Announcement Regarding Planned Commencement of Tender Offer for the Shares of Fujitsu General Limited (Securities Code 6755) by Paloma・Rheem Holdings Co., Ltd. (PDF: 2,249KB)

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[Translation]
January 6, 2025
To whom it may concern:
Company Name:
Fujitsu General Limited
Representative:
Koji Masuda, President and Representative Director
(Securities Code:
6755, Prime Market of the Tokyo Stock Exchange)
Contact:
Toshio Kano, Corporate Vice President and Head of Corporate Communication Office TEL (044) 861-7627

Company Name:
Paloma・Rheem Holdings Co., Ltd.
Representative:
Hiroaki Kobayashi, Representative Director and President
Announcement Regarding Planned Commencement of Tender Offer
for the Shares of Fujitsu General Limited (Securities Code:6755) by Paloma・Rheem
Holdings Co., Ltd.

This is to announce the “Announcement Regarding Planned Commencement of Tender Offer for the Shares of Fujitsu General Limited (Securities Code: 6755)” by Paloma・Rheem Holdings Co., Ltd. attached hereto today.
End
(Attachment)
The purpose of this document is to, in accordance with Article 30, Paragraph 1, Item 4 of the Order for Enforcement of the Financial Instruments and Exchange Act, make an announcement based on a request that Paloma・Rheem Holdings Co., Ltd. (the tender offeror) made to Fujitsu General Limited (the target company of the tender offer).


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“Announcement Regarding Planned Commencement of Tender Offer for the Shares of Fujitsu General Limited (Securities Code: 6755)” as of January 6, 2025


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January 6, 2025
To whom it may concern:
Company Name:
Paloma・Rheem Holdings Co., Ltd.
Representative:
Hiroaki Kobayashi, Representative Director and President
Announcement Regarding Planned Commencement of Tender Offer
for the Shares of Fujitsu General Limited (Securities Code: 6755)

Paloma・Rheem Holdings Co., Ltd. (the “Offeror”) hereby announces that it decided, by a resolution of its board of directors as of today, to acquire the common shares of Fujitsu General Limited (Securities Code: 6755, listed on the Prime Market of the Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”); the “Target Company,” and its common shares, the “Target Company Shares”) through a tender offer (the “Tender Offer”) under the Financial Instruments and Exchange Act (Act No. 25 of 1948, as amended; the “Act”). Because it is expected that a certain amount of time will be required for the procedures and steps under competition laws in Japan, the European Union, India, Saudi Arabia, and the United States, the Offeror plans to promptly commence the Tender Offer when the conditions precedent

set out in the Master Transaction Agreement (as defined in “(1) Summary of the Tender Offer” in “1. Purpose of the Tender Offer”; the same applies hereinafter) (Note 1) (the “Tender Offer Conditions Precedent”), such as the completion of the aforementioned procedures and steps, are satisfied or waived by the Offeror (Note 2). As of today, the Offeror aims, based on discussions with domestic and foreign law firms concerning such procedures, to commence the Tender Offer on or around early July, 2025, but since it is difficult to accurately estimate the amount of time required for the procedures and steps of the relevant domestic and foreign authorities, the details of the schedule for the Tender Offer will be promptly announced as soon as they are decided (Note 7). Any changes to the expected timing of the commencement of the Tender Offer will be also announced promptly. Note 1:
The Tender Offer Conditions Precedent are stipulated as follows: (i) the board of directors of the Target Company has adopted a resolution with the unanimous approval of all disinterested directors to express its opinion in support of the Tender Offer and to recommend that the Target Company’s shareholders tender their shares in the Tender Offer, and that opinion has been publicly announced in accordance with laws and regulations and has not been changed (excluding any updates or other minor changes that are required as a matter of course due to the passage of time from today to the commencement date of the Tender Offer; the same applies hereinafter) or withdrawn, and the Special Committee (as defined in “(iii) Decision-making process and reasoning of the Target Company” in “(2) Background, purpose, and decision-making process leading to the decision to conduct the Tender Offer,


