Commencement of Discussions for Operational Integration with Pokka Corporation through Reorganization in the Group

Transcription

1 [Translation] February 10, 2011 Company Name Sapporo Holdings Limited Representative Takao Murakami President and Representative Director Stock Code 2501 Listed on Tokyo Stock Exchange Sapporo Stock Exchange Inquiries Yoichi Kato Director, Corporate Planning Department Tel: Commencement of Discussions for Operational Integration with Pokka Corporation through Reorganization in the Group Sapporo Holdings Limited (the Company ) hereby announces that the board of directors has resolved at a meeting today and the Company has agreed, to commence discussions with Pokka Corporation ( Pokka ), which became an equity-method affiliate of the Company at the end of September 2009, for the operational integration of the two companies through reorganization in groups. 1. Commencement of Discussions with Pokka The alcoholic beverage, beverage and food industries in Japan experienced a decline in consumer confidence due to delayed economic recovery and deflation, and a decline in the size of markets due to population decrease, the declining birthrate and aging population. Companies within the above industries are confronted with circumstances under which they are required to swiftly develop strategies to expand access to customers, to promote differentiation and enhance competitiveness utilizing their own strengths, and to actively develop their businesses in foreign markets. Within these circumstances, the Company and Pokka executed a capital and business alliance agreement in September 2009, and the Company and Pokka have made efforts to enhance the vending machines business, reduce costs through joint procurement, optimize production systems, develop business jointly in foreign markets, etc., and have achieved certain outcomes, in addition, the mutual relationship of trust between the Company and Pokka was further strengthened through collaboration after the alliance. However, the Company and Pokka jointly reached a decision that the best measure for the two companies would be to develop their current capital and business alliance together, not independently, and to form an integrated corporate group to accelerate their collaboration, so that they are able to further improve their position within the current severe market climate. Therefore, as the first step towards formation of a new corporate group, as stated in the Notice of Acquisition of Shares (Subsidiarisation) of Pokka Corporation, which was separately published by the Company today, the Company will acquire the additional shares of Pokka in late March of 2011, thereby causing Pokka to become a consolidated subsidiary of the Company. In addition, in order to form a corporate group creating value in food, that has enhanced competitiveness in the domestic and foreign alcoholic beverage, beverage, food and restaurant industries, as stated in the exhibit Commencement of Discussions for Operational Integration of Sapporo Holdings Limited and Pokka Corporation, the Company has agreed to commence

2 discussions with Pokka for the operational integration of the two companies through reorganization in groups, today. The Company and Pokka will begin discussions regarding reorganization of the group s business and organizational structure, and will consider the management setup and corporate name, etc. of the holding company appropriate for the newly reorganized corporate group, and move forward with discussions aiming to implement the new business structure in April 2012, when the 88th annual shareholders meeting of the Company, to be held in late March of 2012 will be finished. 2. Future Prospective The Company and Pokka will promptly establish a committee for the operational integration, and will move forward with discussions regarding the operational integration, in addition, the Company will acquire the additional shares of Pokka in late March of 2011, as stated above. The Company and Pokka will consider reorganization of the group s business and organizational structure, the management setup and corporate name, etc. of the holding company, and will move forward with discussions aiming to implement the new business structure in April The Company will announce its plan for the implementation of the new business structure at another time once it has been specifically determined. [End of this release]

3 (Attachment) Sapporo Holdings Limited Pokka Corporation Commencement of Discussions for Operational Integration of Sapporo Holdings Limited and Pokka Corporation February 10, Formation of a Corporate Group Creating Value in Food with Enhanced Competitiveness in the Domestic and Foreign Alcoholic Beverage, Beverage, Food and Restaurant Industries - Sapporo Holdings Limited ( Sapporo HD ) and Pokka Corporation (unlisted, Pokka ) have agreed today to commence discussions for the operational integration of the two companies groups through the integration and reorganization of such groups, aiming to form a new corporate group creating value in food, that has enhanced competitiveness. As the first step towards formation of a new corporate group, as stated in the Notice of Acquisition of Shares (Subsidiarisation) of Pokka Corporation, which was separately published by Sapporo HD today, Sapporo HD will acquire the additional shares of Pokka in late March of Sapporo HD and Pokka will begin discussions regarding reorganization of the two companies groups business and organizational structures, aiming to form a corporate group creating value in food, that has enhanced competitiveness in the domestic and foreign alcoholic beverage, beverage, food and restaurant industries. The two companies will consider the management setup and corporate name, etc. of the holding company appropriate for the newly reorganized corporate group, and move forward with discussions aiming to implement the new business structure in April In its new management framework which aims to be completed by 2016, Sapporo HD is setting Creating Value in Food as one of its primary business domains. In order to develop and expand its business in the broader food sector with a focus on the alcoholic beverage business, in which it boasts a history of more than 130 years, Sapporo HD considers establishing strategic alliances and enhancing international business development, etc. as the group s strategy for growth, and as a result, is engaging in corporate activities based on such strategy. In Japan, Sapporo HD has commenced a joint venture business for yogurt/dessert/chilled-beverages through an alliance with Marudai Food Co., Ltd. and making a capital contribution to Azumino-shokuhin-kobo K.K., as well as participating in the potato chips market, and establishing a capital and business alliance with Kyodo Milk Industry Co., Ltd. In foreign countries, Sapporo HD has participated in the South Korean beer markets through its business alliance with Maeil Dairy Industry Co., Ltd. (South Korea), participated in Vietnamese beer markets, and has moved forward with construction of factories for expansion of business into South- East Asian markets, in order to position Sapporo HD for continued growth. In 2005, Pokka started to drastically reform its operation through a management buy-out, in order to further increase its corporate value. Since then, it has made efforts to change awareness concerning throughout the Pokka s business and to enhance profitability. Concurrently, Pokka has made substantial developments within its food business, which is mainly comprised of high-quality and strong branded lemon and soup products. Pokka also designated the improvement of its market position in Asian markets where Pokka has a long history in the beverage and restaurant industries, and where economic growth is expected going forward, as a key factor for its growth. As a result, Pokka has constructed a solid business foundation in Asian markets through effective focus of management resources. Pokka also made a capital and business alliance with Meiji Seika Kaisha, Ltd. ( Meiji Seika ) and Sapporo HD, considering them as strategic partners which enable Pokka to pursue business synergy while simultaneously maintaining its operational independence. Through this alliance, Pokka has made efforts to produce various synergistic effects through mutual cooperation.

