LIXIL : Mar 23, 2020ReleaseNotification Regarding Plans for Simplified and Short-Form Merger Between LIXIL Group Corporation and its 100% Subsidiary (LIXIL Corporation), Change > NEW

[This is an English translation of the original text written in Japanese]

March 23, 2020

LIXIL Group Corporation Kinya Seto

Representative Executive Officer and President (First Section of TSE/NSE, code 5938)

(Contact): Kayo Hirano

Senior Manager, Investor Relations Office

Notification Regarding Plans for Simplified and Short-Form Merger Between LIXIL Group Corporation and its 100% Subsidiary (LIXIL Corporation), Change of Company Name, and Partial Amendment of Articles of Incorporation

Following the "Notification Regarding Start of Consideration of Merger between LIXIL Group Corporation and its subsidiary" dated January 27, 2020, LIXIL Group Corporation (hereinafter "LGC") hereby announces that its Board of Directors has today approved the merger between LGC, the holding company, and LIXIL Corporation (hereinafter "LIXIL"), its 100% subsidiary. LGC will be the surviving company (hereinafter the "Merger") following the conclusion of the merger contract, which will be effective from December 1, 2020. Since the company is pursuing an absorption-type merger of a fully owned subsidiary of LGC, some of the content and details for disclosure have been abbreviated.

In addition, the Board of Directors today resolved that LGC will submit a request to change the name of the surviving company to LIXIL Corporation through a partial amendment of the Articles of Incorporation at the Annual General Meeting of Shareholders, which will be held in June 2020. The Board of Directors also resolved that LGC will integrate the management of both companies in advance of the Merger. This transition will be effective April 1, 2020.

The details are as follows:

1. Purpose of the Merger

LIXIL Group's aim is to be an entrepreneurial company that can achieve sustainable competitiveness and growth in order to fulfill its corporate purpose to contribute to society by making better homes a reality for everyone, everywhere. To achieve this aim, the company is taking steps to transform its operations,

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including strengthening governance, enhancing productivity and efficiency, as well as becoming a more agile organization that enables better decision-making.

Since 2001, under the former Tostem Inax Holding Corporation, LIXIL Group adopted a holding company structure to optimize overall operations while maintaining cooperation between each operating company. This structure was continued when LIXIL was established following the integration of five major operating companies in 2011. However, as LIXIL Group's strategy has evolved, it must now place a greater focus on actively managing its core businesses and driving synergies across these business areas to accelerate growth. This is in line with the announcement of July 22, 2019 ("Announcement Regarding Management's Future Direction"), which stated that the highest priority of the current executive officers and board of directors is to enhance corporate value by focusing on LIXIL's core businesses inside and outside of Japan.

By dissolving the two-tier structure of LGC and LIXIL, LIXIL Group will improve efficiency by eliminating duplication of management, operating costs and human resources. This change will enable faster decision-making, as well as improve corporate governance by simplifying the group management system and increasing the transparency of management.

Based on these considerations, the Board of Directors has today resolved to conduct an absorption-type merger of LIXIL.

2. Method and the timing of the completion of the Merger

(1) Key dates of the Merger

Board resolution	March 23, 2020
Conclusion of the merger contract	March 23, 2020
Schedule date of the merger	December 1, 2020 (Plan) (Note 1)
(Effective date)
Change of company name of	December 1, 2020 (Plan) (Note 2)
surviving company

(Note 1) According to regulations governing short-form mergers in Item 2, Article 796 for LGC, and Item 1, Article 784 of Japanese corporate law governing simplified mergers for LIXIL, the simplified and short-form merger between LGC and LIXIL, which is a fully owned subsidiary under LGC, can be conducted without seeking approval at the Annual General Meeting of Shareholders.

(Note 2) The change of the company name of the surviving company is subject to the approval of partial amendment of the Articles of Incorporation at the Annual General Meeting of Shareholders of LGC, which will be held in June 2020, and the completion of the procedures required for the Merger.

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(2) Method of the Merger

Using the "merger by absorption" method, LGC will become the surviving company and LIXIL will be dissolved.

(3) Details of allocations related to the Merger

The Merger will not result in any allocation of shares or other assets.

