Group Restructuring
Konami Corporation
06 January 2006
January 5, 2006
FOR IMMEDIATE RELEASE
KONAMI CORPORATION
Kagemasa Kozuki
Chairman of the Board and CEO
Ticker 9766 at TSE1
Konami Sports Life Corporation
Fumiaki Tanaka
Chairman of the Board
Konami Sports Corporation
Toshimitsu Oishi
Representative Director and President
Ticker 4643 at TSE1
Announcement of official agreement for group restructuring (merger between
subsidiaries, share exchange with subsidiary) and shift to holding company
structure by company separation
KONAMI CORPORATION (hereafter referred as 'Konami'), Konami Sports Life
Corporation (hereafter referred as 'Konami Sports Life') and Konami Sports
Corporation (hereafter referred as 'Konami Sports') hereby announce that their
respective Boards of Directors' officially decided through resolutions at
meetings held today, January 5, 2006, to sign a merger agreement and a share
exchange agreement and to prepare separation planning documents following the
basic agreement concluded on November 7, 2005.
This group restructuring is conditioned on the approval of the related proposal
above at the extraordinary shareholdersf meeting to be held on January 26, 2006.
I Group restructuring and shift to holding company structure
The merger of Konami Sports Life and Konami Sports (hereafter referred as 'this
merger') will be by absorption in which Konami Sports will be the surviving
company and Konami Sports Life will be the dissolved company.
The execution of share exchange (hereafter referred as 'this share exchange')
between Konami and Konami Sports, in which Konami will become the complete
parent company and Konami Sports will become the wholly owned subsidiary, is
conditioned on the effectiveness of this merger. After this share exchange,
Konami Sports will change its name to Konami Sports & Life Corporation
(hereafter referred as 'Konami Sports & Life').
Konami will execute a company separation, in which a newly established wholly
owned subsidiary, Konami Digital Entertainment Co., Ltd. (hereafter referred as
'Konami Digital Entertainment') will succeed to Konamifs digital entertainment
business and Konami will shift to a holding company structure.
II. Summary of group restructuring and shifting to a holding company
structure
(1) Outline of company separation
1. Summary of company separation
Digital Entertainment Business of Konami will be separated from Konami in the
process of shifting to a holding company structure.
2. Schedule of separation (planned)
January 5, 2006 Boards of Directors' meeting for preparation of separation
planning documents
January 26, 2006 Extraordinary shareholders' meetings for approval of
separation planning documents
March 31, 2006 Date of separation
3. Method of separation
The method to be used is a company separation, with Konami as the separating
company and the newly established Konami Digital Entertainment as the succeeding
company.
4. Number of shares to be allotted with respect to the company separation
Konami Digital Entertainment will allot to Konami all 520,000 shares of its
newly issued common stock.
5. Cash paid due to separation
Cash will not to be paid for this separation.
6. Rights and duties to which the newly established company will succeed
Rights and duties to which the newly established company will succeed will be
based on all outstanding debts and credits, labor contracts and the other rights
and duties in connection with the Digital Entertainment Business of Konami,
unless otherwise specified in the separation planning documents.
7. Expectation for fulfillment of obligations
a. Konami (separating company)
The amount of assets will be larger than the amount of liabilities after the
separation, and no changes are expected in Konamifs business activities which
will affect Konamifs ability to fulfill its obligations.
b. Konami Digital Entertainment (succeeding company)
The amount of assets will be larger than the amount of liabilities after the
separation, and no changes are expected in Konami Digital Entertainmentfs
business activities which will affect Konami Digital Entertainmentfs ability to
fulfill its obligations.
8. The amount of capital decrease, and cancellation of stock for separating
company
None.
9. Newly appointed board of directors
a. Directors
Fumiaki Tanaka, Akira Tamai, Notsu Naoyuki
b. Corporate Auditor
Nagahiro Morimoto, Noboru Onuma, Yasumasa Iwagaki
10. Contents of company separation
a Business to be separated
Digital Entertainment Business of Konami
b Sales, Operating Income and Ordinary Income of separated business
for the six months ended September 30, 2005
Digital Entertainment Sales Operating Income Ordinary Income
business 50,523 Million yen 11,561 Million yen 11,236 Million yen
c Assets and Liabilities of separated business segment as of October 1,
2005
Assets Liabilities
Items Book Value Items Book Value
Current Assets 50,412 million yen Current Liabilities 20,157 million yen
Non Current Assets 22,531 million yen Non Current Liabilities 786 million yen
Total Assets 72,943 million yen Total Liabilities 20,943 million yen
.
