NSK Announces the Formation of 49.9%:50.1% Steering Business Joint Venture
Time：31 Jul,2023
<p style="text-align: center;"><img src="/ueditor/php/upload/image/20230731/1690799413620948.png" title="1690799413620948.png" alt="4.png"/></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">NSK Ltd. (TSE: 6471, herein after referred to as “NSK”) announced the execution of a joint venture agreement (“Joint Venture Agreement”) with Japan Industrial Solutions III Investment Limited Partnership (“JIS”). It was agreed: i) NSK Steering & Control, Inc. (“NS&C”), a consolidated subsidiary which controls NSK's global steering business, will issue Class Shares to JIS equivalent to 50.1% of voting rights of NS&C by way of third-party allotment (“Third-Party Allotment”), ii) JIS and NSK will jointly operate NS&C, and iii) NS&C will pay a special dividend to NSK prior to the Third-Party Allotment. (The series of transactions including such share issuance and payment of special dividend are hereinafter referred to as the “Transaction”.)</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">Today, NSK resolved to change the Third-Party Allotment to: i) NS&C will temporarily issue all 10,041 Class Shares to NSK, and ii) NSK will then transfer all 10,041 Class Shares to JIS for 20 billion yen (hereinafter referred to as the “Transfer”). NSK resolved to complete the Transaction in a way that is partially different from the previously disclosed information. Accordingly, we have disclosed the changes as detailed below.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">Further, as a result of the Transfer, NS&C will become an equity method affiliate of the Company on August 1, 2023.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">1. Reasons and Summary of the change</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">In accordance with the Joint Venture Agreement, NSK planned to have NS&C issue 10,041 Class Shares1 to JIS, the equivalent to 50.1% of voting rights of NS&C, by way of third-party allotment. However, after discussion with JIS, NSK concluded with JIS consent to change the Third-Party Allotment to the Transfer. The shareholding and voting rights stay same regardless of the change.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">1 Note: A Class Share has one voting right both for the general shareholder meeting and the class meeting.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">2. Outline of the relevant Subsidiary/Specified Subsidiary (Sub-subsidiary)</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">Refer to the Section 3 of the NSK website News dated May 12, 2023, “NSK Announces the Execution of a Joint Venture Agreement Accompanying Changes in a Consolidated Subsidiary and a Specified Subsidiary (Sub-subsidiary)”</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">3. Outline of Overview of the Underwriters of the Class Shares</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">Refer to the Section 4 of the NSK website News dated May 12, 2023, “NSK Announces the Execution of a Joint Venture Agreement Accompanying Changes in a Consolidated Subsidiary and a Specified Subsidiary (Sub-subsidiary)”</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">4. Status of NS&C and NSS Shares and Voting Rights Held by NSK Before and After the Transaction</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">Refer to the Section 5 of the NSK website News dated May 12, 2023, “NSK Announces the Execution of a Joint Venture Agreement Accompanying Changes in a Consolidated Subsidiary and a Specified Subsidiary (Sub-subsidiary)”</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">5. Schedule</span></p><p></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">(1) Date of resolution by NSK's CEO</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">May 12, 2023 </span></p><p></p><p></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">(2) Date of executing the agreement</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">May 12, 2023 </span></p><p></p><p></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">(3) Date of closing</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">August 1, 2023 (scheduled) </span></p><p></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">* Underlined information is updated from the Section 6 of the NSK website News dated May 12, 2023, “NSK Announces the Execution of a Joint Venture Agreement Accompanying Changes in a Consolidated Subsidiary and a Specified Subsidiary (Sub-subsidiary)”</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">6. Future Outlook and Impact on Business Performance</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">As a result of the Transfer, NS&C and its' consolidated subsidiaries will become an equity method affiliate of the Company on August 1, 2023, and will be excluded from the scope of consolidation of NSK. Subsequently, effective from the first quarter of the current fiscal year, the Steering business will be classified as a discontinued operation and the NSK Group's consolidated sales, operating income, and income before income taxes will be presented excluding the discontinued operations while income attributable to owners of the parent and basic earnings per share will be presented as the sum of continuing operations and discontinued operations.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 12px;">As for the impact on the Company's full-year consolidated performance for the fiscal year ending March 31, 2024, sales are expected to decrease by 182 billion yen and operating income and income before income taxes are expected to increase by 2.5 billion yen, respectively. For details, please refer to the “Notice of Revision of Full-Year Earnings Forecast” dated July 31, 2023. Please note that this revision is based on information currently available and reflects only the impact of the classification of the Steering business as a discontinued operation. The Company will continue to analyze the impact of this transaction on its' business results and will promptly disclose any relevant matters.</span></p><p><br/></p>
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