.); and sell foreign assets if the sale price is equal to or higher than

the market price.

4. From the execution date of this Agreement until the completion of the Creation of Wholly Owned

Subsidiary, Y shall, upon the reasonable request of X or any of its agents, to the extent that it does

not materially impede Y’s regular business operations, make available to X and/or its agents or

representatives, books, records materials and other information of Y and its subsidiaries, and secure

X’s reasonable contact to Y’s or its subsidiaries’ managers and employees.

Article 4 Right to Nominate Directors

X will, from and after the completion date of the Creation of Wholly Owned Subsidiary,

have the right to nominate all of Y’s managers. If any director or executive officer (shikko-

yakuin) of Y or its subsidiaries expresses his or her intention to resign, X and Y shall agree

to such resignation.

Article 5 Confidentiality

1. X and Y shall keep confidential, shall not disclose to third parties (other than legal counsels,

certified accountants, tax accountants, financial advisors and consultants of each party, where in

each such case, disclosure shall be conditioned on the imposition on such third party of confidential

obligations equivalent to those of the contracting parties set forth in this Article, except for the case

of disclosure to third party having confidential obligations under laws), and shall not use for any

purpose other than for the purpose of the performance of this Agreement, the content of this

Agreement and negotiation and consultation in connection and based on this Agreement, without

the prior written consent from the other party, unless such announcement or disclosure is required

under laws or regulations or is made based on the request by the relevant authorities, etc.

2. Notwithstanding the preceding Paragraph, X and Y may disclose the contents of this Agreement in

the tender offer registration statement, opinion statement report and other disclosure documents in

connection with the Tender Offer to the extent agreed upon after separate consultation between X

and Y or otherwise as required by applicable laws.

Article 6 Effect of this Agreement; Miscellaneous

1. The effective period of this Agreement shall be from the execution date of this Agreement until the

earliest of: (a) the date of termination of this Agreement pursuant to the Paragraphs 2 or 3 of this

Article; or (b) the date on which X and Y mutually agree in writing to terminate this Agreement.

2. Y may immediately terminate this Agreement by notifying X in writing if any of the following

occurs:

(a) if X does not announce or implement the Tender Offer pursuant to the Paragraph 1 of the Article

1; if the Tender Offer is withdrawn; or if the Tender Offer is not successfully completed at the end

34


of the Tender Offer period;

(b) if X breaches its obligations under this Agreement and such breach remains uncured after five

(5) business days of a written notice thereof; or

(c) if Y withdraws the Approval Statement pursuant to the Paragraph 3 of the Article 1 or expresses

its approval for a tender offer or other transaction competing with the Tender Offer.

3. X may immediately terminate this Agreement by notifying Y in writing if any of the following

occurs:

(a) if Y does not announce or maintain the Approval Statement pursuant to the Paragraph 2 of the

Article 1;

(b) if Y withdraws the Approval Statement or expresses its approval for a tender offer or other

transaction competing with the Tender Offer;

(c) if the Tender Offer is withdrawn or is not successfully completed at the end of the Tender Offer

period; or

(d) if Y breaches their respective obligations under this Agreement and such breach remains

uncured after five (5) business days of a written notice thereof.

4. Article 5 (Confidentiality), Article 7 (Governing Law and Jurisdiction), this Article 10, and the

obligation of Y to pay the Termination Fee (if applicable), and liability for any breach of this

Agreement arising prior to the termination hereof shall survive after the termination of this

Agreement.

Article 7 Governing Law, Jurisdiction and Language

1. This Agreement shall be governed and construed by the laws of Japan.

2. If any dispute arises in connection with this Agreement, the parties shall endeavor to settle such

dispute upon the good faith consultation, and if such consultation is not successful Tokyo District

Court shall have the exclusive jurisdiction for first instance for such dispute.

3. Neither party shall be entitled to assign, transfer, succeed, pledge, or otherwise dispose to any third

party any of its rights or obligations under this Agreement without the prior written consent of the

other party.

4. The official language of this Agreement shall be Japanese, and should there be any discrepancies

between its English translation, the Japanese version shall prevail.