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and management policy following the Tender Offer” in “1. Purpose of the Tender Offer” below; the same applies hereinafter), established by the board of directors of the Target Company in relation to the Tender Offer, has reported to the board of directors of the Target Company that it is appropriate for the board of directors of the Target Company to express its opinion in support of the Tender Offer and to recommend that the Target Company’s shareholders tender their shares in the Tender Offer, and the report has not been changed or withdrawn; (ii) no judgment has been made or is likely to be made by any judicial or administrative agency that restricts or prohibits the Transactions (as defined in “(1) Summary of the Tender Offer” in “1. Purpose of the Tender Offer” below; the same applies hereinafter); (iii) Fujitsu Limited (“Fujitsu”) has performed and complied with, in all material respects, all of its obligations under the Master Transaction Agreement (Note 3), and Fujitsu’s representations and warranties (Note 4) are true and accurate in all material respects; (iv) the acquisition and implementation of all domestic and foreign permits and authorizations, etc. (Note 5) necessary to duly complete the Transactions (the “Acquisition of Clearance”) has been completed; (v) the License Agreement (as defined in “(6) Material agreements regarding the Tender Offer” in “1. Purpose of the Tender Offer” below; the same applies hereinafter) has been duly and validly executed and remains in effect; (vi) the Target Company’s MOU (as defined in “(iv) Management policy after the Tender Offer” in “(2) Background, purpose, and decision-making process leading to the decision to conduct the Tender Offer, and management policy following the Tender Offer” in “1. Purpose of the Tender Offer” below; the same applies hereinafter) duly and validly exists, and the Target Company has performed and complied with, in all material respects, all of its obligations under the Target Company’s MOU (however, the foregoing conditions shall be deemed satisfied unless a breach of such obligations has a material adverse effect); (vii) confirmation has been obtained in writing from the Target Company that, as of the business day immediately preceding the commencement date of the Tender Offer, there is no material fact regarding the business, etc. of the Target Company (as provided for in Article 166, Paragraph 2 of the Act) that has not been publicized (as used in Article 166, Paragraph 4 of the Act) by the Target Company, except for matters relating to the Transactions including the Tender Offer to be announced on that date by the Target Company; (viii)
i
f the Tender Offer has commenced on or after today, no circumstances have
arisen in the Target Company or its consolidated subsidiaries that would allow the withdrawal of the Tender Offer pursuant to the provisions of the proviso of Article 27-11, Paragraph 1 of the Act; and (ix) no proposal for a dividend of surplus to be implemented on or after today has been approved at any shareholders’ meeting of the Target Company and no decision has been made to convene a shareholders’ meeting with that proposal as an agenda item (excluding cases where the decision to convene the shareholders’ meeting is withdrawn or the proposal is rejected at the shareholders’ meeting). Further, since the Master Transaction Agreement sets out termination events (Note 6), the Offeror will not bear an obligation to commence the Tender Offer in the event that the Master Transaction Agreement terminates. Please refer to “(6) Material agreements regarding the Tender Offer” in “1. Purpose of the Tender Offer” below for details of the Master Transaction Agreement.
Note 2:
The Master Transaction Agreement stipulates that any of the Tender Offer Conditions Precedent may be waived at the discretion of the Offeror.
Note 3:
Please refer to “(6) Material agreements regarding the Tender Offer” in “1. Purpose


