| [January 17, 2005] |
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Nippon Broadcasting System, Inc. Announces Notice of Approval of the Tender Offer for Shares of the Company
TOKYO --(Business Wire)-- Jan. 17, 2005 -- The Company hereby announces the resolution passed at the meeting of its Board of Directors held on January 17, 2005 recommending acceptance of the tender offer for the common shares of the Company by Fuji Television Network, Incorporated ("Fuji TV"). -0- *T 1. Summary of Offeror (1) Trade Name: Fuji Television Network, Incorporated (2) Main Business: Television broadcasting pursuant to the Broadcast Law (3) Date of Incorporation: November 18, 1957 (4) Address of Head Office: 2-4-8, Daiba, Minato-ku, Tokyo (5) Representative: Koichi Murakami, President and Representative Director (6) Amount of Capital: 106,200,000,000 yen (as of September 30, 2004) (7) Major Shareholders and Shareholding Ratio (as of September 30, 2004): Nippon Broadcasting System, Incorporated 22.51 % Toho Co., Ltd. 5.76 % Japan Trustee Services Bank, Ltd. (trust account) 4.38 % The Master Trust Bank of Japan, Ltd. (trust account) 3.83 % Nippon Cultural Broadcasting Inc. 3.06 % (8) Relationship with the Company: Capital relationship: Fuji TV owns 12.39% of the outstanding shares of the Company, and the Company owns 22.51% of the outstanding shares of Fuji TV. Personnel relationship: Four (4) directors of Fuji TV are concurrently working as directors of the Company, and one (1) full-time statutory auditor of Fuji TV is concurrently working as a part-time statutory auditor of the Company. Operational relationship: Fuji TV and the Company collaborate in the management of a studio to produce programs. *T
2. Details of the Opinion on and Purpose of the Tender Offer
The Company determined that the tender offer for its common shares by Fuji TV (the "Tender Offer") will contribute to the development of the Company's business for the reasons below and passed a resolution recommending acceptance of the Tender Offer at the meeting of its Board of Directors held on January 17, 2005.
Fuji TV, which currently owns 12.39% (4,064,660 shares) of the total issued shares of the Company, is conducting the Tender Offer for the purpose of obtaining management control over the Company through the acquisition of all of the issued shares of the Company (excluding the treasury stock owned by the Company).
With the rapid progress of digitalization in the business environment surrounding the broadcasting industry, the integration of broadcasting and telecommunications has accelerated. In order to adapt to this changing business environment, we must accurately understand and analyze market needs and establish a new business model free from pre-conceived ideas and taking into account technological developments.
Although Fuji TV and the Company have a history of cooperation, they have managed their companies separately and, based on independent management policies and strategies, have established their respective positions as leaders in the television and radio broadcasting industries. In order to maintain a strong position in the media industry of the 21st century, however, we believe the companies urgently need to adopt a group management system that enables flexible and efficient implementation of decisions regarding the use and concentration of operating resources of the group, supported by the capital policies of the entire group rather than those of the individual companies.
Furthermore, from the viewpoint of the shareholding relationships, we consider it necessary for the group to establish a long-lasting and stable management system particularly, since the group operates in the highly public media business and there will be an ongoing need to fulfill the Fuji-Sankei group's social mission and responsibilities.
Obtaining management control over the Company through the Tender Offer is the first step towards Fuji TV's aim to establish a new group management system in which Fuji TV will be the core entity.
For the purpose of effectively competing in the media industry of the 21st century, the Company will work with Fuji TV to strengthen the business base of the whole Fuji-Sankei group and commit itself to establishing one of the strongest media groups in Japan with a global outlook.
The purchase price of the Tender Offer, 5,950 yen per share, reflects a premium of approximately 21% over the average closing price of shares of the Company on the Tokyo Stock Exchange, Second Section during the three-month period ended January 14, 2005 (4,937 yen). The Board of Directors of the Company has determined that the purchase price of the Tender Offer is reasonable by referring to the valuation of the shares of the Company calculated by an independent institution (KPMG FAS Co.,Ltd.).
