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Mitsubishi Rayon to become a subsidiary of MCHC
03
Dec '09
Mitsubishi Chemical Holdings Corporation (Head office: Minato-ku, Tokyo; President: Yoshimitsu Kobayashi; hereinafter referred to as “MCHC”) and Mitsubishi Rayon Co., Ltd. (Head office: Minato-ku, Tokyo; President: Masanao Kambara; hereinafter referred to as “MRC”) have reached an agreement to integrate management (hereinafter referred to as “Management Integration”) in accordance with resolutions passed at both companies' meetings of the Board of Directors convened on November 19, 2009. Under the agreement, MRC will become a subsidiary of MCHC. The two companies have concluded a Memorandum of Understanding (hereinafter referred to as “Memorandum of Understanding”) today.
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1. Overview and Method of Management Integration

(1) Management Integration will be undertaken with MCHC acquiring all outstanding shares in MRC (excluding any treasury shares held by MRC) with the ultimate objective of making MRC a wholly owned subsidiary.

(2) In undertaking Management Integration, MCHC will initiate a tender offer (hereinafter referred to as “Tender Offer”) for all outstanding shares in MRC with a target date of the beginning of February 2010 at the latest and planned completion by the end of March 2010, subject to the completion of all necessary procedures and responses pursuant to relevant laws in Japan and overseas.

(3) In the event the Tender Offer is initiated, the proposed acquisition price (hereinafter referred to as “Tender Offer Price”) per share of MRC common stock shall be ¥380. MCHC has received a fairness opinion from its financial advisor, Mitsubishi UFJ Securities Co., Ltd., stating that from a financial perspective the proposed purchase price of the Tender Offer represents fair value for MCHC under the conditions precedent.The Tender Offer sets the lower limit of the planned share acquisition by MCHC at the number of shares possessing more than half of MRC's voting rights. In the event the total number of shares tendered is less than the aforementioned number of shares, MCHC shall not acquire all shares tendered. Should the total number of shares tendered exceed the aforementioned number of shares, MCHC will acquire all shares tendered.
MRC has also received a fairness opinion from its financial advisors Mizuho Securities Co., Ltd. and JP Morgan Securities Japan Co., Ltd., stating that from a financial perspective the proposed purchase price of the Tender Offer represents fair value for MRC under the conditions precedent. MRC has indicated that it intends to express a favorable opinion if the Tender Offer is initiated.

4) In the event MCHC is unable to acquire all outstanding shares issued by MRC through the Tender Offer, with respect to the shares which could not be acquired, the two companies plan to conduct a share exchange (hereinafter referred to as “Share Exchange”) and MCHC plans to make MRC its wholly owned subsidiary. The two companies plan to deliberate details of conditions of exchange including the effective exchange date and exchange ratio. We plan to make an immediate announcement as soon as details are determined.
During the course of deliberations, depending on the state of progress, there could be a re-evaluation of the details and timing of Management Integration that could also include the adoption of a method other than the proposed Share Exchange. We plan to provide information on the Share Exchange and various conditions as soon as these are decided.

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Mitsubishi Rayon Co Ltd

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