Acquisition of shares of Shinko Wire Company, Ltd. (subsidiary acquisition) in association with Shinko Wire’s absorption-type merger of its subsidiary

September 28, 2017

Kobe Steel, Ltd.

Kobe Steel, Ltd. announces that it has passed a resolution at its board of directors meeting held today to turn Shinko Wire Company, Ltd. into a subsidiary in association with Shinko Wire’s absorption-type merger of Tesac Wirerope Co., Ltd.

Reason for acquisition of shares

As a secondary processor of steel wire rods in the Kobe Steel Group, Shinko Wire is engaged in the business of manufacturing and selling PC steel products, steel wires, stainless steel wires, wire ropes, steel wire processed products, and other products.

Shinko Wire plans to conduct an absorption-type merger of its consolidated subsidiary, Tesac Wirerope, on April 1, 2018 in order to strengthen its rope business. To the shareholders of Tesac Wirerope, Shinko Wire has decided to issue 710,228 shares of common stock in Shinko Wire.

The merger of Shinko Wire and Tesac Wirerope will consolidate product brands, manufacturing, processes, development, technology, quality assurance systems and other management resources. It will improve cost competitiveness at the global level, including the Kobe Steel Group’s rope business in Japan, and make possible the creation of high-quality, high value-added products. Kobe Steel determined that the merger would contribute to strengthening its competitiveness in the demand field of steel wire rods and bars.

In this merger, as the shares held by Kobe Steel in Tesac Wirerope will be exchanged with the common stock of Shinko Wire, Kobe Steel’s ownership ratio of voting rights in Shinko Wire will be 40% or more. Shinko Wire will therefore meet the requirements to become a subsidiary of Kobe Steel.

Strengthening cooperation with Shinko Wire, a core company in the business field of steel wire rods and bars, has long been a theme at Kobe Steel. With this subsidiary acquisition as an opportunity, Kobe Steel aims to further expand its business in this field.

Outline of Shinko Wire Company, Ltd.

(1) Company name Shinko Wire Company, Ltd.
(2) Location 10-1, Nakahama-cho, Amagasaki, Japan
(3) Name & position of representative Koji Fujii
President and Representative Director
(4) Business Manufacture and sales of PC steel products, steel wires, stainless steel wires, wire ropes, steel wire processed products, and other products.
(5) Capital 8,062 million yen
(6) Date of establishment March 18, 1954
(7) Net assets 15,711 million yen
(8) Total assets 34,388 million yen
(9) Principal shareholders & their shareholding ratios
Kobe Steel, Ltd.
Shinko Wire customer stock ownership association
Mizuho Bank, Ltd.
Metal One Corporation
Employee stock ownership association
Nippon Koshuha Steel Co., Ltd.
(10) Relationship between the listed company and company concerned Capital relationship Kobe Steel holds 30.7% of the issued shares of the company concerned.
Personnel relationship Kobe Steel's directors or employees (including those previously at Kobe Steel) represent a majority of the directors of the company concerned.
Business relationship Kobe Steel sells wire rod to the company concerned and purchases wire rope and other products.
Status of related parties As the company concerned is an affiliate of Kobe Steel, it is a related party of concern.
(11) Consolidated performance and consolidated financial condition for the past 3 years
Fiscal period Year ended Mar. 2015 Year ended Mar. 2016 Year ended Mar. 2017
Net assets 19,112 million yen 19,338 million yen 19,525 million yen
Total assets 43,998 million yen 42,341 million yen 42,389 million yen
Net assets per share 300.93 yen 302.70 yen 309.79 yen
Net sales 28,727 million yen 29,151 million yen 27,040 million yen
Operating income 1,220 million yen 1,757 million yen 709 million yen
Ordinary income 886 million yen 1,131 million yen 513 million yen
Net income attributed to owners of the parent 285 million yen 541 million yen 328 million yen
Net income per share 5.48 yen 10.41 yen 6.31 yen
Dividend 5 yen 5 yen 5 yen

Number of shares to be acquired and situation of shares held before and after acquisition

(1) No. of shares held before change 1,859,294 shares
(No. of voting rights: 18,592 units)
(Ownership ratio of voting rights: 35.9%)
(2) No. of shares to be acquired 710,228 shares
(No. of voting rights: 7,102 units)
(3) No. of shares held after change 2,569,522 shares
(No. of voting rights: 25,695 units)
(Ownership ratio of voting rights: 43.6%)


Future Outlook

As soon as it becomes clear that the acquisition of these shares will affect Kobe Steel’s business performance for the fiscal year ending in March 2019, Kobe Steel will make a report.

(Reference) Kobe Steel’s consolidated business results forecast (announced July 28, 2017) and previous year’s results

Net sales Operating income Ordinary (loss) income Net income (loss) attributable to owners of the parent
Forecast for fiscal 2017
(year ending Mar. 2018)
1,880,000 million yen 80,000 million yen 55,000 million yen 35,000 million yen
Fiscal 2016 results
(year ended March 2017)
1,695,864 million yen 9,749 million yen (19,103) million yen (23,045) million yen

(Reference) Outline of Tesac Wirerope

Company name Tesac Wirerope Co., Ltd.
Location 11-1, Nishiki Nakamachi, Kaizuka, Osaka, Japan
Name & position of representative Isao Takagi, President Director
Business Manufacture of wire ropes
Date of establishment April 1, 2001
Principal shareholders & shareholding ratios
Shinko Wire Company, Ltd.
Kobe Steel, Ltd.

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