IN WITNESS THEREOF, the parties hereto prepares two (2) original copies of this Agreement, prints

its name and seals its impression, and possess one (1) copy each.

35


December 22, 2019

X: 2-10-9, Hatchobori, Chuo-ku, Tokyo

Chitocea Investment Company, Limited

Representative Director Yuhei Yamaguchi

Y：2-10-9, Hatchobori, Chuo-ku, Tokyo

UNIZO Holdings Company, Limited

President and CEO Tetsuji Kosaki

36


December 22, 2019

Yuhei Yamaguchi Representative Director

Chitocea Investment Co., Ltd. 2-10-9, Hatchobori, Chuo-ku, Tokyo

Notice Concerning Commencement of Tender Offer for the Shares of

UNIZO Holdings Company, Limited (Security Code: 3258)

Chitocea Investment Co., Ltd. (“Tender Offeror”) announces that it has resolved today to acquire the issued and outstanding common shares (“Company Shares”) of UNIZO Holdings Company, Limited (First Section of Tokyo Stock Exchange, Inc. (“TSE”), Security Code: 3258, hereinafter the “Company”) by tender offer (“Tender Offer”) pursuant to the Financial Instruments and Exchange Act (Act No.25 of 1948, as amended).

Tender Offeror is a kabushiki kaisha incorporated in December 2019 by Chitocea Co., Ltd. as the sole

incorporator for the purpose of acquiring and holding the shares etc. of the Company. Chitocea Co., Ltd. is a kabushiki kaisha incorporated by another kabushiki kaisha whose shareholders consist only of the employees (who does not concurrently serve as directors, and includes manager (bucho) class employees who are executive officers (shikko yakuin) of the Company Group (defined below) within two years from assumption of office) of the group consisting of the Company and 19 consolidated subsidiaries of the Company (“Company Group”). As of this date, the Tender Offeror is a kabushiki kaisha, the common shares that consist of 73% of the total and outstanding common shares of which are owned by Chitocea Co., Ltd. and the common shares that consist of 27% of the total and outstanding common shares of which are owned by LSREF6 UNITED INVESTMENTS S.À.R.L., invested by LSREF6 Affiliate Finance (Cayman), LLC, an entity of Lone Star (Lone Star Global Acquisitions, Ltd. (registered as investment advisor at the U.S. SEC) or its subsidiaries/affiliates and the funds which such entities advise are collectively referred to herein, “Lone Star”), respectively.

Lone Star, who invests in common shares that consist of 27% of the total and outstanding common

shares of the Tender Offeror, is an investment fund incorporated by John Grayken in 1995 in Dallas, Texas, U.S.A., and is a global private equity fund investing in corporations, real estate, credit, financial products, asset securitized products, etc. Since launching the first fund in 1995, Lone Star has launched 20 funds, raising an aggregate capital of US$ 83.9 billion (approx. JPY 9 trillion) from investors. Major investors of each fund are pension funds, sovereign wealth funds, university funds, foundations, and funds of funds. Currently at Lone Star, two funds, i.e. Lone Star Real Estate Fund VI, L.P. (raised capital of US$ 4.7 billion in June 2019) and Lone Star Fund XI, L.P. (raised capital of US$ 8.1 billion in February 2019) are actively investing based on investment advice from Lone Star Global Acquisitions, Ltd. (registered as investment advisor at the U.S. SEC.).

The Tender Offeror has resolved to implement the transaction to conduct the Tender Offer targeting

to acquire all Company Shares (excluding treasury shares owned by the Company) listed at the First Section of TSE and to wholly own the Company as its wholly owned subsidiary.

Overview of the Tender Offer is as follows:

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(1) Name of Target Company UNIZO Holdings Company, Limited

(2) Class of Shares etc. Subject to Tender Offer

Common shares (3) Price of Tender Offer etc.

