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The following information is true and accurate at the time of publication.
January 28, 2003
Agreement to Make CIS Corporation a Wholly-Owned Subsidiary of Sony Corporation
Subsequent Merger with
Existing Sony's Information System Subsidiary Planned
Sony
Corporation
Nobuyuki Idei
Representative Director
(Code No.: 6758 Tokyo, Osaka, Nagoya, Fukuoka, and
Sapporo Stock Exchanges) |
CIS Corporation
Osamu Todaka
Representative Director (Code No.: 4758 JASDAQ)
|
At their respective
Board of Directors' Meetings held today, Sony Corporation
("Sony") and CIS Corporation ("CIS") have approved a decision
to make CIS a wholly-owned subsidiary of Sony through a
stock for stock exchange agreement. After obtaining approval
at the CIS Shareholders' Meeting scheduled for March 27,
2003, it is planned to implement the stock for stock exchange
on May 1, 2003. The intention is to then merge CIS with
Sony's existing information system subsidiary, Sony Information
System Solutions Inc. ("SISS"), to create a new company.
The new company is targeted to begin operations in July
2003.
Sony is currently accelerating its drive
to construct a global information system platform through
a supply chain that applies advanced IT and the reform of
processes for production, sales and accounting. SISS has
been at the center of these efforts with the construction
and maintenance of information systems and the provision
of infrastructure services. However, as the need for the
creation of a global information system platform has grown,
key processes (information system planning, design as well
as project management) require strengthening. The plan for
CIS to become a wholly-owned subsidiary of Sony and the
subsequent merger with SISS is intended to focus resources
and enhance productivity in these areas. This will allow
the creation of an advanced system platform for the entire
Sony group as well as cutting information system costs groupwide.
The idea is to promote a "System on Demand" service model
which integrates all elements from network infrastructure
to applications by applying sophisticated broadband technology.
CIS was founded in 1988 and has gained
a reputation as a "Global IT Evangelist" introducing advanced
IT methodology as a part of management innovation in Japan.
The company rapidly built up expertise in system consulting
and integration and made an OTC listing in June 2000. Since
July 2001, when it formed a joint company with Sony for
management and information consulting (GENCIS Consulting
Inc.) CIS has developed partnerships with Sony and SISS.
With the new agreement, CIS will now become a full member
of the Sony Group and will be able to participate in the
most advanced ongoing projects. This will give it an opportunity
to maximize the skills and experience it has acquired and
to develop a new level of high-quality consulting services.
Sony and CIS will then work toward the
merger of SISS and CIS. The new company will combine skills
and resources to create an integrated global information
system platform for the entire Sony Group and to generate
further efficiencies. The new company will also expand its
existing IT consulting business.
CIS President Osamu Todaka is scheduled
to become Representative Director and President of the new
company. SISS President Kazuro Sato is scheduled to become
Representative Director and Vice President of the new company.
1. Conditions of stock for stock exchange, etc.
(1) Stock for stock exchange schedule
| January
28, 2003(Tuesday) |
Board
meetings to approve stock for stock exchange agreement |
| January
28, 2003(Tuesday) |
Conclusion
of stock for stock exchange agreement |
| March
27, 2003(Thursday) |
Shareholders
meeting to approve stock for stock exchange agreement
(CIS) |
| April
30, 2003(Wednesday) |
Last
day of share certificate submission period (CIS) |
| May
1, 2003(Thursday) |
Effective
date of stock for stock exchange |
| *Pursuant
to the provisions of Clause 1 of Article 358 of the
Commercial Code of Japan, Sony shall perform the stock
for stock exchange with CIS without approval of the
stock for stock exchange agreement by its shareholders. |
(2) Stock for stock exchange ratio
Sony retained Morgan Stanley Japan Limited,
and CIS retained Nomura Securities Co., Ltd. for advice
on the analysis of the stock for stock exchange ratio and
other relevant matters. Based on such advice and other considerations,
Sony and CIS negotiated and came to the following agreement
regarding the stock for stock exchange ratio.
Note that if there are any material changes
in any of the various conditions upon which the stock for
stock exchange ratio shown below was determined, Sony and
CIS may decide to change the said ratio.
The CIS board of directors today resolved
to cancel 5,000 shares of CIS treasury stock before the
stock for stock exchange takes place. The stock for stock
exchange ratio shown below has been calculated based on
the number of CIS shares that will remain outstanding after
the cancellation of treasury stock.
|
Sony
|
CIS
|
| Stock
for stock exchange ratio |
1
|
8.74
|
|
(Notes)
1.
|
Morgan
Stanley Japan Limited performed Stock Price Performance
Analysis to analyze the fair value of Sony, and Stock
Price Performance Analysis, Comparable Company Analysis
and Discounted Cash Flow Analysis (DCF) to analyze
the fair value of CIS. The results of all such analysis
and relevant factors, as well as the synergies expected
from CIS as a wholly-owned subsidiary of Sony and
its subsequent merger with SISS, were relevant considerations
in the analysis of the exchange ratio. |
|
2.