(2) Outline of the merger
1. Schedule of merger (planned)
January 5, 2006 Board of Director's meeting to sign the merger agreement /
Date of execution of the merger agreement
January 26, 2006 Extraordinary shareholders' meeting for approval of the
merger agreement
February 28, 2006 Date of merger and registration
2. Method of merger
Konami Sports will be the surviving company and Konami Sports Life will
subsequently be dissolved.
3. Merger ratio
a. Share allotment ratio
3.99 shares of Konami Sports will be allotted to 1 share of Konami Sports Life.
b. Basis for the determination of merger ratio
The calculation of the merger ratio was conducted by Nikko Cordial Securities
Inc., ('Nikko') independently and reasonably based on each subject company's
request.
Nikko calculated the range of the merger ratio through a total consideration of
the results of its analysis, using an adjusted net asset method for Konami
Sports Life and the market share price method and the DCF method (Discounted
Cash Flow method) for Konami Sports.
The merger ratio was agreed after consideration and negotiation between the
subject companies based on the above evaluations.
However, this merger ratio may be changed after discussions between the subject
companies in the event material changes in the basis of calculation occur.
c. Number of shares to be allotted with respect to the merger
As a substitute for issuing new shares, Konami Sports will allot 15,760,500
shares of its common stock held as treasury stock, which includes 15,457,741
shares that will be succeeded from Konami Sports Life, to Konami as a
shareholder of Konami Sports Life.
d. Cash paid due to merger
Cash will not to be paid for this merger.
(3) Outline of share exchange
1. Share exchange schedule (planned)
January 5, 2006 Board of Director's meetings to sign the share exchange
agreement / Date of execution of the share exchange agreement
January 26, 2006 Extraordinary Shareholders' meetings for approval of the share
exchange agreement
February 23, 2006 Date of delisting of Konami Sports
March 1, 2006 Date of share exchange
April 20, 2006 Date of grant of share certificates
2. Share exchange ratio
a. Share allotment ratio
0.79 shares of Konami will be allotted to 1 share of Konami Sports. However,
there will be no share allotment for Konami Sports' shares that will be allotted
to Konami upon the merger between Konami Sports and Konami Sports Life.
b. Basis of calculation of share exchange ratio
The calculation of share exchange ratio was conducted by Nikko independently and
reasonably based on each subject company's request.
Nikko calculated the range of the share exchange ratio through a total
consideration of the results of its analysis, using the market share price
method and the DCF method for both Konami Corporation and Konami Sports.
The share exchange ratio was agreed after consideration and negotiation between
the subject companies based on the above evaluations.
However, this share exchange ratio may be changed after discussions between the
subject companies in the event material changes in the basis of calculation
occur.
c. Number of shares to be allotted with respect to the share exchange
Konami will allot a total of 9,898,911 shares of its common stock, including
4,024,078 shares of newly issued shares and 5,874,833 shares held as treasury
stock.
d. Cash paid due to share exchange
Cash will not to be paid for share exchange
e. Change of registered name
After the share exchange has been executed, Konami Sports will change its
registered name to Konami Sports & Life Corporation on March 31, 2006.
III Outline concerning company
(1) Registered name KONAMI Konami Sports Konami Sports Life Konami Digital
CORPORATION Corporation Corporation Entertainment
As of September 30, As of September 30, As of September 30, Co., Ltd
2005 2005 2005
Establishing on
March 31, 2006
(2) Main business Planning, production, Operating fitness Developing, Planning, production,
and distribution of clubs, swimming manufacturing and and distribution of
online games, computer schools, gymnastic sales of fitness and online games, computer
& video games, card schools and other care support machines & video games,
games, toy contents related business. and fitness and care amusement machines,
for amusement support goods. toys, card games,
facilities, contents contents for mobile
for mobile phone, phone, music, image
music and image software, books, and
software. magazines.
