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Kawashima shares will be delisted from Tokyo Stock Exchange
17
May '11
JS Group Corporation and Kawashima Selkon Textiles Co Ltd, at the board of directors' meetings held respectively, decided to convert Kawashima into a wholly owned subsidiary of JSGC through a share exchange pursuant to a share exchange agreement, which was also executed. The effective date of the Share Exchange is scheduled for August 1, 2011.

In accordance with Article 796 Section 3 of the Companies Act of Japan, JSGC intends to conduct a simplified share exchange that will not require approval at a general shareholders' meeting.

Kawashima shares will be delisted from Tokyo Stock Exchange, Inc. ("TSE") on July 27, 2011, in advance of the Share Exchange effective date.

1. The Purpose of Wholly Owning Kawashima through the Share Exchange

(1) Purpose of the Share Exchange

JSGC and Kawashima signed a business and capital alliance contract in November 2010 and at the same time JSGC accepted the allocation of new shares to a third party to strengthen the capitals of Kawashima to pursue synergy generation between the two companies. After strengthening its capital through the business and capital alliance, Kawashima reduced its interest-bearing debt and generated financial synergy Also, there were synergy effects generated between JSGC subsidiary L1XIL Corporation ("L1XIL"), in housing related business that manufacture and sells window related products and interior building materials, and Kawashima. In particular, cooperation in sales of products for new homes and renovation. as well as joint development of energy saving window products was done.

Further expansion of synergy effects had constantly been the topic between the two companies. At the meeting held between JSGC and Kawashima in March 2011, the companies recognized that Kawashima must be able to make a greater use of the JSGC infrastructures and therefore need stronger alliance.

In particular, Kashima will sell its products using JSGC's nationwide sales channels including L1XIL showrooms and overseas business operating sites. JSGC will also sell its products through Kawashima sales channel to further expand sales as well as reduce cost by joint distribution and by the management of indirect costs.

As a result of discussion between JSGC and Kawashima, the companies reached a conclusion that Kawashima should establish a management system to be able to share strategic policy with JSGC and make agile business decision. For such purpose, the companies decided best to have Kawashima join within the scope of consolidation of JSGC to pursue strategic unity of the group with speed.

JSGC believes that it will be able to strengthen the group's business portfolio and to be able to develop business swiftly by Kawashima becoming a wholly owned subsidiary.

Kawashima has long history and experience in interior business especially in interior fabrics and traditional clothing and artistic textiles, however, the company decided to become a wholly owned subsidiary of JSGC to increase strategic unity with the Group in order to grow its business. As a result, Kawashima believes that it will be able to develop business stably and that it would be able to increase overall corporate value.


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