1. Handling of share options and bonds with share options related to the Merger Not applicable.

3. Overview of the companies to be merged

(1)	Name of the	LIXIL Group Corporation	LIXIL Corporation
company
(2)	Major	1) To control and manage the	To manufacture and sell building
business	operations of the companies	materials and housing equipment for
		operating businesses relating to	housing and buildings, operate
		living spaces in Japan and foreign	housing-related businesses as well as
		countries by obtaining and holding	related services.
		the shares or the equities in such
		companies.
		2) To control and manage the
		operations of the companies
		operating business relating to the
		urban environment in Japan and
		foreign countries by obtaining and
		holding the shares or the equities in
		such companies.
(3)	Year of	September 1949	October 2001
foundation
(4)	Headquarters	Ojima 2-1-1,Koto-ku, Tokyo, JAPAN	Ojima 2-1-1,Koto-ku, Tokyo, JAPAN
(5)		Kinya Seto	Kazuhiko Ootsubo
Representative
(6)	Capital	JPY68,418 million	JPY34,600 million
(7)	Outstanding	313,319,159 shares	650,649 shares
shares

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(8) Major	The Master Trust Bank	6.17%	LIXIL Group	100%
shareholders and	of Japan, Ltd. (Trust		Corporation
its % of	account)
shareholding	Japan Trustee Services	4.91%
(As of	Bank, Ltd. (Trust
September 30,	Account)
2019)	State Street Bank Client	3.72%
	Omnibus OM04
(Note) excluding	(Standing Proxy: The
treasury stock of	Hongkong and
23,215 thousand	Shanghai Banking
shares.	Corporation Limited
	Tokyo Branch)
	Other
(9) Financial	IFRS (Consolidated)	JGAAP (Stand-alone)
position and
Total equity (JPY	567,167	Total equity (JPY	134,964
operating results	million)		million)
for the latest
Total asset (JPY million)	2,059,544	Total asset (JPY million)	829,446
fiscal year (March
Equity attributable to	1,839.59	Net asset per share	207,430.08
2019)	owners of the parent		(JPY)
	per share (BPS) (JPY)
	Revenue (JPY million)	1,832,608	Net Sales (JPY million)	883,231
	Operating loss (JPY	-15,029	Operating income (JPY	6,019
	million)		million)
			Ordinary income (JPY	8,470
			million)
	Loss for the year	-52,193	Net loss (JPY million)	-79,642
	attributable to owners
	of the parent (JPY
	million)
	Basic loss per share	-179.98	Loss per share (JPY)	-122,404.19
	(JPY)

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4. Change of the company name of the surviving company

1. New company name LIXIL Corporation
2. Reason for the change

LGC will change its name to LIXIL Corporation, effective December 1, 2020 (plan), the effective date of the Merger. The Merger reflects the Company's strategic intent to place greater focus on actively managing its core businesses and driving synergies across these business areas to accelerate growth. Therefore, whereas the current name of LGC reflects the current holding group structure of the company, the new company name, LIXIL Corporation, more suitably reflects the simplified operating company it desires to become as a result of the Merger. LIXIL has been widely recognized as a reliable corporate brand because of its achievements in providing high-quality products and services that improve people's comfort and lifestyles, helping to make better homes a reality for everyone, everywhere.

1. Effective date of the change December 1, 2020 (Plan) (Note)

(Note) The change of the company name of the surviving company is subject to the approval of partial amendment of the Articles of Incorporation at Annual General Meeting of Shareholders, which will be held in June 2020, and the completion of the procedures required for the Merger.

5. Partial Amendment of the Articles of Incorporation

(1) Reason for the change

LGC will amend the Article 1 (Corporate Name) of the current Articles of Incorporation to change the company name as stated in "4. Change of the company name of the surviving company."

The change will take place on the effective date of the Merger (scheduled December 1, 2020), subject to the Merger becoming effective.

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1. Details of the amendment of the Articles of Incorporation The details of the amendment are as follows:

	(Underline denotes amendments)
Current	After amendment
Chapter 1 General Provisions	Chapter 1 General Provisions
(Corporate Name)	(Corporate Name)
Article 1	Article 1
The name of the Company shall be Kabushiki	The name of the Company shall be Kabushiki
Kaisha LIXIL Group. In English, the Company	Kaisha LIXIL. In English, the Company shall be
shall be called LIXIL Group Corporation.	called LIXIL Corporation.

6. Overview after the Merger (plan)

Due to the Merger, LGC will inherit the business of LIXIL as of the effective date. There will be no change to headquarters, representatives, capital and accounting period related to the Merger.