(3) Date of March 19, 1973 March 14, 1973 December 16, 1975 March 31, 2006
incorporation
(planned)
(4) Head office 2-4-1, Marunouchi, 4-10-1, 4-10-27, 6-10-1,Roppongi,
location Chiyoda-ku, Tokyo Higashi-shinagawa, Higashi-shinagawa,
Shinagawa-ku, Tokyo Minatoku-ku, Tokyo
Shinagawa-ku, Tokyo
(5) Representative Kagemasa Kozuki, Toshimitsu Oishi, Fumiaki Tanaka, Fumiaki Tanaka,
Chairman of the Board Representative
and CEO Director and President Chairman of the Board Representative
Director and President
(6) Capital 47,399 million yen 5,040 million yen 15,050 million yen 26,000 million yen
(7) Total number of 139,531,708 shares 28,290,768 shares 3,950,000 shares 520,000 shares
shares issued
(8) Shareholders' 149,486 million yen 11,368 million yen 30,630 million yen 52,000 million yen
Equity
(9) Total assets 203,217 million yen 48,719 million yen 32,329 million yen 72,943 million yen
(10) Financial year March 31 March 31 March 31 March 31
end
(11) Number of 1,960 employees 1,507 employees 80 employees 2,100 employees
employees
(approximate)
(12) Major venders (Suppliers) (Suppliers) (Suppliers) (Suppliers)
and customers
Sony Computer Konami Sports Life Konami Corporation Sony Computer
Entertainment Inc. Corporation Entertainment Inc.
Japan Beverage Inc.
Nintendo Co., Ltd. DESENTE, LTD. Nintendo Co., Ltd.
(Purchasers)
(Purchasers) (Purchasers) (Purchasers)
Konami Sports
Konami Digital Individual member, Corporation Konami Digital
Entertainment, Inc. Corporate member Entertainment, Inc.
(13) Major Kozuki Holding B.V. Konami Sports Life KONAMI CORPORATION KONAMI CORPORATION
shareholder's Corporation
and shareholding 9.69% 100.00% 100.00%
ratios 54.64%
Kozuki Foundation For Konami Sports
Sports and Education Corporation
9.69% 14.70%
The Master Trust Bank Japan Trustee Bank of
of Japan, Ltd. Japan, Ltd.
7.46% 1.81%
Japan Trustee Bank of Konami Sports Employee
Japan, Ltd. Stock Purchase
Association
7.46%
KONAMI CORPORATION 1.43%
6.61%
(14) Main banks Sumitomo Mitsui Bank of Sumitomo Mitsui Sumitomo Mitsui
Banking Corporation Tokyo-Mitsubishi UFJ, Banking Corporation Banking Corporation
Ltd.
(15) Relationships among the companies concerned:
Capital Konami owns 100% of the issued shares of Konami Sports Life. Konami Sports Life owns
54.64% of the issued shares of Konami Sports.
Personnel The chairman of the board of Konami Sports also serves as director of Konami.
The chairman of the board of Konami Sports Life also serves as executive corporate
officer of Konami and director of Konami Sports.
The president of Konami Sports also serves as President of Konami Sports Life.
Transactions Konami Sports Life consigns the production of fitness machines to Konami.
Konami Sports purchases fitness machines and health related goods from Konami Sports
Life.
(16) Results for the last three fiscal years
(1) KONAMI CORPORATION
(Unit: million yen)
Non-consolidated Consolidated
Fiscal Year March 31, March 31, March 31, September March 31, March 31, March 31, September
2003 2004 2005 30, 2005 2003 2004 2005 30, 2005
Net sales 130,186 146,654 134,117 51,016 253,657 273,412 260,691 111,870
Operating 11,577 13,303 4,261 5,179 (21,870) 40,713 28,136 7,462
income
Ordinary 13,068 16,910 13,447 9,408 (22,096) 40,107 27,442 14,335
income
Net income (11,284) 10,381 12,794 11,197 (28,519) 20,104 10,486 6,964
Net income (92.82) 83.71 105.33 85.93 (234.58) 166.86 87.41 53.45
per share
Annual divided 54.00 54.00 54.00 27.00 - - - -
per share (interim)
Shareholders' 872.38 894.08 931.24 1,147.20 750.35 847.66 885.97 1,027.32
equity per share
(2) Konami Sports Corporation
(Unit: million yen)
Non-consolidated Consolidated
Fiscal Year March 31, March 31, March 31, September March 31, March 31, March 31, September
2003 2004 2005 30, 2005 2003 2004 2005 30, 2005
Net sales 66,682 76,486 77,380 39,946 75,149 77,511 78,026 40,115
Operating 2,944 5,023 4,412 963 3,220 5,063 4,451 960
Income
Ordinary 2,791 4,738 3,965 833 3,002 4,771 4,003 827
income
Net income 950 1,157 1,204 301 933 1,155 1,216 291
Net income 34.67 43.81 48.08 12.50 34.05 43.71 48.59 12.07
per share
Annual dividend 45.60 30.00 30.00 15.00 - - - -
per share (interim)
Shareholders' 572.44 545.43 473.20 471.12 578.43 551.92 480.59 478.08
equity per share
(3) Konami Sports Life Corporation
(Unit: million yen)
Non-consolidated
Fiscal Year March 31, March 31, March 31, September 30,
2003 2004 2005 2005
Net sales 14,135 7,222 5,043 2,158
Operating 585 (157) (705) (42)
income
Ordinary 475 425 (242) 190
income
Net income 239 223 (253) 152
Net income 101.24 56.60 (64.09) 38.45
per share
Annual dividend per - - - -
share
Shareholders' 7,723.64 7,780.25 7,716.16 7,754.60
equity per share
Note: There are no consolidated financial statements for Konami Sports Life
Corporation
IV Corporate profiles after shifting to holding company
structure (planned)
(1) KONAMI CORPORATION
i Main Business
Planning and execution of management strategies to improve the corporate value
and shareholdersf value of the entire group, as well as the management of
business execution within each subsidiaries.
