(Source: Business Wire)
NEC Electronics Corporation (NEC Electronics; TSE:6723), Renesas
Technology Corp. (Renesas), NEC Corporation (NEC; TSE:6701), Hitachi,
Ltd. (Hitachi; TSE:6501 / NYSE:HIT), and Mitsubishi Electric Corporation
(Mitsubishi Electric; TSE:6503) today announced that they have signed a
definitive agreement to integrate business operations at NEC Electronics
and Renesas (the "Business Integration"). The Business Integration will
become effective following the adoption of the resolutions at the
Extraordinary General Meeting of Shareholders of NEC Electronics and
Renesas and approval by authorities concerned.
As a condition to the Business Integration, Renesas will issue shares of
Renesas common stock to Hitachi and Mitsubishi Electric, the sole
shareholders of Renesas, in exchange for a total of 78 billion yen
before the effective date of the Business Integration (the "Pre-merger
Capital Injection"). In addition, on the effective date of the Business
Integration (scheduled to be April 1, 2010), the integrated company
after the Business Integration (the "Integrated Company") will issue
shares of its common stock to NEC, Hitachi, and Mitsubishi Electric in
exchange for a total of approximately 122 billion yen (the "Post-merger
Capital Injection").
1. Goals of Business Integration
Both as leading semiconductor companies, NEC Electronics and Renesas
provide a wide variety of semiconductor solutions, primarily
specializing in microcontroller units (MCUs). In light of fierce global
competition and structural changes triggered by the rapid expansion of
emerging markets in the semiconductor market, NEC Electronics and
Renesas have been exploring the possibility of the Business Integration
after signing a basic agreement on April 27, 2009, in order to further
strengthen their business foundations and technological assets, while
increasing corporate value through enhanced customer satisfaction.
The Integrated Company will provide globally competitive products in its
three major product groups, MCUs, SoCs, and discrete products, by
concentrating its development resources to further strengthen the
companies' respective advantages. The Integrated Company aims to expand
its business by offering complete solutions that extend the three major
groups to best fit the requirement of customers of all kinds of
industries.
In order to address the ongoing challenges of the current economic
downturn, NEC Electronics and Renesas will each continue to execute
structural reform plans in order to strengthen their business
frameworks. The two companies will integrate their operations and
generate synergies to establish a powerful new semiconductor company
that is capable of consistently achieving high earnings in order to
withstand changing semiconductor market conditions.
2. Outline of Business Integration
(1) Schedule of Business Integration
Signing of basic agreement April 27, 2009
Signing of definitive agreement September 16, 2009
Signing of merger agreement By mid-January 2010
Shareholders meetings for approval of merger agreement February 2010 (planned)
Effective date of merger April 1, 2010 (planned)
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(2) Structure of Business Integration
The merger will be effective with NEC Electronics being the surviving
entity.
(3) Integration Ratio (Ratio between equity value of NEC Electronics and
that of Renesas after completion of the Pre-merger Capital Injection)
NEC Electronics Renesas
Integration Ratio 1 1.189
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Note 1: For the Business Integration, NEC Electronics will issue a total
of approximately 146.84 million common shares to the Renesas common
shareholders based on a merger ratio that will be calculated in
accordance with the Integration Ratio set forth in 2-(3) above.
Note 2: The Integration Ratio represents the ratio between the total
number of the NEC Electronics common shares outstanding (not including
the potential shares) immediately before the Business Integration and
the total number of the NEC Electronics common shares to be allocated to
the Renesas shareholders as a result of the Business Integration, based
on the assumption that the Pre-merger Capital Injection is funded before
the Business Integration. The ratio of the number of the NEC Electronics
common shares to be issued to the Renesas shareholders in exchange for a
share of the Renesas common stock as a result of the Business
Integration (i.e., merger ratio) will be determined at the time the
merger agreement is signed.
Note 3: In accordance with Art. 124 §4 of the Corporation Law, Hitachi
and Mitsubishi Electric, the new shareholders of the Integrated Company
after the Business Integration, will be entitled to vote at the ordinary
shareholders meeting of the Integrated Company which is scheduled to be
held in June 2010.
(4) Reinforcement of capital
As a condition to the Business Integration, Renesas will issue shares of
Renesas common stock to Hitachi and Mitsubishi Electric, the sole
shareholders of Renesas, in exchange for an aggregate of 78 billion yen
before the effective date of the Business Integration. In addition, on
the effective date of the Business Integration (scheduled to be April 1,
2010), the Integrated Company will issue shares of its common stock to
NEC, Hitachi, and Mitsubishi Electric in exchange for an aggregate of
approximately 122 billion yen.
Note: Depending on the business result of NEC Electronics for the first
half of the fiscal year ending March 31, 2010, the amount of the
Pre-merger Capital Injection could be reduced and the amount of the
Post-merger Capital Injection could be increased keeping the Integration
Ratio as 1:1.189.