|
Nomura
Securities Co., Ltd. assessed the value of shares
of Sony by using the Market Price Analysis, and of
shares of CIS by using the Market Price Analysis,
the Comparable Trading Multiples Analysis, the Net
Adjusted Book Value Analysis and the Discounted Cash
Flow Analysis. Nomura Securities considered the results
of the analyses as a whole and derived an exchange
ratio. |
|
3.
|
Number
of shares to be issued upon stock for stock exchange:
1,088,304 shares of common stock of Sony (For each
share of CIS common stock, Sony shall issue 8.74shares
of its common stock.) |
2. Summary of Parties
| (1)
Trade name |
Sony
Corporation |
CIS
Corporation |
| (2)
Field of business |
Manufacture
and sale of electronic and electrical machines and
equipment |
Development,
introduction and consultation of information systems |
| (3)
Date of incorporation |
May
7, 1946 |
November
5, 1988 |
| (4)
Location of head office |
7-35,
Kitashinagawa 6-chome,Shinagawa-ku, Tokyo |
7-7,
Higashi-Shimbashi 2-chome,Minato-ku, Tokyo |
| (5)
Representative |
Nobuyuki
Idei, Representative Director |
Osamu
Todaka,Representative Director |
| (6)
Share capital |
¥476,224
million |
¥3,303
million |
| (7)
Total number of shares issued and outstanding |
922,918,991
shares |
129,520
shares |
| (8)
Shareholders' equity |
¥1,886,389
million |
¥6,175
million |
| (9)
Total assets |
¥3,615,038
million |
¥6,744
million |
| (10)
Date of settlement |
March
31 |
December
31 |
| (11)
Number of employees |
16,836 |
167 |
| (12)
Major customers |
Affiliated
manufacturing and salescompanies inside and outside
Japan |
Manufacturing,
financing, service, and IT companies in Japan |
| (13)
Major shareholders and shareholding ratios |
1
Moxley & Co. 6.1%
2 Japan Trustee Services Bank,Ltd. (Trust Account)
4.4%
3 The Master Trust Bank ofJapan, Ltd. (Trust Account)
3.3%
4 The Chase Manhattan Bank,N. A. London 2.9%
5 State Street Bank and TrustCompany 2.8% |
1
JBL Corporation 23.9%
2 Osamu Todaka 22.9%
3 Microsoft Corporation 20.8%
4 The Master Trust Bank ofJapan, Ltd. (Trust Account)
4.4%
5 CIS Corporation 3.9% |
| (14)
Main banks |
Sumitomo
Mitsui Banking CorporationThe Bank of Tokyo-Mitsubishi,
Ltd.and others |
The
Bank of Tokyo-Mitsubishi, Ltd.Mizuho Bank, Ltd.and
others |
(Note)
The above date for Sony and CIS are as of September 30,
2002 and June 30, 2002 respectively.
(15) Business results for the three most recent years (unit:
millions of yen)
|
Sony
Corporation |
CIS
Corporation |
| Fiscal
year ended on |
2000/3/31 |
2001/3/31 |
2002/3/31 |
1999/12/31 |
2000/12/31 |
2001/12/31 |
| Net
sales |
2,592,962
|
3,007,584
|
2,644,195
|
4,031
|
5,068
|
5,393
|
| Operating
income (loss) |
(2,755)
|
50,458
|
(52,994)
|
566
|
773
|
(659)
|
| Ordinary
income (loss) |
30,237
|
81,502
|
(6,122)
|
564
|
733
|
(651)
|
| Net
income (loss) |
30,838
|
45,002
|
29,635
|
251
|
381
|
(539)
|
| Net
income (loss) per share (yen) |
73.09
|
49.18
|
32.22
|
53,890.47
|
30,442.98
|
(4,167.46)
|
| Dividends
per share (yen) |
50
|
25
|
25
|
0
|
10,000
|
0
|
| Shareholders'
equity per share (yen) |
3,956.68
|
2,021.33
|
2,024.10
|
240,032.78
|
626,765.21
|
57,513.68
|
(Notes)
1.Sony split its shares at a ratio of two shares for each
share on May 19, 2000.
2.CIS split its shares at the ratio of two shares for each
share on October 20, 2000, and at the ratio of ten shares
for each share on August 1, 2001.
3. Circumstances after stock for stock exchange
| (1)
Trade name |
Sony
Corporation |
| (2)
Field of business |
Manufacture
and sale of electronic and electrical machines and
equipment |
| (3)
Location of head office |
7-35,
Kitashinagawa 6-chome, Shinagawa-ku, Tokyo |
| (4)
Representative |
Nobuyuki
Idei
Representative Director |
| (5)
Share capital |
This
stock for stock exchange will not effect the amount
of Sony's share capital. |
| (6)
Effect on business result |
This
stock for stock exchange will not have a material
effect on Sony's business results. |
|
|
|
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