The shares of the Company, which are listed on the Tokyo Stock Exchange, Second Section, will possibly be delisted, depending on the results of this Tender Offer, since there is no restriction on the number of the Company's shares Fuji TV may purchase through the Tender Offer. Fuji TV will explore the possibility of making the Company its wholly owned subsidiary through a share exchange or by other means in the future, in order to ensure it obtains management control over the Company.
If the Company becomes a subsidiary of Fuji TV as a result of the Tender Offer, it will need to dispose of the shares of Fuji TV it owns within an appropriate period thereafter in accordance with Article 211-2 of the Commercial Code of Japan. In disposing of such shares, the Company is considering giving the highest priority possible to transferring such shares from the Company to Fuji TV and minimizing the number of shares sold by the Company through the market, taking into full consideration various factors including tax merits and demerits, impact on the market price of Fuji TV's shares, and compliance with restrictions on foreign investments. Due to the fact that upon successful completion of the Tender Offer, voting rights for the shares of Fuji TV held by the Company will be cancelled pursuant to Article 241(3) of the Commercial Code of Japan, the Company is considering the most appropriate strategy, such as lending such shares, from the perspective of aiding Fuji TV's compliance with restrictions on foreign investments under the Radio Law and the Broadcast Law.
3. Prospects after the Tender Offer
The Company is scheduled to become a consolidated subsidiary of Fuji TV as a result of the Tender Offer. The effect of the Tender Offer on the business performance of the Company will be announced again after the Tender Offer is complete.
(Reference)
Summary of the Tender Offer by Fuji Television Network, Incorporated for shares of the Company
(1) Class of Shares to be Purchased:
Common Shares
(2) Tender Offer Period:
January 18, 2005 (Tuesday) to February 21, 2005 (Monday)
(3) Purchase Price:
5,950 yen per share
(4) Basis for Calculation of Purchase Price:
The purchase price proposed by Fuji TV (5,950 yen per share) was determined by taking into consideration various factors including the historical market prices of shares of the Company, the financial and operational conditions of the Company, and the results of a share value appraisal conducted by Fuji TV's advisor (Deloitte Tomatsu Corporate Finance Co., Ltd.) to obtain over 50% of the shares with voting rights of the Company. The purchase price is approximately 21% higher than the average closing price of shares of the Company on the Tokyo Stock Exchange, Second Section during the three-month period ended January 14, 2005 (4,937 yen).
(5) Minimum Number of Shares Planned to be Purchased: 12,335,341 shares
(Note) If fewer than 12,335,341 shares are tendered, Fuji TV will not be obligated to purchase any of the shares. If more than 12,335,341 shares are tendered, Fuji TV will purchase all of the shares tendered; provided, however, that there is no plan for the treasury stock held by the Company (75,820 shares) to be subject to the Tender Offer. Therefore, the maximum number of shares that may be acquired by Fuji TV through the Tender Offer is 28,659,520.
(6) Changes in Number of Shares Held by Fuji TV
Number of Shares Held Prior to Tender Offer: 4,064,660 shares (ownership ratio 12.39%)
Number of Shares Held After Tender Offer: 16,400,001 shares (ownership ratio 50.00%)
(Note 1) The number of shares held after the Tender Offer is the number of shares Fuji TV will hold if it purchases 12,335,341 shares, which is the minimum number of shares planned to be purchased.
(Note 2) If shareholders tender more than the minimum number of shares planned to be purchased, Fuji TV will purchase all shares of the Company so its shareholding ratio after the Tender Offer will be a maximum of 100%.
(Note 3) The ownership ratio is calculated based on 32,800,000 shares as the total number of the outstanding shares of the Company (as of September 30, 2004), and the ratio of voting rights held is calculated based on 3,272,418 voting rights, which is the result of adjusting for 10 shares constituting one "unit" and applying number of total outstanding shares of the Company (32,800,000 shares as of September 30, 2004) minus the number of treasury shares held by the Company (75,820 shares).
(7) Date of Public Notification:
January 18, 2005 (Tuesday)
(8) TOB Agent:
Daiwa Securities SMBC Co., Ltd.
Daiwa Securities Co., Ltd. (sub-agent)
(Note) Daiwa Securities SMBC Co., Ltd. holds approximately 8% of the outstanding shares of Nippon Broadcasting System. Fuji TV independently determined the purchase price of the Tender Offer.
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