(5) Notes on share acquisition rights and bonds with share acquisition
rights of Renesas
None
3. Basis and Process of Calculation of
Integration Ratio and Relationship with Financial Advisors
Please refer to Exhibit 1 "Basis and Process of Calculation of the
Integration Ratio" hereto.
4. Outline of NEC Electronics and Renesas
(1) Company Name NEC Electronics Corporation (Surviving entity) Renesas Technology Corp.
(2) Major Operations R&D, manufacture, sale, and servicing of semiconductor devices mainly on system LSIs Development, design, manufacture, sale, and servicing of SoC products such as MCUs, logic devices, and analog devices; discrete semiconductor products; and memory products such as SRAM
(3) Established November 1, 2002 April 1, 2003
(4) Headquarters Kawasaki City, Kanagawa Prefecture, Japan Chiyoda-ku, Tokyo, Japan
(5) Representative Junshi Yamaguchi, President and CEO Katsuhiro Tsukamoto, Representative Director, Chairman Yasushi Akao, Representative Director, President
(6) Capital ?85.955 billion (As of March 31, 2009) ?77 billion (As of March 31, 2009)
(7) Number of Stocks Issued 123.5 million (As of March 31, 2009) 5.54 million (As of March 31, 2009)
(8) Net Assets ?128.130 billion (As of March 31, 2009) ?176.888 billion (As of March 31, 2009)
(9) Total Assets ?482.545 billion (As of March 31, 2009) ?682.937 billion (As of March 31, 2009)
(10) End of FY March 31 March 31
(11) Employees 22,476 (Consolidated, As of March 31, 2009) 25,000 (Consolidated, As of March 31, 2009)
(12) Major Customers Electronic equipment manufacturers, Semiconductor production equipment manufacturers, Semiconductor materials manufacturers Electronic equipment manufacturers, Semiconductor production equipment manufacturers, Semiconductor materials manufacturers
(13) Major Stockholders and Ownership Ratios NEC Corporation: 65.02% Japan Trustee Services Bank, Ltd. (Re-trust of The Sumitomo Trust and Banking Co., Ltd. / NEC Corporation pension and severance payments Trust Account): 5.02% (Note 1) Hitachi, Ltd.: 55% Mitsubishi Electric Corporation: 45%
(14) Main Banks Sumitomo Mitsui Banking Corporation The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Corporate Bank, Ltd.
(15) Present Relationship between Corporate Parties
Capital Ties Renesas owns 100 shares of stock in NEC Electronics.
Personal Ties No relevant items
Business Relationship NEC Electronics outsources some production processes to Renesas Northern Japan Semiconductor, Inc., a consolidated subsidiary of Renesas.
Relevant Circumstances of Related Parties No relevant items
(16) Business Performance for the last three years
(Unit: ?1 million except for otherwise expressly stated herein)
NEC Electronics (Consolidated, US-GAAP) (Note 2) Renesas (Consolidated, Japan-GAAP)
Fiscal Year Ending March31, 2007 March31, 2008 March31, 2009 March31, 2007 March31, 2008 March31, 2009
Net Sales 692,280 687,745 546,470 952,590 950,519 702,739
Semiconductor Sales 659,733 653,275 521,735 - - -
Operating Income (Loss) -28,557 5,094 -68,355 23,644 43,480 -96,573
Ordinary Income (Loss) - - - 15,931 29,215 -102,799
Income (Loss) before Income Taxes -35,375 -3,252 -89,335 13,275 28,171 -136,656
Net Profit (Loss) -41,500 -15,995 -82,625 8,738 9,468 -203,257
Net Income (Loss) Per Share (?) -336.04 -129.52 -669.04 1,747.52 1,893.64 -40,627.31
Dividend Per Share (?) 0 0 0 0 0 0
Net Assets Per Share (?) 2,146.32 1,839.20 1,037.51 65,735.31 66,623.71 31,497.69
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Note 1: 5.02% of shares which are owned Japan Trustee Services Bank,
Ltd. (Re-trust of The Sumitomo Trust and Banking Co., Ltd. / NEC
Corporation pension and severance payments Trust Account) were shares
that were contributed by NEC as severance indemnities trusts. The voting
rights of such shares will be exercised at the instruction of NEC.
Note 2: NEC Electronics' consolidated financial information until FY
09/3 is in accordance with U.S. GAAP. However, the figure for operating
income shown above represents net sales minus the cost of sales,
research and development expenses, and selling, general and
administrative expenses. The figure for net assets per share shown above
represents shareholders' equity per share.
5. Outline of the Integrated Company
(1) Company Name Renesas Electronics Corporation (Tentative name) Note: Please refer to the attached exhibit 2 for the corporate logo of the new company.
