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MarketScreener Homepage  >  Equities  >  Tokyo  >  Nintendo Co., Ltd    7974   JP3756600007

NINTENDO CO., LTD (7974)
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Notice of the Subsidiarization of JESNET Co. Ltd. and the Acceptance of Assignment of Business from AJIOKA Co., Ltd. (PDF: 76KB)

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08/25/2016 | 03:04am EST

To Whom It May Concern

August 25, 2016

Listed Company Name: Nintendo Co., Ltd. Representative: Tatsumi Kimishima

Representative Director and President

(Code Number: 7974 First Section of the Tokyo Stock Exchange)

Contact Person: Yutaka Takenaga

Deputy General Manager

Corporate Analysis & Administration Division (TEL 075 - 662 - 9600)

Notification of the Subsidiarization of JESNET Co. Ltd. and the Acceptance of Assignment of Business from AJIOKA Co., Ltd.

Nintendo Co., Ltd., (HQ: Kyoto Minami-ku; Representative Director and President: Tatsumi Kimishima; hereinafter "Nintendo") would like to announce that it has passed a resolution to acquire the stock of JESNET Co. Ltd. (HQ: Sapporo, Hokkaido; Representative Director and President: Jou Suzuki; hereinafter "JESNET") and make it a subsidiary of Nintendo at the August 25, 2016 meeting of the Board of Directors. Furthermore, on the same day as JESNET becomes a subsidiary of Nintendo, JESNET will accept the assignment of the video game wholesale business from AJIOKA Co., Ltd. (HQ: Nishio, Aichi; Representative Director and President: Gentarou Ajioka; hereinafter "AJIOKA"). JESNET and AJIOKA have also agreed to this resolution.

  1. Background for the Subsidiarization and Acceptance of Assignment of Business

    As a manufacturer of video game systems, Nintendo is committed to bringing smiles to people across the world through products and services. To continue to produce an unprecedented level of fun, Nintendo has worked to produce products that anyone can enjoy, regardless of their age, gender or past gaming experience.

    At the same time, JESNET and AJIOKA have been the largest-scale companies dedicated to handling Nintendo products in Japan for many years, selling mainly video game systems through their nation-wide distribution network.

    This subsidiarization and acceptance of assignment of business will unify Nintendo's product development acumen with JESNET's and AJIOKA's robust stocking and sales networks to form a supply structure that can meet consumer demand in a timely fashion. This means that Nintendo will have an integrated system from the development through supply of its products, allowing for rapid decision-making and an improvement in sales service. These steps are intended to strengthen the overall competitiveness of the Nintendo group and increase its corporate value.

  2. Overview of JESNET Subsidiarization
    1. Transfer of Stocks

      Nintendo will obtain shares on April 3, 2017 (planned) by receiving 53,724 common shares in a third-party allocation of shares performed by JESNET, as well as receiving 6,677 common shares on the same day from multiple current shareholders, excluding J Holdings Co., LTD. Nintendo will hold 60,401 common shares in JESNET (proportion of voting rights: 70.0%), and JESNET will become a consolidated subsidiary of Nintendo.

      The current principal shareholder of JESNET, J Holdings Co., LTD will continue to hold common shares in JESNET (proportion of voting rights: 15.0%) and AJIOKA will obtain common shares (proportion of voting rights: 15.0%) in the third-party allocation of shares performed by JESNET on the same day.

    2. Overview of Company Becoming a Subsidiary (JESNET)

      Name

      JESNET Co. Ltd.

      Location

      1-35, 19-chome Kita, Nango-dori, Shiroishi-ku, Sapporo, Japan

      Representative title

      and name

      Representative Director and President

      Jou Suzuki

      Business lineup

      Nintendo game systems, game system accessories, game software,

      card games, other amusement business

      Capital stock

      88 million yen

      Date of foundation

      December 24, 1952

      Major shareholders and

      their stock ownership ratio

      J Holdings Co., LTD. 54.5%

      Connection

      with Nintendo

      Capital

      relationship

      JESNET holds 100,922 shares of Nintendo stock to

      facilitate the smooth business relationship.

      Personal

      relationship

      No applicable relationship

      Business

      relationship

      Nintendo has transactions handling Nintendo products

      with JESNET.

