Acquisition of Vios Medical, Inc., USA and Disposal of Treasury Shares by Third-Party Allotment (PDF: 298KB)

September 22, 2017

Company Name:	Murata Manufacturing Co., Ltd.
Name of Representative:	Tsuneo Murata Chairman of the Board, President and Representative Director
(Code Number: 6981, First Section of the Tokyo Stock Exchange)
Contact:	Takumi Ikushima General Manager of Corporate Communication Department
(Phone: [phone])

Announcement: Acquisition of Vios Medical, Inc., USA and Disposal of Treasury Shares by Third-Party Allotment

Murata Manufacturing Co., Ltd. (the "Company") has passed a resolution at its board of directors meeting held on September 22, 2017 (the "Acquisition Resolution Date"), to have the Company's subsidiary, PJ Florence Acquisition Co., Ltd., established on September 21, 2017 (Headquarters: Delaware, USA., President: Mr. David Kirk, hereinafter referred to as the "Special Purpose Acquisition Company" or "SPAC") acquire Vios Medical, Inc. (Headquarters: Minnesota, USA, CEO: Amit Patel, hereinafter referred to as "Vios"), a company which provides chest sensors which can measure heart rate, respiratory rate, electrocardiogram, etc., as well as software and cloud services, etc. to monitor the same, to have Vios, a surviving company, become its subsidiary company (the "Acquisition") and has executed a merger agreement between the SPAC and Vios (the "Merger Agreement"). Furthermore, we hereby announce, as specified below, that a resolution has been passed for disposal of treasury shares by third-party allotment of shares to supplement part of the consideration to be paid in relation to the Acquisition (the "Consideration").

1. Acquisition of Vios
2. Reasons for Acquisition

The Company aims to contribute to the advancement of electronics in society by pursuing basic technology to pioneering technology for the next generation and developing and supplying its original products in accordance with its basic policy that "New electronic devices begin with new electronic components; new electronic components begin with new materials...". In addition, the Company has positioned the healthcare and medical field as one of the markets we will focus on, in parallel with the

automotive and energy fields, in order to realize the business goals set forth in the "Mid-term Direction 2018" announced in December 2015, and seeks market diversification and growth, by obtaining a first-class medical device marketing license to thereby create a new business model and customer value.

Vios is a US healthcare IT emerging company established in December 2012, which engages in the development of chest sensors (Note 1) which can measure the heart rate, respiratory rate, electrocardiogram, etc., as well as the development and provision of software and cloud services, etc. to monitor the same. It will become possible to monitor, in real time, the "vital signs" data acquired through the chest sensor (FDA approved (Note 2)) through bedside and central monitors (Note 3) installed with software developed by Vios. Vios is currently proactively carrying out trials at hospitals across the U.S., as well as in India where a subsidiary company is located, working towards developing business.

Vios technology features a real-time monitoring system enabled through the processing of vital information obtained through a sensor using Vios' original patented algorism. In addition, such data can also be analyzed in a semi real-time manner though low-price commercial devices such as ready-made tablet devices or personal computers, thus significantly reducing implementation costs at medical institutions, compared to using expensive, pre-existing monitoring devices. Furthermore, by using a wireless network, it enables continuous monitoring of patients in hospital without being affected by their movement. Such technology is also effective for home care (remote supervising), which has seen increased need in recent years, as well as home monitoring or remote medical care assistance after the patient leaves the hospital.

Vios has various monetize models, in addition to the sales of monitoring devices, the usage fees for such devices proportionate to the amount of use, and the fees for analyzed data relating to the vital information obtained through such devices, and the Company believes that the acquisition of Vios shows good prospects for the creation of a new business model and increased customer value in the healthcare and medical field, and this is in line with the Company's business strategy and will contribute to the improvement of corporate value through the synergies expected with the Company's sensor and transmission technology.

The Company has had an investment stake in Vios (625,000 shares of Class B Preferred Shares, amounting to 3.6% of the voting rights as of the Acquisition Resolution Date) since 2016, as part of its expansion into the sales of electronic components and various modules for the healthcare market, and building networks in the medical business market. The Company is now working toward further expanding its business by focusing on the Acquisition as a foothold for expanding its healthcare and medical business abroad by effectively utilizing Vios' network of overseas hospitals.

(Notes)

1. A chest sensor is a vital sensor device worn on the patient's chest, and vital signs information obtained therefrom will be sent to the bedside monitor in real time.

2. The U.S. Food and Drug Administration

3. A bedside monitor is a wireless monitoring device for displaying vital signs information at the

bedside, such as electrocardiogram, etc. obtained from the patient, and a central monitor is a device for collectively displaying, in a nurses' station or the like, the vital signs information obtained from more than one patient.