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of the Tender Offer” below for details of Fujitsu’s obligations under the Master Transaction Agreement.
Note 4:
Please refer to “(6) Material agreements regarding the Tender Offer” in “1. Purpose of the Tender Offer” below for details of the representations and warranties of Fujitsu under the Master Transaction Agreement.
Note 5:
“Permits and authorizations, etc.” include, but are not limited to, permits and authorizations, etc. (collectively meaning a notification under Article 10, Paragraph 2 of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade or other permit, authorization, license, approval, consent, registration, notification, or any other similar act or procedure by the national government, a local government, or any other judicial or administrative agency as required by relevant laws and regulations) under competition laws of Japan, the European Union, India, Saudi Arabia, and the United States.
Note 6:
Please refer to “(6) Material agreements regarding the Tender Offer” in “1. Purpose of the Tender Offer” below for termination events of the Master Transaction Agreement.
Note 7:
While the commencement of the Tender Offer is conditional upon the completion of the procedures and steps under competition laws in each of the jurisdictions stated above, the Offeror hereby announces, as of today, that it plans to conduct the Tender Offer prior to the public notice of commencement of the Tender Offer in light of the status of discussions with the Target Company and Fujitsu, taking into account that, it is necessary to publicly announce the implementation of the Tender Offer when carrying out the procedures under competition laws in the European Union and the United States, that it is necessary to avoid the announcement by the Competition Commission of India being made before the announcement of the Tender Offer by the Offeror in India since, when commencing the procedures under competition laws, the commencement of such procedures will be publicly announced by the Competition Commission of India, which has jurisdiction over the procedures under competition laws, and that the amount of time required for the procedures under competition laws in each of the jurisdictions stated above is difficult to be accurately estimated.

1.
Purpose of the Tender Offer
(1) Summary of the Tender Offer
The Offeror decided, by a resolution of its board of directors as of today, to conduct the Tender Offer to acquire all of the Target Company Shares (excluding all of the treasury shares held by the Target Company and the Target Company Shares held by Fujitsu (number of shares held: 46,121,000 shares; ownership percentage (Note 1): 44.02%; the “Non-Tendered Shares”)) listed on the Prime Market of the Tokyo Stock Exchange as part of a series of transactions (the “Transactions”) aimed at making the Target Company a wholly-owned subsidiary of the Offeror, which are predicated on the delisting of the Target Company Shares. As of today, the Offeror does not hold any Target Company Shares. Note 1:
“Ownership percentage” means the ratio expressed as a percentage (rounded to two decimal places) of the number of shares owned to the number of Target Company Shares (104,765,761 shares) as calculated by deducting the number


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of treasury shares (4,640,900 shares) held by the Target Company as of September 30, 2024 as stated in the Semiannual Securities Report for the 106th fiscal year submitted by the Target Company on November 1, 2024 (the “Target Company’s Semiannual Securities Report”), from the total number of issued shares of the Target Company as of September 30, 2024 (109,406,661 shares) as stated in the Target Company’s Semiannual Securities Report; the same applies hereinafter.
In the Transactions, the Offeror intends to ultimately make the Target Company a wholly-owned subsidiary of the Offeror through the following procedures: (A) the Tender Offer to be conducted by the Offeror; (B) procedures for the Share Consolidation (as defined in “(4) Policy for organizational
restructuring after the Tender Offer (matters relating to a so-called “Two-Step Acquisition”)” below; the same applies hereinafter) to be conducted by the Target Company in order to make the Offeror and Fujitsu the only shareholders of the Target Company if the Offeror is unable to acquire all of the Target Company Shares (excluding treasury shares held by the Target Company and the Non-Tendered Shares held by Fujitsu) through the Tender Offer;
(C) (i) the provision of funds to the Target Company by the Offeror to cover the
consideration for the Share Repurchase (as defined below) (which is expected to be through a capital increase by a third-party allotment through which shares are allotted to the Offeror or through a loan to the Target Company (the “Financing”)) and (ii) a decrease in the amounts of the stated capital, capital reserve, and retained earnings reserve of the Target Company in accordance with Article 447, Paragraph 1 and Article 448, Paragraph 1 of the Companies Act (Act No. 86 of 2005, as amended; the “Companies Act”) (the “Capital Decrease, Etc.”) (Note 2) to be implemented by the Target Company, each to be conducted for the purpose of procuring funds and a distributable amount necessary for conducting the Target Company’s acquisition of the Target Company Shares held by Fujitsu on the condition that the Share Consolidation becomes effective; and
(D) a share repurchase to be conducted by the Target Company, through which the Non-
Tendered Shares held by Fujitsu are acquired (the “Share Repurchase”) (Note 3) (Note 4).
Please refer to “(4) Policy for organizational restructuring after the Tender Offer (matters relating to a so-called “Two-Step Acquisition”)” below for details of the Share Consolidation. Note 2:
In the Capital Decrease, Etc., the stated capital, capital reserve, and retained earnings reserve of the Company will be reduced and transferred to other capital surplus and other retained earnings reserve.
Note 3:
In the Share Repurchase, the Offeror decided to implement the Share Repurchase based on the belief that it is possible to both maximize the purchase price per share of the Target Company Shares in the Tender Offer (the “Tender Offer Price”) and ensure fairness among shareholders by increasing the amounts distributed to the minority shareholders of the Target Company, taking into consideration that it is expected that the provisions of the Corporation Tax Act (Act No. 34 of 1965; as amended) on excluding deemed dividends from gross profits will be applied in regard to Fujitsu. The Tender Offer Price and the consideration for the repurchase of treasury


