Notice of Conclusion of Capital and Business Alliance, Disposal of Shizuki Electric’s Treasury Stock via a Third-party Allocation of Shares, and Establishment of Joint Venture (PDF: 362KB)

September 16, 2016

Company name: Murata Manufacturing Co., Ltd. Name of representative: Tsuneo Murata

President and Statutory Representative Director (Code: 6981, First section of the Tokyo Stock Exchange)

Contact: Takumi Ikushima

Public Relations Manager (Phone: [phone])

Company name: Shizuki Electric Co., Inc. Name of representative: Kaoru Ito

President & CEO

(Code: 6994, Second section of the Tokyo Stock Exchange)

Contact: Tetsuya Tomomatsu Vice President,

Executive Director, Administration Division (Phone: [phone])

N otice of C onclusion of C apital and Business A lliance, D isposal of Shizuki Electric's Treasury Stock via a Third-party Allocation of Shares, and Establishment of Joint Venture

Murata Manufacturing Co., Ltd. (hereinafter "Murata") and Shizuki Electric Co., Inc. (hereinafter "Shizuki") have determined to conclude a capital and business alliance, dispose of Shizuki's treasury stock (hereinafter the "Treasury Stock Disposal") via a third-party allocation of shares (hereinafter the "Third-party Allocation") with Murata as the allottee and establish a joint venture, and both companies have concluded a capital and business alliance as shown below. Additionally, Murata will become a major shareholder in Shizuki due to the Treasury Stock Disposal, and changes to major shareholders will be disclosed separately.

1. Overview of capital and business alliance
2. Purpose of capital and business alliance

   Murata and Shizuki have cooperated with each other to consolidate their management resources while securing their respective uniqueness, in an effort to conduct joint marketing, product development, sales, and promote joint development of new materials that combines the ceramic capacitor technology held by Murata and film capacitor technology held by Shizuki. These new materials have excellent heat resistance capacity and can contribute to the simplification of cooling functions of systems embedded in electric automobiles, leading to increased competitiveness of both companies.

   Since favorable results were obtained in the prototypes produced in 2015, and in light of certain targets being met in new product development, focus was placed on commercialization of these new materials from the beginning of 2016. Subsequently, upon deliberation by both companies on future business expansion, agreement was reached to establish a joint venture (hereinafter the "Joint Venture") via a joint investment to realize the provision of competitive high value-added products and

   achieve high profitability by consolidating management resources held by both groups.

   Furthermore, in addition to the establishment of the Joint Venture, with the intent of creating a stronger relationship of trust between both companies and powerfully promoting new products under the Joint Venture, the companies arrived at concluding a capital alliance as of today.

3. Details of capital and business alliance

4. Details of capital alliance

   Murata and Shizuki, in order to strengthen the relationship of trust between both companies and promote business of the Joint Venture, have agreed for Murata to acquire 3,900,000 shares of treasury stock of Shizuki via the Treasury Stock Disposal. Subsequent to the Treasury Stock Disposal, Murata's shareholding ratio of common stock in Shizuki will amount to 13.52% against the total number of issued shares.

5. Details of business alliance

   A joint venture will be established via a joint investment by Murata and Shizuki, and the companies will conduct development and manufacture of new products that combines the ceramic capacitor technology and film capacitor technology.

6. Overview of the Joint Venture

   1) Name	Undecided
   2) Address	Ugo, Ogachi-gun, Akita Prefecture
   3) Title and name of representative	Yoshihiro Yamada, President and Representative Director
   4) Details of business	Development, manufacture, and sale of film capacitors
   5) Capital	100 million yen
   6) Date of establishment	October 3, 2016 (Scheduled)
   7) Fiscal year-end	March 31
   8) Net assets	Undecided
   9) Total assets	Undecided
   10) Investment ratio in the joint venture	Murata: 65% Shizuki: 35%

7. Schedule

8. Resolution of the Board of Directors' meeting September 16, 2016

9. Conclusion of capital and business alliance and joint venture agreement September 16, 2016

10. Treasury Stock Disposal payment date October 3, 2016

11. Joint Venture establishment date October 3, 2016 (Scheduled)

12. Joint Venture business commencement date October 2016 (Scheduled)

13. Overview of companies concerned in capital and business alliance

14. Overview of Murata Manufacturing Co., Ltd.

    Please see "II. Disposal of Shizuki's treasury stock via a third-party allocation of shares, 6. Basis for selecting the scheduled disposal target, etc., (1) Overview of the scheduled disposal target."

