Last checked at 28 Jul 2008 09:30
[Translation]
July 28, 2008
To Whom It May Concern:
Company Name: Toyota Motor Corporation
Name and Title of Representative:
Katsuaki Watanabe, President
(Code Number: 7203
Securities Exchanges throughout Japan)
Name and Title of Contact Person:
Takuo Sasaki
General Manager, Accounting Division
(Telephone Number: 0565-28-2121)
Notice regarding Conversion of Central Motor Co., Ltd. into a Wholly-owned Subsidiary by
TOYOTA MOTOR CORPORATION through Simple Share Exchange
Tokyo - TOYOTA MOTOR CORPORATION ("TMC") announced today that TMC and Central Motor Co., Ltd. ("Central Motor") have signed a share exchange agreement by which Central Motor shall become a wholly-owned subsidiary of TMC and TMC shall become the parent company of Central Motor as described below ("the Share Exchange"), each company having adopted a resolution approving the Share Exchange at a meeting of its board of directors held today. The effective date of the share exchange agreement will be October 1, 2008.
The Share Exchange is subject to the approval of the share exchange agreement by shareholders at the extraordinary general meeting of shareholders of Central Motor scheduled to be held on September 3, 2008, after which the Share Exchange will take effect on October 1, 2008. TMC is not required to obtain approval from shareholders at its general shareholders' meeting, as TMC will implement the Share Exchange through the process of "simple share exchange" under Article 796, Paragraph 3 of the Corporation Act of Japan.
Please note that some of the disclosure items and contents are omitted herein, because the Share Exchange is a "simple share exchange" to convert a consolidated subsidiary into a wholly-owned subsidiary.
1. Purpose of converting Central Motor into a wholly-owned subsidiary through the Share Exchange
| Due to the globally escalating price of oil and the globally increasing interest in environmental issues, the demand for energy-efficient small automobiles continues to expand inside and outside Japan. On the other hand, this trend is leading to even more competition among manufacturers. While we carry on high-level domestic production mainly for export, we face some important management issues such as securing human resources in Japan, disaster risk dispersion, and the need for a quick response to changing global demand. Given such conditions, TMC is establishing a structure to flexibly meet the change in global demand. This structure is represented by the development of the Toyota Group's third manufacturing base in North East Japan, following Chubu and North Kyushu, where we will consolidate the production of key components. This will save logistics costs, improve global competitiveness of small cars, and streamline the "domestic trilateral framework" that helps us in recruitment, disaster risk dispersion and further enhancement of domestic bases with experienced workers. Central Motor is a car assembly company in the Toyota Group, and the main business of Central Motor is the manufacturing of the bodies of passenger cars such as the Corolla Axio and the Yaris. As a result of the Share Exchange, TMC and Central Motor will establish an even stronger relationship and pursue the establishment of a further efficient production system in the Toyota Group and the further improvement of quality and cost competitiveness, including the moving of Central Motor's head office plant to Miyagi Prefecture, with the aim of starting operations in 2010. |
2. Outline of the Share Exchange
(1) Timeline
| Board of Directors Meeting to resolve the Share Exchange | (Both companies) | Monday, July 28, 2008 |
| Execution of the Share Exchange Agreement | (Both companies) | Monday, July 28, 2008 |
| Public notice of the Record Date of the Extraordinary General Meeting of Shareholders | (Central Motor) | Tuesday, July 29, 2008 (Planned) |
| Record Date of the Extraordinary General Meeting of Shareholders | (Central Motor) | Wednesday, August 13, 2008 (Planned) |
| Extraordinary General Meeting of Shareholders to approve the Share Exchange | (Central Motor) | Wednesday, September 3, 2008 (Planned) |
| Scheduled date of the Share Exchange (Effective Date) | Wednesday, October 1, 2008 (Planned) | |
| Date of Share Certificate Delivery | November, 2008 (Planned) |
(Note 1) TMC will implement the Share Exchange by means of a "simple share exchange" under Article 796,
Paragraph 3 of the Corporation Act which does not require approval by shareholders at its general
shareholders' meeting.
(Note 2) The scheduled date of the Share Exchange is subject to change by mutual agreement between TMC and
Central Motor.
(2) Share Exchange Ratio
| Company | TMC (Parent Company) | Central Motor (Wholly-owned Subsidiary) |
| Share Exchange Ratio | 1 | 0.23 |
| Number of Shares to be delivered in the Share Exchange | Common Stock：1,683,600 shares (TMC will allot to Central Motor shareholders 1,683,600 shares of TMC's treasury stock in the Share Exchange.) | |
(Note 1) Share Exchange Ratio
0.23 shares of TMC common stock will be delivered in exchange for one share of Central Motor stock in the Share Exchange. However, TMC common stock will not be delivered in the Share Exchange in exchange for the 6,680,000 shares of Central Motor stock which are held by TMC .