JPY 5,100 per common share (4) Tender Offer Period

From December 24, 2019 (Tuesday) to February 4, 2020 (Tuesday) (25 Business Days) (5) Number of Shares etc. Subject to Tender Offer

Number of Shares to be Acquired

Minimum Limit of Shares to be Acquired

Maximum Limit of Shares to be Acquired

34,220,126 shares 22,813,400 shares ―

(6) Commencement Date of Settlement February 13, 2020 (Thursday)

(7) Tender Offer Agent

Tokai Tokyo Securities Co., Ltd. 4-7-1 Meieki, Nakamura-ku, Nagoya-shi, Aichi

Please see the Tender Offer Notification which the Tender Offeror will submit in connection with the Tender Offer on December 24, 2019 for the details of the Tender Offer. The Tender Offer Notification will be publicly available on EDINET (http://disclosure.edinet-fsa.go.jp/).

End.

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[Other Countries] Depending on the country or region, there may be legal restrictions on the release, issuance, or distribution of this press release. In such cases, please take note of such restrictions and comply with them. This press release does not constitute a solicitation of application to purchase or sales of shares related to the Tender Offer and is simply deemed as distribution of materials for information purposes only.

39


[Restriction on Solicitation] The purpose of this press release is publication of the Tender Offer to the general public, and it is not prepared for the purpose of soliciting sales. When applying to sell, be sure to review the Tender Offer Explanation Statement regarding the Tender Offer and apply based on each shareholder’s own judgment. This press release is not an application or solicitation to sell securities, is not a solicitation for an application to purchase, nor does it constitute a part thereof. Neither this press release (or any part thereof) nor its distribution shall provide a basis for a contract pertaining to the Tender Offer, nor shall it be relied upon when executing such contract.

[Future Predictions] The information provided hereto may include forward looking predictions such as “expect”, “predict”, “intend”, “plan”, “confident” and “assume,” including in relation with future businesses of the Tender Offeror and other companies etc. Such expressions are based on the current business prospects of the Tender Offeror subject to future changes depending on the circumstance. The Tender Offeror is not obligated to update the expressions of such information regarding forward looking predictions to reflect the actual business performance, various circumstances or change in conditions. This press release contains “forward-looking statements” as defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934. Due to any known or unknown risks, uncertainties, or any other factors, it is possible that actual results may substantially differ from the projections, etc., as expressly or implicitly indicated in any “forward-looking statements.” Neither the Tender Offeror, the Target Company nor any of its affiliated companies guarantee that such projections, etc. expressly or implicitly indicated in any “forward-looking statements” will prove to be correct. The “forward-looking statements” in this press release have been prepared based on the information held by the Tender Offeror as of the date of this press release, and, unless otherwise required by applicable laws and regulations, neither the Tender Offeror, the Target Company nor any of its affiliated companies are obliged to update or modify such statements in order to reflect any events or circumstances in the future. [U.S. Regulations] Although the Tender Offer will be conducted in accordance with the procedures and information disclosure standards prescribed in the Financial Instruments and Exchange Act of Japan, these procedures and standards may differ from the procedures and information disclosure standards in the United States. In particular, Sections 13(e) and 14(d) of the U.S. Securities Exchange Act of 1934 (as amended), and the rules prescribed thereunder, do not apply to the Tender Offer, and the Tender Offer does not conform to those procedures and standards. All financial information contained in this press release is based on Japanese accounting standards, is not based on U.S. accounting standards, and may not necessarily be comparable to the financial information prepared based on U.S. accounting standards. In addition, it may be difficult to enforce any right or claim arising under U.S. federal securities laws because the Tender Offeror and the Target Company are incorporated outside the United States and their directors are non-U.S. residents. Shareholders may not be able to sue a company outside the United States and its directors in a non-U.S. court for violations of the U.S. securities laws. Furthermore, there is no guarantee that shareholders will be able to compel a company outside the United States or its subsidiaries and affiliated companies to subject themselves to the jurisdiction of a U.S. court. Unless otherwise specified, all procedures relating to the Tender Offer will be conducted entirely in Japanese. While some or all of the documentation relating to the Tender Offer may be prepared in English, if there is any inconsistency between the English documentation and the Japanese documentation, the Japanese documentation will prevail.

note: this document has been translated from a …2019/12/22 · in the event of any discrepancy...

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