7. Shifting to integrated operations ,effective April 1, 2020, in advance of the Merger (future plan)

By dissolving the two-tiered structure of LGC and LIXIL, the company will accelerate its decision-making and business operations, along with its ability to respond to the rapidly changing business environment. Also, in order to improve corporate governance by increasing the transparency of management prior to the legal effect of the Merger scheduled for December 1, 2020, LIXIL Group will move away from its current holding group structure, which includes LIXIL as its core operating company, and begin operating a more agile integrated management structure with LIXIL from April 1, 2020.

While maintaining the independent legal status of LGC and LIXIL during this transition period, the business will operate with management holding concurrent positions and managing consolidated decision-making bodies. This approach allows the company to use the transition period of April 1, 2020 to December 1, 2020 to finalize all necessary integration details required to operate smoothly and effectively on the effective date of the Merger.

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(Reference: Executive Officers of LIXIL Group Corporation and Directors and Corporate Auditors of LIXIL Corporation, Effective April 1, 2020)

		LIXIL Group Corporation	LIXIL Corporation
Name	Directors	Executive Officers	Roles and Committees,	Directors	Roles, etc.
			etc.	/Corporate Auditors
Kinya Seto	Director	Representative	Chief Executive Officer	Representative Director,
		Executive Officer and	(CEO)	Chairman, President and CEO,
		President		Chairperson of the Board
Sachio Matsumoto		Representative	Finance, Treasury, and	Representative Director and	CFO
		Executive Officer and	M&A,	Executive Vice President
		Executive Vice	Chief Financial Officer
		President	(CFO)
Hwa Jin Song		Executive Officer and	Human Resources, Public	Director, Senior Managing	CPO
Montesano		Senior Managing	Affairs, Investor	Director
		Director	Relations, External
			Affairs, and Corporate
			Responsibility,
			Chief People Officer
			(CPO)
Yugo Kanazawa		Executive Officer and	Marketing, Digital, and	Director, Senior Managing	CDO
		Senior Managing	IT, Chief Digital Officer	Director
		Director	(CDO)
Bijoy Mohan		Executive Officer and	LIXIL International	Director, Senior Managing	LIXIL International CEO
		Senior Managing		Director
		Director
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		LIXIL Group Corporation	LIXIL Corporation
Name	Directors	Executive Officers	Roles and Committees,	Directors	Roles, etc
			etc.	/Corporate Auditors
Satoshi Yoshida	Director	Executive Officer and	LIXIL Housing	Director, Senior Managing	LHT Japan CEO
		Senior Managing	Technology (LHT) Japan	Director
		Director
Hiroyuki Oonishi		Executive Officer and	LIXIL Water Technology	Director, Senior Managing	LWT Japan CEO
		Senior Managing	(LWT) Japan	Director
		Director
Shoko Kimijima		Executive Officer and	Legal and Compliance,	Director, Senior Managing	CLCO
		Senior Managing	Chief Legal &	Director
		Director	Compliance Officer
			(CLCO)
Yuji Tsuboi				Corporate Auditor
Zenji Miura	Outside Director		Chairperson of Audit	Corporate Auditor
			Committee, Member of
			Compensation
			Committee
Teruo Suzuki	Outside Director		Chairperson of	Corporate Auditor
			Governance Committee,
			Member of Audit
			Committee

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		LIXIL Group Corporation	LIXIL Corporation
Name	Directors	Executive Officers	Roles and Committees,	Directors		Roles, etc.
			etc.	/Corporate Auditors
Daisuke	Outside Director		Chairperson of	Corporate Auditor
Hamaguchi			Compensation
			Committee, Member of
			Audit Committee
Tamio Uchibori	Outside Director		Member of Audit	Corporate Auditor
			Committee
Ryuichi Kawamoto	Director		Member of Audit	Corporate Auditor
			Committee

(Note) The Directors and Executive Officers of LIXIL Group Corporation and LIXIL Corporation above constitute the management structure effective April 1, 2020, until the end of Annual General Meeting of Shareholders of LGC to be held in June 2020. Regarding the new management structure, which is directors and executive officers (proposal) after the Annual General Meeting of Shareholders of LGC to be held in June, please see "Notification Regarding Determination of Director Candidates, Election of Executive Officers, Change of Representative Executive Officer, and Partial Amendment of the Articles of Incorporation (Change in Term of Office of Executive Officers)" separately announced today.