1. Consideration for Acquisition

   The total amount of the Consideration (the "Total Consideration") that the Company will pay to the Vios shareholders (except for the Company as mentioned below) and stock option holders shall be approximately USD 102 million (Note: Approximately JPY 11.4 billion). It should be noted that, as indicated in "1. Reasons for Acquisition" above, although the Company currently owns Class B Preferred Shares of Vios, since the Company is excluded from the targets for the payment of the Consideration, the Company will not be receiving the payment for the Consideration. The breakdown of the Total Consideration shall be as follows:

2. The Company's common stock equivalent to approximately USD 75.73 million (Approximately JPY 8.5 billion) in total (for the specific amount of the disposal, please refer to "II. Outline of disposal of treasury shares by third-party allotment of shares, etc. 1.

   Overview of disposal" as mentioned below); and

3. Cash equivalent to approximately USD 25.88 million(Approximately JPY 2.9 billion) in total (Note) For the sake of convenience, the USD/JPY exchange rate as of September 21, 2017 is converted

at USD 1 = JPY 112.5. The same shall apply hereafter.

The Consideration will be delivered to Vios shareholders, except for the Company, and stock option holders on the date the Acquisition takes place (Scheduled for October 13, 2017, the "Closing Date"). The number of Vios shareholders, except for the Company, which will receive the delivery of shares on the Closing Date will be 34, and the number of Vios stock option holders which will receive cash on the Closing Date will be 27.

As for the consideration in items (i) and (ii) above, the Company's common stock for the consideration in item (i) will be delivered by way of the SPAC (as defined below), which is the scheduled disposal target, issuing a total of 507,104 shares of the Company's common stock that were issued by way of the Company's disposal of treasury shares by third-party allotment of shares (the "Disposal of Treasury Shares"). In addition, the cash for the consideration in item (ii) will be paid in by the portion of the funds provided by way of the scheduled disposal target issuing new common stock to the Company by October 12, 2017, and the Company making payment related to such stock (approximately JPY 11.4 billion, equivalent to the Total Consideration), (it should be noted that the Company has necessary and sufficient cash reserves to make such payment).

In determining the Total Consideration, the Company will obtain a share valuation report prepared by Nomura Securities Co., Ltd. (Representative Executive Officer and President: Toshio Morita, Headquarters: 1-9-1 Nihonbashi, Chuo-ku, Tokyo), a third party valuation agency independent from the

Company and Vios, and, upon reviewing the valuation results, the Company will consult and negotiate with the Vios shareholders to determine the final result.

4. Method of Acquisition

The Acquisition will be carried out by: (i) the Disposal of Treasury Shares to a subsidiary company which will be newly established by the Company in the US for the purpose of the Acquisition (the "SPAC"); (ii) the subsidiary company conducting a reverse triangle merger (Note) with such subsidiary company as a absorbed company and Vios as a surviving company in accordance with the provisions of the Delaware General Corporation Law (the "DGCL"); and (iii) as mentioned in "2. Acquisition Price," the shares that are to be retained by the SPAC through the Disposal of Treasury Shares or the cash being transferred or paid to Vios shareholders, except for the Company, and stock option holders as consideration for the Acquisition. The specific procedures are outlined as follows:

(Note) The reverse triangle merger mentioned herein shall mean a merger conducted in accordance with the Agreement and Plan of Merger governed by the DGCL in which the company conducting the Acquisition (the "Buyer") establishes a wholly owned subsidiary (the "Buyer Subsidiary") which becomes the absorbed company and the company subject to the Acquisition (the "Acquired Company") becomes the surviving company. Specifically, the shares of the Buyer Subsidiary retained by the Buyer will be converted into shares of the Acquired Company to be newly issued and will therefore cease to exist, as will the existing shares retained by the shareholders of the Acquired Company (as a result, only the Buyer will be retaining the Acquired Company's shares; however, as mentioned below, in the Acquisition, the existing shares of the Acquired Company retained by the Company in which, although it is a Buyer, it is also a shareholder of the Acquired Company, will not cease but will instead continue to exist.). As consideration for such shares retained by the shareholders of such Acquired Company ceasing to exist and the acquisition of the Acquired Company's shares by the Buyer through these procedures, shares, etc. of the Buyer will be delivered (directly or indirectly through the absorbed company) to the shareholders of the Acquired Company by the Buyer. This series of transactions (i.e. the reverse triangle merger) will be hereinafter collectively referred to as the "Merger".)