Ryoyo Electro : Notice of Execution of Definitive Agreement for Management Integration between Ryoyo Electro Corporation and Ryosan Company, Limited through the Establishment of a Joint Holding Company

The business combination described in this press release involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of United States companies.

It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court's judgment. You should be aware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

[Translation]

Company

Representative

Contact

October 16, 2023

Ryoyo Electro Corporation
Representative Director,	Moritaka Nakamura
President
(Code number: 8068 TSE Prime)
Executive	Officer, General
Manager	of Administration Masayuki Takahashi
Division

(Tel.: [phone])

Company

Representative

Contact

Ryosan Company, Limited
Representative Director,	Kazuhiko Inaba
President
(Code number: 8140 TSE Prime)
Executive	Officer,	General
Manager	of	Planning Norihiko Takahashi
Division

(Tel.: [phone])

Notice of Execution of Definitive Agreement for Management Integration between Ryoyo Electro Corporation and Ryosan Company, Limited through the Establishment of a Joint Holding Company (Share Transfer)

Ryoyo Electro Corporation ("Ryoyo Electro") and Ryosan Company, Limited ("Ryosan"; Ryoyo Electro and Ryosan are collectively referred to as the "Companies") have been in discussions regarding the management integration of the Companies (the "Management Integration"), as disclosed in the "Notice of Execution of a Memorandum of Understanding for Management Integration between Ryoyo Electro Corporation and Ryosan Company, Limited", dated May 15, 2023, and hereby announce that they have reached an agreement concerning the establishment of Ryoyo Ryosan Holdings, Inc. (the "Joint Holding Company"), which will become the wholly-owning parent company of the Companies, on April 1, 2024 (scheduled) by way of a joint share transfer (kyoudou kabushiki iten) (the "Share Transfer"), and the terms and conditions of the Management Integration, and in accordance with the resolutions of their respective boards of directors held today, they have entered into a management integration agreement in the spirit of equality (the "Management Integration Agreement") and have jointly prepared a share transfer plan (the "Share Transfer Plan").

The implementation of the Management Integration and the Share Transfer is subject to, among other things,

[Translation]

the Companies obtaining the approval of their general meetings of shareholders and the permission and authorization of the relevant authorities required for the Management Integration and the Share Transfer.

1. Background and purpose of the Management Integration

1. Background of the Management Integration

Ryoyo Electro is an electronics trading company selling "semiconductors and devices" and offering "ICT and solutions" in its business domain. Ryoyo Electro sells products and provides associated services to electronic equipment manufacturers and users in Japan and overseas. It endeavors to realize its vision of becoming "a company that provides the best solutions for our customers' issues and problems in a faster and better manner than anyone else." By leveraging its wide range of upstream and downstream contacts in the supply chain and taking advantage of the market needs, as obtained from end users, Ryoyo Electro expands its relationships with upstream electronics manufacturers; also, by creating unique solutions that combine product, technology and services, it is developing a business model that circulates information and value throughout the supply chain.

Ryosan is a trading company specializing in the sale of semiconductor and electronic components in its device business and IT equipment in its solutions business. It sells products, such as electronic equipment, to manufacturers in Japan and overseas. Ryosan aims to become a "company that creates confidence and the best fit for society in the electronics domain." It positioned the innovation of its business model, supplier networks and sales channels as pillars of growth. Ryosan is proceeding with the "promotion of the diversification of its portfolio" through extensive commercial rights acquisitions and channel reform, "deepening its local businesses in the Greater China" through collaboration with local investees, "benefiting from advanced investment products and new investment," "investing in business transformation", such as entry into new businesses, including manufacturing based on customer needs, "streamlining existing businesses" by utilizing various digital technologies and "developing business infrastructure", such as management information development, education, risk management and governance.