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shares in the Share Repurchase (per share prior to share consolidation; the “Repurchase Price”) are calculated so that (i) the amount calculated as the after-tax earnings of Fujitsu if the Share Repurchase were to be conducted at the Repurchase Price is equivalent to (ii) the amount of earnings that Fujitsu would receive if it were to tender its shares in the Tender Offer at the Tender Offer Price. Accordingly, Fujitsu will not receive greater benefits than the minority shareholders of the Target Company.
Note 4:
While there is a possibility that the Share Repurchase will be conducted after the Share Consolidation prior to the approval of the exemption from the obligation to file an annual securities report, a tender offer of treasury shares is not planned to be conducted upon the execution of the Share Repurchase as the Share Repurchase is intended to be conducted after the delisting of the Target Company Shares, and the delisted shares will not constitute “treasury share certificates, etc.” (Article 24-6, Paragraph 1 of the Act and Article 4-3 of the Order for Enforcement of the Financial Instruments and Exchange Act), which would be subject to a tender offer of treasury shares (Article 27-22-2 of the Act).
Upon implementing the Tender Offer, the Offeror has entered into a master transaction agreement dated today (the “Master Transaction Agreement”) with Fujitsu, and has agreed on the terms and conditions of the Transactions, which includes that Fujitsu shall not tender any of the Non-Tendered Shares held by Fujitsu in response to the Tender Offer and that the Non-Tendered Shares shall be sold to the Target Company upon the Share Repurchase after the Share Consolidation takes effect. Please refer to “(6) Material agreements regarding the Tender Offer” below for details of the Master Transaction Agreement. In the Tender Offer, the minimum number of shares to be purchased has been set by the Offeror at 23,722,800 shares (ownership percentage: 22.64%), and if the total number of Share Certificates, Etc. tendered in response to the Tender Offer (the “Tendered Share Certificates, Etc.”) is less than the minimum number of shares to be purchased, the Offeror will not purchase any of the Tendered Share Certificates, Etc. In other words, if the total number of Tendered Share Certificates, Etc. is less than the minimum number of shares to be purchased (23,722,800 shares; ownership percentage: 22.64%), the Tender Offer will not be successful and the Transactions will not be implemented . Conversely, as described above, given that the purpose of the Tender Offer is to make the Target Company a wholly-owned subsidiary of the Offeror by having the Offeror acquire all of the Target Company Shares (excluding treasury shares held by the Target Company and the Non-Tendered Shares held by Fujitsu), the Offeror has not set a maximum number of shares to be purchased in the Tender Offer, and if the number of tendered shares is equal to or exceeds the minimum number of shares to be purchased (23,722,800 shares; ownership percentage: 22.64%), the Offeror will purchase all of the Tendered Share Certificates, Etc. The minimum number of shares to be purchased (23,722,800 shares; ownership percentage: 22.64%) has been set to be the number calculated by (i) subtracting the number of treasury shares held by the Target Company as of September 30, 2024 (4,640,900 shares) from the total number of issued shares of the Target Company as of September 30, 2024 (109,406,661 shares) as stated in the Target Company’s Semiannual Securities Report, (ii) multiplying the number of voting rights (1,047,657 voting rights) represented by that number of shares (104,765,761 shares) by two-thirds, (iii) multiplying


