Announcement of Transfer of Printed Wiring Board Business

June 07, 2021

Showa Denko Materials Co., Ltd.

Showa Denko Materials Co., Ltd. (President and CEO: Hisashi Maruyama; hereinafter “Showa Denko Materials”) hereby announces that, on June 2, 2021, it has entered into an agreement to transfer the printed wiring board business operated by Showa Denko Materials and its consolidated subsidiaries, namely, Showa Denko Materials Electronics Co., Ltd. (hereinafter “SDME”), Yamagishi AIC Inc. (hereinafter “YGA”), and Showa Denko Materials (Singapore) Pte. Ltd. (hereinafter “SDMS”), (hereinafter the “Business”; for avoidance of doubt, the Business does not include the manufacturing and sale of base materials, photosensitive dry films, and other raw materials for Printed Wiring Boards (hereinafter “PWB”) by Showa Denko Materials) to PTCJ-S Holdings Co., Ltd., a special purpose company set up by Polaris Capital Group Co., Ltd. (President and CEO: Yuji Kimura; hereinafter “Polaris”).

Showa Denko Materials plans to establish two wholly owned companies and on September 1, 2021 transfer the Business held by Showa Denko Materials (including its shares in YGA and SDMS) and the Business held by SDME (including its shares in YGA) by means of company splits (hereinafter, the company succeeding the Business held by Showa Denko Materials, “NewCo”, the company succeeding the Business by SDME, “NewCo (SDME)”, and the company splits individually or collectively, “Company Split”). After the Company Split has come into effect, Showa Denko will transfer all shares in the NewCo* to PTCJ-S Holdings Co., Ltd. on the same date.
*NewCo holds all shares in NewCo (SDME) after the Company Split where Showa Denko Materials will transfer all of its shares in NewCo (SDME) to NewCo.

Showa Denko Materials began manufacturing and selling PWB in 1964, and today, the Business has expanded to cover high layer PWB, Multi Wiring Boards, and PWB for thin modules, manufactured by SDME and SDMS, and single-sided and double-sided PWB, manufactured by YGA. The advantage of the Business lies in its superior technological capabilities to produce high-quality products with a variety of specifications and a successful track record in Japan as well as in overseas markets for over 50 years. Further growth of the Business is expected with solution offerings utilizing its unique engineering expertise in order to meet the technical requirements for PWB, which are becoming stricter in recent years, such as higher density, high speed application, and thinner boards, particularly in the areas of semiconductor inspection, IT infrastructure, and 5G.
On the other hand, Showa Denko Materials became a consolidated subsidiary of Showa Denko K.K. in April 2020, and the two companies are scheduled to integrate in 2023. Preceding the integration, Showa Denko Materials is currently in the process of optimally allocating its management resources, reorganizing its business portfolio, and working to create innovations by combining the technologies of both companies to achieve sustainable growth. As part of this process, careful consideration was given to the Business and Showa Denko Materials reached the conclusion that the expansion of the Business by fully leveraging its strengths, including its technological competitiveness and strong relationships with customers would be best achieved through Polaris, which has a wealth of investment experience and is well experienced in increasing the corporate value of its portfolio companies.
Polaris will (i) support the Business in the development/execution of growth strategies such as strengthening business management system by leveraging its deep insight and expertise, which have been accumulated through a number of precedent projects in the areas including, among others, semi-conductor/5G industries and a number of carve-out to date, (ii) engage in initiation and execution of inorganic growth strategies, such as M&A and business alliance in the high-end markets where not only technological capabilities but also reliability and track records are critical success factors in a bid to achieve disruptive growth path, and (iii) provide a number of business/financial supports including arranging appointment of full-time permanent officers/employees who are supposed to be a key role in strengthening its independent business foundation and dispatching several outside directors to maximize its corporate value to pursue for the future security listing.
The impact of the Company Split and the share transfer on Showa Denko Materials’ performance is expected to be minor.

 

1. Outline of the Parties to the Company Split (Absorption-type Split) (As of June 7, 2021)

 

2. Execution Date of the Company Split (Absorption-type Split) and Share Transfer
September 1, 2021 (planned)

 

3. Overview of Polaris Capital Group Co., Ltd.

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