      Operating results and financial conditions (past three years)

      Fiscal year

      FY ended July 2013

      FY ended July 2014

      FY ended July 2015

      Net assets

      8,638 million yen

      8,996 million yen

      9,128 million yen

      Total assets

      14,970 million yen

      11,987 million yen

      15,276 million yen

      Net sales

      78,363 million yen

      65,477 million yen

      57,062 million yen

      Operating income

      1,119 million yen

      556 million yen

      634 million yen

      Ordinary income

      1,128 million yen

      588 million yen

      733 million yen

      Net income

      652 million yen

      380 million yen

      383 million yen

      Number of shares held before

      the subsidiarization

      0 shares (number of votes: 0) (proportion of voting rights: 0%)

      Number of shares obtained

      Common shares: 60,401 shares (number of votes: 60,401)

      Of which, number received in third-party allocation of shares: 53,724 shares

      Number received in receipt of shares: 6,677 shares

      Value of shares

      JESNET common shares: 4,530 million yen (note)

      Note: Total value of allocation of shares and shares held by existing shareholders

      Advisory fees, etc. (approximate value): 150 million yen

      Total: 4,680 million yen

      Number of shares held after

      the subsidiarization

      60,401 common shares (number of votes: 60,401) (proportion of

      voting rights: 70.0%)

    3. Number of Shares Obtained, Value of Shares and Status of Shares Held Before and After the Agreement
    4. Overview of Acceptance of Assignment of Business from AJIOKA
      1. Contents of Acceptance of Assigned Business

        Video game wholesale business

      2. Operating Results of Assigned Business

        FY ended June 2015

        FY ended June 2016

        Net sales

        41,819 million yen

        38,735 million yen

        Gross profit

        1,754 million yen

        1,654 million yen

        Operating income

        274 million yen

        211 million yen

        Ordinary income

        682 million yen

        381 million yen

        AJIOKA has not prepared financial materials specifically for the assigned business; however, this business comprises the majority of AJIOKA's profit and loss, so the overall operating results for AJIOKA are presented here.

      3. Items and Value of Assigned Business (as of June 30, 2016)

        Assets

        Item

        Book Value

        Inventory

        520 million yen

        Total

        520 million yen

        Note: The value above is the book value as of June 30, 2016. It is expected that the value of the assets to be transferred will change by the date of the assignment of business.

      4. Value of Assigned Business and Method of Payment

        The value of the assigned business is 1,000 million yen plus the value of the transferred assets listed above, to be determined after receipt.

        The payment method will be cash.

      5. Overview of Transferring Business
      6. Name

        AJIOKA Co., Ltd.

        Location

        4-31, Sakuragi-cho, Nishio, Aichi, Japan

        Representative title

        and name

        Representative Director and President

        Gentarou Ajioka

        Business lineup

        Wholesale sales of computer game software and hardware and

        electronic parts

        Capital stock

        48 million yen

        Date of foundation

        April 24, 1962

        Net assets

        16,972 million yen

        Total assets

        19,238 million yen

        Major shareholders and

        their stock ownership ratio

        Nagoya Small and Medium Business Investment & Consultation Co., Ltd. 46.8%

        Connection with Nintendo

        Capital

        relationship

        AJIOKA holds 77,517 shares of Nintendo stock to

        facilitate the smooth business relationship.

        Personal

        relationship

        No applicable relationship

        Business

        relationship

        Nintendo has transactions handling Nintendo products

        with AJIOKA.

        Situations applicable to

        related parties

        No applicable situations for related parties at Nintendo.

      7. Schedule for the Subsidiarization and Acceptance of Assignment of Business

        Board of Directors Resolution: August 25, 2016 Agreement Execution Date: August 25, 2016

        Planned Date for the Subsidiarization and Acceptance of Assignment of Business: April 3, 2017

        (Note) This subsidiarization and acceptance of assignment of business assumes that there will be no cause found to prevent the subsidiarization and acceptance of assignment of business or to issue a cease and

        desist order based on the results of the Japan Fair Trade Commission's review of the report submitted following Article 10 paragraph 2 and Article 16 paragraph 2 of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade.

      8. Future Business Projection
      9. This subsidiarization and acceptance of assignment of business will not have an effect on results for this fiscal year. Nintendo will begin including the effect on results in the earnings forecasts for the next fiscal year and later.

      Nintendo Co. Ltd. published this content on 25 August 2016 and is solely responsible for the information contained herein.
      Distributed by Public, unedited and unaltered, on 25 August 2016 07:04:04 UTC.

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