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that number (698,438 voting rights, rounded up to the nearest whole number) by the share unit number of the Target Company (100 shares), and then (iv) deducting from that number (69,843,800 shares) the number of the Non-Tendered Shares held by Fujitsu as of September 30, 2024 (46,121,000 shares). The minimum number of shares to be purchased has been set because, if the Offeror is unable to acquire all of the Target Company Shares (excluding treasury shares held by the Target Company and the Non-Tendered Shares held by Fujitsu) through the Tender Offer, the Offeror plans to request the Target Company to implement a series of procedures to make the Offeror and Fujitsu the only shareholders of the Target Company and to take the Target Company Shares private (the “Squeeze-Out Procedures”) after the successful completion of the Tender Offer, as stated in “(4) Policy for organizational restructuring after the Tender Offer (matters relating to a so-called “Two-Step Acquisition”)” below, and a special resolution at the shareholders’ meeting as prescribed in Article 309, Paragraph 2 of the Companies Act would be required for implementing the Share Consolidationas part of the Squeeze-Out Procedures. Accordingly, the minimum number of shares to be purchased has been set so that the Offeror and Fujitsu will hold two-thirds or more of the number of voting rights of all shareholders of the Target Company after the Tender Offer in order to reliably carry out the Squeeze-Out Procedures. The Offeror plans to obtain the funds required for the Transactions, including the Tender Offer, using financing from Sumitomo Mitsui Banking Corporation (the “Settlement Financing”).

Overall structure of the Tender Offer and the contemplated subsequent procedures The following diagrams illustrate the overall structure of the Tender Offer and the contemplated subsequent procedures: (i)
Current status
(ii) The Tender Offer


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(iii) The Squeeze-Out Procedures
(iv) The Financing and the Capital Decrease, Etc.
(v) The Share Repurchase


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(vi) After the implementation of the Transactions
According to the “Notice Concerning the Opinion in Support of the Planned Commencement of the Tender Offer for Shares of the Company by Paloma・Rheem Holdings Co., Ltd., and Recommendation to Tender the Shares” released today by the Target Company (the “Target Company’s Press Release”), the Target Company believes that the execution of the Transactions, including the Tender Offer, by the Offeror will contribute to the enhancement of the Target Company’s corporate value and that the Tender Offer Price is fair and reasonable, and having determined that it is therefore appropriate to recommend that the Target Company’s shareholders tender their shares in the Tender Offer, the Target Company resolved at its board of directors meeting held today, as its opinion as of that day, to express an opinion in support of the Tender Offer and recommend that the Target Company’s shareholders tender their shares in the Tender Offer, if the Tender Offer commences. For the details of the decision-making process of the Target Company, please refer to “(iii)

Decision-making process and reasoning of the Target Company ” in “(2) Background, purpose, and decision-making process leading to the decision to conduct the Tender Offer, and management policy following the Tender Offer” below.
(2) Background, purpose, and decision-making process leading to the decision to conduct the
Tender Offer, and management policy following the Tender Offer The background, purpose, and decision-making process leading to the decision to conduct the Tender Offer as well as the management policy following the Tender Offer are described below. The statements regarding the Target Company below are based on information released by the Target Company, the Target Company’s Press Release, and explanations received from the Target Company.