(Note 2) Treatment of Shares less than One Unit
Shareholders who will hold shares less than one unit of TMC stock (less than 100 shares) as a result of the Share Exchange will be unable to sell such shares on the securities exchanges. The shareholders who will hold shares less than one unit of TMC stock can utilize the "system for purchase of shares less than one unit" (sale of shares less than 100 shares).
(Note 3) Treatment of Fractions of less than One Share
If the number of the shares that shall be delivered to any shareholder as a result of the Share Exchange includes a fraction of less than one share, a cash amount in proportion to the fractions attributed to the Share Exchange will be paid to such shareholder in accordance with Article 234 of the Corporation Act.
(3) Basis for Calculation of the Share Exchange Ratio
In order to ensure the fairness and appropriateness of the share exchange ratio, TMC and Central Motor selected Nomura Securities Co., Ltd. ("Nomura") and Seiei Audit & Co. ("Seiei") as their respective third party institution to perform calculation of the share exchange ratio.
In calculating the value per share, Nomura applied an Average Market Price Analysis to TMC stock and a Comparable Companies Analysis as well as a DCF (Discounted Cash Flow) Analysis to Central Motor stock; while Seiei applied a Market Price Average Analysis to TMC stock, and a Comparable Companies Analysis, DCF Analysis and Market Value Based Net Asset Analysis to Central Motor stock.
As a result of subsequent discussion and negotiation between TMC and Central Motor which took into account the results of the calculations referred to above, each company approved the share exchange ratio at its board of directors meeting held on July 28, 2008 and signed the share exchange agreement on the same day. The above-mentioned share exchange ratio is subject to change by mutual agreement between TMC and Central Motor in the event of a substantial change in the conditions on which the calculations are based.
(4) Wholly-owned Subsidiary's Treatment of Stock Acquisition Rights and Bonds with Stock Acquisition Right
Central Motor has not issued any stock acquisition rights or bonds with stock acquisition right.
3. Overview of Parties to Stock Exchange (as of March 31, 2008)
| (1) | Trade Name | Toyota Motor Corporation (Parent Company) | Central Motor Co., Ltd. (Wholly-owned Subsidiary) |
| (2) | Businesses | Design, manufacture and sale of automobiles and related components and products; Financial services; Housing-related services; IT/Communication services; and others | Auto body manufacturing; Design, production, set-up, etc. and sale of automotive production equipment; Industrial waste disposal; Manufacturing and sale of non-auto plate pressing products, etc.; and others |
| (3) | Date Established | August 27, 1937 | September 4, 1950 |
| (4) | Head Office Address | 1 Toyota-Cho, Toyota City, Aichi Prefecture, Japan | 4-12 Ohyama-Cho, Sagamihara City, Kanagawa Prefecture, Japan |
| (5) | Representatives | Katsuaki Watanabe, President | Kanji Ishii, President |
| (6) | Capital | 397,050 million yen | 1,300 million yen |
| (7) | No. of Shares Issued | 3,447,997,492 shares | 14,000,000 shares |
| (8) | Net Asset | 11,869,527 million yen (consolidated) | 13,921 million yen (consolidated) |
| (9) | Total Asset | 32,458,320 million yen (consolidated) | 33,363 million yen (consolidated) |
| (10) | Fiscal Year Ending | March 31 | March 31 |
| (11) | Major Shareholders (Shareholding Ratio) | The Master Trust Bank of Japan, Ltd. (6.29%); Japan Trustee Services Bank, Ltd. (6.29%); Toyota Industries Corporation (5.81%) | Toyota Motor Corporation (47.71%); Kanto Auto Works, Ltd. (19.71%); Toyota Auto Body Co., Ltd. (9.19%) |
4. Information on the Parent Company after the Share Exchange
| (1) | Trade Name | Toyota Motor Corporation |
| (2) | Businesses | Design, manufacture and sale of automobiles and related components and products; Financial services; Housing-related services; IT/Communication services; and others |
| (3) | Head Office Address | 1 Toyota-Cho, Toyota City, Aichi Prefecture, Japan |
| (4) | Representative | Katsuaki Watanabe, President |
| (5) | Capital | 397,050 million yen (There will be no change in capital as a result of the Share Exchange) |
| (6) | Fiscal Year Ending | March 31 |
| (7) | Outlook after the Share Exchange | The Share Exchange will have little impact on our financial performance (both consolidated and unconsolidated). |