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8. Future outlook

(1) Impact on LIXIL Group's consolidated financial performance

As the considered merger is between LGC and its fully owned subsidiary, there will be no negative impact on LIXIL Group's consolidated financial performance.

(2) Impact on LIXIL Group's non-consolidated financial performance

At the timing when LGC conducts the absorption-type merger of LIXIL, LGC will record a "Gain / loss on extinguishment of tie-in shares" in LGC's individual accounts. The specific amount is unknown at this time because it varies depending on LIXIL's net assets immediately before the absorption-type merge. However, the profit and loss will be eliminated in the consolidated financial statements, so there is no effect on LIXIL Group's consolidated financial statements.

LGC will announce any significant amounts that should be disclosed in the future regarding the impact on LIXIL Group's non-consolidated financial performance (JGAAP) once they are determined.

End

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(SUPPLEMENTARY MATERIAL)

REGARDING THE MERGER OF

LIXIL GROUP CORPORATION AND LIXIL CORPORATION

Copyright © LIXIL Group Corporation. All rights reserved.

STRENGTHENING GOVERNANCE THROUGH MERGER

• Strengthen Monitoring and Supervision by the Board of Directors

• Pursue effectiveness of monitoring and supervision

In addition to monitoring and supervising the portfolio management of the holding company, the Board of Directors will also monitor and supervise the business operations

• Improve management transparency

By dissolving the two-tier structure, the Board of Directors will support the decisive management executions of LIXIL, the largest operating company in the Group

• Strengthen Group companies' management and improve management efficiency
• • Enable faster decision-making
  • Eliminate duplication of management and human resources (reduce additional operating costs)
  • Improve management control and supervision across the Group by headquarter function

Significance and purpose of the

The new management team, which was established after the Annual General Meeting of Shareholders held in June 2019, will eliminate the current two-tiered structure. Each Director and Executive Officer will thereby monitor and supervise the business more actively and respond to the Company's shareholder mandate, including achieving performance targets and ensuring thorough compliance.

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GOVERNANCE-RELATED CHALLENGES AND THE PURPOSE OF MERGER

Governance structure of LIXIL Group Corporation, LIXIL Corporation, and other operating companies (as of March 23; before the merger)

Holding company: LIXIL Group

Board of Directors

Nomination Committee

		Executive Officers
Governance Committee	Compensation Committee

Audit committee

Management and supervision

of business portfolio

Operating Company: LIXIL

Board of Directors	Corporate Auditors

Management and supervision

of business management

Group Companies(1)

(1) As of March 23, 2020, LIXIL Group or LIXIL is the parent company of the Group companies

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IMPROVING MANAGEMENT TRANSPARENCY AND GROUP GOVERNANCE

Governance structure of LIXIL Group Corporation, LIXIL Corporation, and operating companies other than LIXIL (from December 1 (plan); after the merger)

Holding company: LIXIL Group		Operating Company: LIXIL

Governance

Committee

Management to enhance enterprise- wide control across the Group through centralization of Core Functions from HQ through all businesses and geographies.

Board of Directors

Nomination Committee

	Executive Officers
Compensation Committee
Audit committee

Monitoring and supervision of

business portfolio +

business management

Finance	All domestic and overseas subsidiaries

IT

Legal

Human Resources

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ADVANCE INTEGRATION AS OF APRIL 1, 2020

Purpose, Background, and Overview

●We believe it is desirable to strengthen LIXIL Group Corporation's corporate governance as soon as possible by dissolving the two-tierstructure of LGC and LIXIL.

●Prior to the conclusion of legal proceedings, planned for December 1, 2020, LIXIL Group

Corporation will adopt an integrated management structure with LIXIL Corporation (advance integration), enabling agile operations in a unified manner, effective April 1.

●While maintaining the independent legal status of LGC and LIXIL during this transition period, the business will operate with management holding concurrent positions and managing consolidated decision-making bodies(1).

1. Please refer to the timely disclosure "Notification Regarding Plans for Simplified and Short-Form Merger Between LIXIL Group Corporation and its 100% Subsidiary (LIXIL Corporation), Change of Company Name, and Partial Amendment of Articles of Incorporation", which was announced today on March 23, for details of the management holding post concurrently and decision- making bodies consolidated.

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