As described above, the Companies operate as trading companies in the electronics domain. The environment surrounding the electronics trading industry is undergoing significant changes due to rapid increase in the use of new technologies, with the acceleration of IoT and digital transformation (DX) across society. In line with these changes in the industry environment, the function and role of electronics trading companies is also changing. In addition, while competition among trading companies is intensifying due to the alliances of electronic component manufacturers, such as semiconductor and IT equipment manufacturers, external factors, such as changes in the supply-demand balance in the semiconductor market, trends in the financial markets, rising resource and material prices, and geopolitical risks, are having a significant impact on the business environment and performance. As such, electronics trading companies, while having low profitability, are vulnerable to changes in the external environment.

Based on this recognition, the Companies have aligned their understanding that, in order to achieve a sustainable increase in corporate value and further contribute to all stakeholders, it is necessary not only to establish a solid management base, but also to break through the growth limit of each company and pursue value enhancement across the entire value chain by integrating their respective strengths. The Companies have therefore reached a final agreement regarding the Management Integration through the establishment of the Joint Holding Company.

1. Purpose of and initiatives for the Management Integration
   Through the Share Transfer, the Companies, as a new core group of domestic electronics trading companies,

will promote the following initiatives that make maximum use of the management resources, such as good customer relationships and excellent products and solutions, that each of the Companies has built up over the years, within a new framework, and strive to further enhance their corporate value.

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[Translation]

1. Expanding "quantity" by multiplying the management assets of the Companies

Given the limited overlap in customers and product lines, the Companies will rapidly expand their business base by offering new products to their existing customers and by offering existing products to new customers. By expanding and enhancing new contact points with customers through these initiatives, the Companies will gain an accurate and deep understanding of their customers'needs. In addition, the Companies will further expand the scale of their business by leveraging the needs identified as a result of these initiatives to offer new products and services.

1. Improving "quality" by creating new value
   The Companies will further acquire know-how to provide solutions by making the most of their accumulated

knowledge to meet the diverse needs of customers identified through the initiatives described in (i) above. The Companies will not only sell products, but also promote the provision of added value that no other company can provide, in order to solve problems and issues faced by customers and the market as a whole. By broadening the scope of the solution domain through these initiatives, the Companies will seek to develop diverse business models and create a new image of electronics trading companies unlike any before.

1. Creating an optimal structure and fostering a corporate culture to support the initiatives in (i) and (ii)

As an optimal structure to support the initiatives in (i) and (ii) above, the Companies will develop an infrastructure for the unified management of the group and establish a system to realize the provision of new value to customers.

In addition, the Companies will further improve their organizational ability to meet customer needs by fostering a corporate culture in which each and every employee can enhance their "individual" skills and experience both the joy of contributing to customers and personal growth through the active exchange of knowledge and technology among employees of the Companies.

By combining the strengths of Ryosan, which has key semiconductor products and a solid customer base, with those of Ryoyo Electro, which has extensive experience in ICT fields such as DX and AI, through the initiatives in (i) to

1. above, the Companies will aim to become a company that customers continue to choose, creating a virtuous cycle by pursuing "quantity" and "quality," helping solve not only the issues and problems of individual customers but also the common problems and issues of the market as a whole, and seeking to provide new value.
2. • 3 -

[Translation]

The Companies will promote the above initiatives to realize synergies from the Management Integration as early as possible and aim to achieve a sales volume of JPY 500 billion and an operating profit of JPY 30 billion as the group management's targets for the fiscal year ending March 31, 2029. In addition, the Companies will continue to consider measures with a view to realize further growth opportunities beyond the scope of electronics trading companies in order to pursue value enhancement throughout the entire value chain, with the ultimate goal of solving the problems of end-users who are "customers of the Companies' customers."

2. Outline of the Management Integration

1. Method of the Management Integration
   The Management Integration will take the form of a joint share transfer whereby the Companies will become

wholly-owned subsidiaries (kabushiki iten kanzen kogaisha), and the newly established Joint Holding Company will become the wholly-owning parent company (kabushiki iten kanzen oyagaisha).

