This document has been prepared in accordance with accounting principles and practices generally accepted in Japan, and translated for reference only from the original Japanese version. The Company gives no warranty with respect to its correctness.

 

The original disclosure in Japanese was released on November 10, 2016

Takara Holdings Inc.

 

Notice Regarding Subscription to Third-Party Allotment of Shares of Mutual Trading Co., Inc.

by Consolidated Subsidiary (Takara Shuzo Co., Ltd.)

　Takara Shuzo Co., Ltd. (“Takara Shuzo”), a consolidated subsidiary of Takara Holdings, resolved at its Board of Directors’ meeting held on November 10, 2016 to subscribe to third-party allotment of shares by Mutual Trading Co., Inc. (“Mutual Trading”), a Japanese food wholesaler in the United States. Details of the subscription to third-party allotment of shares are as described below.
　Mutual Trading is an affiliate accounted for by the equity method of the Company, in which Takara Shuzo owns 45.4% of its voting rights. Through the subscription to third-party allotment of shares, the ownership ratio of its voting rights will be 51.0%, and therefore Mutual Trading will become a consolidated subsidiary of the Company.


1. Rationale for the subscription to third-party allotment of shares
　Established in 1926 in Los Angeles, California, the United States, Mutual Trading is one of the oldest Japanese food wholesalers in the country which marks its 90th anniversary this year. The history of Mutual Trading starts with the import of Japanese foods, jointly organized by Japanese immigrants in the region who missed the foods and flavors of their homeland, such as rice, miso and soy sauce. Since then, Mutual Trading has developed markets as a pioneer in the Japanese food wholesale business in the United States, expanding its business scale gradually in line with the widening acceptance of Japanese food culture and development in transportation technologies. Currently it handles over 5,000 items covering a broad range, from Japanese foods, seasonings and alcoholic beverages to restaurant supplies including cookware, tableware and glasses, while developing its business not only in North America but in Hawaii and South America (Peru).
　In 1951, Takara Shuzo commenced the export of the sake Sho Chiku Bai to the United States. Since then, Takara Shuzo has built a cooperative relationship with Mutual Trading as its largest purchaser (distributer) of alcoholic beverages and seasonings in the United States. In 1982, with investment by Mutual Trading, Takara Shuzo took control of the current Takara Sake USA Inc., and started the manufacture and sale of Sho Chiku Bai made in California the following year, 1983. Later, this became a major driving force for the further expansion of the sake business in the United States. Takara Shuzo started investing in Mutual Trading in 1985, and has continued strengthening their partnership in recent years, such as by subscription to third-party allotment of Mutual Trading shares in 2012.
　Under Takara Group Vision 2020, our long-term vision for the ten years beginning in April 2011, the Company aims to expand business in markets where Takara advantages can be leveraged domestically and overseas and build a well-balanced business structure that can hold up well to business environment changes. In addition, the Takara Group Medium-Term Management Plan FY2017, the three-year management plan formulated as the second step of an action plan aimed at achieving the long-term vision, sets out a basic policy under which we will improve domestic business profitability and expand our overseas business, while at the same time building a well-balanced business structure that can hold up well to business environment changes by accelerating the growth of our Biomedical business and promotes efforts aimed at building a Japanese food wholesale network in the United States., Europe, and worldwide as one of our priority strategies.
　As the number of Japanese restaurants in North America is thought to have increased by approximately 50 percent from 2013 to 2015(*), further growth in the market for Japanese food market is foreseen. The subscription to third-party allotment of Mutual Trading shares represents an agreement on the business strategies of Mutual Trading, which aims at further business growth in these market environments, and Takara Holdings, which wishes to develop its Japanese food wholesale network also in the United States under the aforesaid policy. Going forward backed by the expansion of the market for Japanese food, the Company will actively advance the construction and expansion of a global Japanese food wholesale network, primarily in Europe and the United States, and further expand our business and increase our corporate value by spreading Japanese food culture around the world.
(*Source: Ministry of Agriculture, Forestry and Fisheries)

２．Overview of Mutual Trading

(1) Name Mutual Trading Co., Inc.
(2) Location Los Angeles, California, the United States
(3) Representative Chairman Noritoshi Kanai
(4) Business Import and wholesale of alcoholic beverages, food products, and seasonings
(5) Capital 2,431 Thousand U.S. dollars
(6) Established April 19, 1926
(7) Principal shareholders and
percentage of sharesheld		 Takara Shuzo Co., Ltd.(45.4%), Kanai family (14.9%), Hoshizaki family (10.1%), Inaba family (5.0%), etc.
(8) Relationships between the
listed company and the said
company		 （Capital relationship）
Mutual Trading is an affiliate accounted for by the equity method of the Company, in which Takara Shuzo, a consolidated subsidiary of the Company, owns 45.4% of its voting rights. In addition, Mutual Trading owns 10.0% of voting rights of Takara Sake USA Inc., a consolidated subsidiary of the Company.
（Personnel relationship）
Five officers and employees of the Company and its subsidiaries serve concurrently as officers of Mutual Trading, and an officer of Mutual Trading serves concurrently as an officer of Takara Sake USA Inc., a consolidated subsidiary of the Company.
（Transaction relationship）
There is a transaction relationship between Mutual Trading and the Takara Group consisting of the purchase and sale of products.
(9) Number of officers and
employees		 518   *as of September 30, 2016 (consolidated basis)
(10) Fiscal year-end December 31
(11) Operating performance and
financial position of Keta
Foods over the past three
years

 

Units: Thousand U.S. dollars

Fiscal year Fiscal year ended
December 31, 2013		 Fiscal year ended
December 31, 2014		 Fiscal year ended
December 31, 2015
　Consolidated net assets 51,374 54,775 60,005
　Consolidated total assets 105,317 112,429 121,482
　Consolidated net sales 186,312 207,538 231,914
　Consolidated operating income 5,237 6,569 9,795

　Net income attributable to owners of the parent

 2,443 3,112 5,041

３．Overview of Takara Shuzo

(1) Name Takara Shuzo Co., Ltd.
(2) Location 609 Takenaka-cho, Fushimi-ku, Kyoto, Japan
(3) Representative Toshio Kakimoto, President
(4) Business Manufacture and sale of alcoholic beverages, seasonings, and raw alcohol
(5) Capital 1,000 million yen
(6) Established April 1, 2002
(7) Principal shareholders and percentage of sharesheld Takara Holdings Inc.  100%

４．Number of shares to be acquired, acquisition price and percentage of ownership before and after acquisition of shares

(1) Number of shares owned before transfer 108,000 shares (ownership ratio of voting rights: 45.4%)
(2) Number of shares to be acquired 27,213 shares
(3) Acquisition price Acquisition price through subscription to third-party allotment 8,163 Thousand U.S. dollars
(4) Number of shares owned after transfer 135,213 shares (ownership ratio of voting rights: 51.0%)

５．Schedule

(1) Resolution at Board of Directors’ meeting November 10, 2016
(2) Conclusion of share subscription through third-party allotment agreement November 10, 2016 (scheduled)
(3) Payment date for share subscription through third-party allotment November 14, 2016 (scheduled)

６.　Impact on Earnings
　The impact of the subscription on consolidated earnings for the fiscal year ending March 31, 2017 is immaterial, as it is limited to the business performance of Mutual Trading for the fourth quarter (October - December 2016). However, the Company has included it in the consolidated forecasts for the fiscal year ending March 31, 2017, provided in the Consolidated Financial Statements for the Second Quarter Ended September 30, 2016, released today, on November 10, 2016.