4 Since the capital and business alliance in September 2009, Sapporo HD and Pokka have made efforts to increase their corporate value by exerting synergistic effects through enhancing the vending machines business, joint development of commercial products, cooperation in marketing and sales, optimizing production systems, realizing joint procurement, and establishment of a joint logistics system, etc. Sapporo HD and Pokka have achieved certain outcomes primarily in respect of production, joint procurement and joint logistics within Japan. Within foreign markets, Pokka Corporation (Singapore) Pte Ltd has begun to distribute Sapporo beer related products in Singapore, where the Pokka brand is widely recognized. While the above activities, the alcoholic beverage, beverage and food industries in Japan experienced a decline in consumer confidence due to delayed economic recovery and deflation, and a decline in the size of markets due to population decrease, the declining birthrate and aging population. Companies within the above industries are confronted with circumstances under which they are required to swiftly develop strategies to expand access to customers, to promote differentiation and enhance competitiveness utilizing their own strengths, and to actively develop their businesses in foreign markets. The mutual relationship of trust between Sapporo HD and Pokka was further strengthened through collaboration after the alliance, however, Sapporo HD and Pokka jointly reached a decision that the best measure for the two companies would be to develop their current capital and business alliance together, not independently, and to form an integrated corporate group to accelerate their collaboration, so that they are able to further improve their position within the current severe market climate. Therefore, as stated above, Sapporo HD and Pokka have agreed today to commence discussions for the operational integration of the two companies groups through the integration and reorganization of such groups, aiming to form a new corporate group creating value in food, that has enhanced competitiveness, and as the first step towards formation of a new corporate group, Sapporo HD will acquire the additional shares of Pokka in late March of Sapporo HD and Pokka will promptly establish a committee for the operational integration, and will move forward with discussions regarding the reorganization of the group s business and organizational structure, and management setup and the corporate name, etc. of the holding company. With respect to the capital and business alliance between Meiji Seika and Pokka, although the capital alliance will be terminated; their business alliance will continue and they will collaborate with each other to increase their corporate value. [End of this release] <Contact information for mass media> Sapporo Holdings Limited Corporate Planning Department Public Relations Group Tel: Pokka Corporation Public Relations & Environment Office Tel:

5 <Reference Data> Summary of Sapporo HD (1) Company name: Sapporo Holdings Limited (2) Representative: Takao Murakami, President and Representative Director (3) Location: Ebisu, Shibuya-ku, Tokyo (4) Date of incorporation: September, 1949 (5) Main business: holding company (alcoholic beverage (Japan), alcoholic beverage (international), beverage, restaurant, and real estate industries) (6) Accounting period: every year ending in December (7) Number of employees: 3,983 (on December 31, 2010, consolidated) (8) Stated capital: 53,886 million yen (9) Total number of issued shares: 393,971,493 (on December 31, 2010) (10) Consolidated operating results for the most recent accounting years: December 2008 December 2009 December 2010 Sales 414, , ,244 Operating profits 14,685 12,895 15,403 Ordinary profits 10,526 10,725 14,328 Net profits for the 7,640 4,535 10,772 current period Total assets 527, , ,798 Net assets 116, , ,645 (million yen) Summary of Pokka (1) Company name: Pokka Corporation (2) Representative: Masatoshi Hori, President and CEO (3) Location: , Sakae, Naka-ku, Nagoya-shi, Aichi (4) Date of incorporation: April, 1968 (started business in February, 1957) (5) Main business: Beverage, food, restaurant, confectionaries, physical distribution and other businesses (6) Accounting period: every year ending in March (7) Number of employees: 2,473 (on March 31, 2010, consolidated) (8) Stated capital: 2,377 million yen (9) Total number of issued shares: 9,487,000 (on March 31, 2010) (10) Consolidated operating results for the most recent accounting years: March 2008 March 2009 March 2010 Sales 99,647 96,502 97,121 Operating profits 3,903 1,782 1,805 Ordinary profits 4,490 1,931 2,144 Net profits for the 2, ,391 current period Total assets 48,004 58,800 58,527 Net assets 12,591 11,367 12,300 (million yen) * The consolidated operating results of Pokka for the accounting period ending in March 2011 are expected to be as follows: consolidated sales of 99,000 million yen, consolidated operating profits of 3,800 million yen, consolidated ordinary profits of 3,600 million yen, and consolidated net profits for the current period of 3,200 million yen.