Market: Cutting Tools & Accessories
17 May 2016
Kyocera Corporation and Nihon Inter Electronics Corporation plan to merge with August 1, 2016 being the effective date, Kyocera said in a statement.Nihon engages in the manufacturing and distribution of power semiconductors with the discrete business, module business and product business being the three major businesses. Meanwhile, Kyocera determined that sharing its knowledge regarding various business domains from the components business to the finished product business operated by Kyocera and Nihon’s knowledge regarding power semiconductors will enhance the company value of the companies, and in September 2015, made Nihon its consolidated subsidiary. Since then, the Companies have been working on expanding their profits, such as by pursuing synergy effects. However, Nihon has been significantly affected by the deterioration of its business environment, such as the slowdown of the growth of the Chinese economy, which is an important market, tightening of regulations in the domestic amusement industry, and slowdown of the domestic automobile market, and on November 6, 2015, Nihon made a downward adjustment to its forecast for the consolidated performance of the full fiscal year ending March 31, 2016, and announced that there will be a deficit for such term.In response to the sharp deterioration of the business environment surrounding Nihon after it became a consolidated subsidiary of Kyocera, Kyocera determined that it is necessary to strengthen the management platform of Nihon for Nihon’s future business expansion and that radical measures such as utilizing Kyocera’s overall management resources, such as Kyocera’s personnel, technology and funds, are necessary in order to execute such plans. Thus, although at the time of making Nihon a consolidated subsidiary, Kyocera intended to keep Nihon listed for the time being, Kyocera concluded that the best solution for deploying Kyocera’s personnel, technology and funds flexibly and swiftly will be a consolidation by a Merger, rather than operating Nihon as a consolidated subsidiary, and in December 2015, Kyocerarequested Nihon to conduct the Merger.Nihon has been going through a management reconstruction since 2010 and has prioritized the supply of products and the survival of the company. In March 2014, Nihon completed repayments to financial institutions that had been supporting its reconstruction, and Nihon had been making efforts to expand its business by focusing on a growing market. However, the management platform of Nihon , such as its personnel, technology and funds for its future business expansion, such as facility investment for cost reduction, research and development for creating new products and creating locations for enhancing its sales capacities overseas, is still insufficient. Furthermore, significant amount of investment will be necessary to bring back Nihon’s competitive power and growing independently will require a significant amount of time. Since Nihon became Kyocera’s consolidated subsidiary in September 2015, the Companies have been making considerations to pursue a synergy effect, but in that process, it has become clear that by fully utilizing Kyocera’s rich management resources, Nihon’s management platform can be enhanced and its business can be expanded. Now that Nihon has accepted Kyocera’s request, Nihon is certain that, by transcending the boundaries of the companies and changing its position from a consolidated subsidiary to be literally one part of Kyocera, Nihon can utilize Kyocera’s rich management resources more quickly and effectively, further improving its business value, and therefore today, the Companies decided to enter into the Merger Agreement.