ii Head office location
2-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan
iii Directors and Corporate Auditors
Chairman of the Board and CEO Kagemasa Kozuki
Representative Director Kagehiko Kozuki
Representative Director and CFO Noriaki Yamaguchi
Director and CHO Kimihiko Higashio
Director Tsutomu Takeda
Director Tomokazu Godai
(Present Representative Director of Maya
Tec Co., Ltd)
Director Hiroyuki Mizuo
(Present Director of Research Institute
of Kochi University of Technology)
Director Akira Gemma
(Present Senior Advisor, Shiseido Co.,
Ltd)
Corporate Auditor Noboru Onuma
(Former Director, Sumitomo Mitsui
Banking Corporation)
Corporate Auditor Tetsuro Yamamoto
(Former Director, Bank of Tokyo-
Mitsubishi, Ltd.)
Corporate Auditor Minoru Nagaoka
(Present President, Capital Markets
Research Institute)
Corporate Auditor Masataka Imaizumi
(Present Chairman, Police Association)
iv Capital 47,399 million yen
v Total Number of shared issued 139,531,708 shares
vi Total Assets 195,285 million yen
vii Stock Holders Equity 155,114 million yen
viii Fiscal Accounting Period March 31
ix Number of employees 40 (approximate)
(2) Konami Digital Entertainment Co., Ltd
i Main Business
Planning, production, manufacturing and distribution of online games, computer &
video games, amusement machines, toys, card games, contents for mobile phone,
music, image software, books, and magazines.
ii Head office location
6-10-1, Roppongi, Minato-ku, Tokyo, Japan
iii Directors and Corporate Auditors
Representative Directors Fumiaki Tanaka
(Present Executive Corporate Officer of
Konami)
Director Akira Tamai
(Present Corporate Officer of Konami)
Director Naoyuki Notsu
(Present Corporate Officer of Konami)
Corporate Auditor Nagahiro Morimoto
(Present Corporate Auditor of Konami
Sports Life)
Corporate Auditor Noboru Onuma
(Present Corporate Auditor of Konami)
Corporate Auditor Yasumasa Iwagaki
(Present Corporate Auditor of Konami
Real Estate, Inc.)
iv Capital 26,000 million yen
v Total Number of shared issued 520,000 shares
vi Total Assets 72,943 million yen
vii Stock Holders Equity 52,000 million yen
viii Fiscal Accounting Period March 31
ix Number of employees 2,100 (approximate)
(3) Konami Sports & Life Corporation (Present Konami Sports Corporation)
(planned)
i Main Business
Operating and management of sports clubs.
Development, manufacturing and sales of health and care support machines, goods
to support health and to provide health service with prevention and care
ii Head office location
4-10-1, Higashi-Shinagawa, Shinagawa-ku, Tokyo, Japan
iii Capital 5,040 million yen
iv Total Number of shared issued 28,290,768 shares
v Total Assets 50,454 million yen
vi Stock Holders Equity 12,550 million yen
vii Fiscal Accounting Period March 31
viii Number of employees 1,587 (approximate)
V Schedule
The holding company structure will take effect on March 31, 2006, following the
resolution at the Boards of Directors' meeting approving the final contracts and
preparation of separation planning documents on today, January 5, 2006, and
approval resolution of extraordinary shareholders' meetings of each company will
be held on January 26, 2006 approving the transaction.
VI Future forecast after shifting to holding company structure
Forecasts for non-consolidated and consolidated operating results after company
separation, merger and share exchange will be released as soon as they are
determined.
Contact us
KONAMI CORPORATION Konami Sports Corporation
Konami Sports Life Corporation
Chiaki Nakajima Yuri Matsumoto
General Manager of Public Relations General Manager of Public Relations
Department Department
03-4332-0573 03-6688-0573
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