15. Overview of Shizuki Electric Co., Inc.

    1)	Name	Shizuki Electric Co., Inc.
    2)	Location of headquarter	10-45 Taisha-cho, Nishinomiya, Hyogo
    3)	Title and name of representative	Kaoru Ito, President & CEO
    4)	Details of business	Manufacture and sale of capacitors and related devices and equipment, power devices and equipment, and information devices and equipment
    5)	Capital	5,001 million yen
    6)	Date of incorporation	September 1, 1947
    7)	Number of issued shares	33,061,003 shares
    8)	Fiscal year-end	March 31
    9)	Number of employees	(Consolidated) 1,295 persons (As of March 31, 2016)
    10)	Major clients	A Japanese corporation engaged in the manufacture and sale of equipment related to consumer electronics, railway and other industries, automobile, and electric power equipment, etc.
    11)	Major banking partners	Resona Bank, Limited The Bank of Tokyo-Mitsubishi UFJ, Ltd. The Minato Bank, Ltd. The Shoko Chukin Bank, Ltd.
    12)	Major shareholders and shareholding ratios	Mitsubishi Electric Corporation 21.11%
    		GOLDMAN SACHS INTERNATIONAL 13.13%
    		DEUTSCHE BANK AG LONDON-PB NON-TREATY CLIENTS 613 4.60%
    		Resona Bank, Limited 3.93%
    		NOMURA PB NOMINEES TK1 LIMITED 2.81%
    		The Minato Bank, Ltd. 2.80%
    		Shizuki Stock Ownership Association 2.46%
    		Murata Manufacturing Co., Ltd. 1.73%
    		Noritz Corporation 1.69%
    		Shizuki Electric Employee's Shareholding Association 1.58%

    13)	Relationship between the companies concerned	Capital relationship	Murata holds 571 thousand shares of common stock in Shizuki, and Shizuki holds 48 thousand shares of common stock in Murata.
    		Human relationship	Not applicable
    		Business relationship	Shizuki and Murata have cooperated with each other to consolidate their management resources while securing their respective uniqueness, in an effort to conduct joint marketing, product development and sales.
    		Applicable conditions to the relevant parties	Not applicable
    14) Business results and financial positions for the three most recent years
    (Millions of yen)		Fiscal year ended March 31, 2014		Fiscal year ended March 31, 2015	Fiscal year ended March 31, 2016
    Consolidated net assets		16,693		18,990	19,574
    Consolidated total assets		23,217		25,051	25,592
    Consolidated net assets per share (Yen)		568.04		645.16	665.33
    Consolidated net sales		21,998		23,461	21,728
    Consolidated operating income		2,391		2,502	2,125
    Consolidated ordinary income		2,704		2,814	2,239
    Consolidated net income		1,681 (Note)		1,775 (Note)	1,254 (Note)
    Consolidated net income per share (Yen)		57.71 (Note)		60.98 (Note)	43.12 (Note)
    Dividends per share (Yen)		10		11	11

    Note: The above figures represent figures for "net income attributable to shareholders of Shizuki Electric" and "net income attributable to shareholders of Shizuki Electric per share," calculated based on Accounting Standard for Consolidated Financial Statements.

16. Future outlook

Please see "II. Disposal of Shizuki's treasury stock via a third-party allocation of shares, 8. Future outlook" and "III. Establishment of the Joint Venture, 2. Future outlook."