1. Status after the Management Integration
2. 1. Overview of the Joint Holding Company (planned)

Trade name		Ryoyo Ryosan Holdings, Inc.
Location of the head	2-3-5Higashi-Kanda,Chiyoda-ku, Tokyo, 101-0031, Japan
office
Location	of	the	1-12-22 Tsukiji, Chuo-ku, Tokyo, 104-8408, Japan
headquarters
Organizational		A company with an audit and supervisory committee (kansa tou i'inkai setchi gaisha)
structure
Representatives and	Representative Director, President	Moritaka Nakamura
officers	who	will	Representative Director, Vice President	Kazuhiko Inaba
take office		Director	Shunya Endo
			Director	Atuyuki Ohashi
			Director	Norihiko Takahashi
			Outside Director	Shinya Takada
			Outside Director	Haruyoshi Kawabe
			Outside Director	Masumi Shiraishi
			Director, Full-time Audit and Supervisory Committee Member	Kiyoshi Waki
			Outside Director, Audit and Supervisory Committee Member	Mahito Ogawa
			Outside Director, Audit and Supervisory Committee Member	Motomi Oi
			Outside Director, Audit and Supervisory Committee Member	Sachiko Fukuda
Business line		Managing the business of companies principally engaged in the purchase and sale of
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[Translation]

	devices and ICT products, and any business incidental or related thereto
Capital	JPY 15 billion
Fiscal year-end	March 31
Net asset	Not fixed at this time.
Total assets	Not fixed at this time.
Accounting auditor	Deloitte Touche Tohmatsu LLC
Shareholder register	Mitsubishi UFJ Trust and Banking Corporation
administrator

(ii) Other

Other matters related to the management structure of the Joint Holding Company will be determined by the effective date of the Share Transfer through further discussions between the Companies.

(3)	Schedule of the Management Integration
	Execution of a Memorandum of Understanding for the Management	May 15, 2023
	Integration (the Companies)
	A meeting of the board of directors to approve the Management Integration	October 16, 2023 (today)
	Agreement and the Share Transfer Plan (the Companies)
	Execution of the Management Integration Agreement and preparation of the	October 16, 2023 (today)
	Share Transfer Plan (the Companies)
	The date of public notice of the record date for the extraordinary general	October 16, 2023 (today)
	meeting of shareholders (the Companies)
	The record date for the extraordinary general meeting of shareholders (the	October 31, 2023 (scheduled)
	Companies)
	The extraordinary general meeting of shareholders to approve the Share	December 19, 2023 (scheduled)
	Transfer Plan (the Companies)
	The last trading day at Tokyo Stock Exchange, Inc. ("Tokyo Stock	March 27, 2024 (scheduled)
	Exchange") (the Companies)
	The date of delisting from the Tokyo Stock Exchange (the Companies)	March 28, 2024 (scheduled)
	The effective date of the Share Transfer (the date of registration of the
	establishment of the Joint Holding Company)	April 1, 2024 (scheduled)
	The date of listing of the shares of the Joint Holding Company

(Note) The above is the current plan, and the schedule may be changed through consultation between the Companies, if necessary, depending on the progress made with the Management Integration and with the Share Transfer, or for other reasons.

1. Details of Allotment pertaining to the Share Transfer (Share Transfer Ratio)

	Ryoyo Electro	Ryosan
Share transfer ratio	１	1.32

(Note 1) Share allotment ratio

One common share of the Joint Holding Company will be allotted to one common share of Ryoyo Electro, and 1.32 common shares of the Joint Holding Company will be allotted to one common share of Ryosan. However, the above share transfer ratio may be changed through consultation between the Companies in the event of any material change in the terms and conditions which form the basis of the calculation. If there is a fraction of less than one share in the number of common shares of the Joint Holding Company to be delivered to shareholders of the Companies as a result of the Share Transfer, the

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