May 12, 2023
NSK Announces the Execution of a Joint Venture Agreement Accompanying Changes in a
Consolidated Subsidiary and a Specified Subsidiary (Sub-subsidiary)
Tokyo, May 12, 2023 - NSK Ltd. (TSE: 6471, herein after referred to as "NSK") has today entered into a joint venture agreement ("Joint Venture Agreement") with Japan Industrial Solutions III Investment Limited Partnership ("JIS"). It is agreed i) NSK Steering & Control, Inc. ("NS&C"), a consolidated subsidiary which controls NSK's global steering business, will issue class shares equivalent to 50.1% of voting rights of NS&C by way of third-party allotment ("Third-Party Allotment") to JIS, ii) NS&C will distribute special dividend to NSK prior to the Third-Party Allotment (the series of transactions including such share issuance and distribution of special dividend are hereinafter referred to as the "Transaction") and iii) JIS and NSK will jointly operate NS&C. As a result of the Transaction, NS&C and NSK Steering Systems Co., Ltd. ("NSS"), a subsidiary of NS&C and a specified subsidiary /sub-subsidiary of NSK, will become equity-method affiliated companies.
1. Background and Purpose
The automotive industry is currently facing major transformation. In addition, supply chain disruptions triggered by Covid-19 outbreak, semiconductor shortages, geopolitical risks including the Ukraine situation, and global inflation have added to the increasingly challenging business environment. In this environment, as announced in the Mid-Term Management Plan 2026 ("MTP2026") dated May 13, 2022, NSK has initiated business structural reforms to enhance the automotive steering business; and at the same time, NSK has been pursuing alliance discussions with external partners. As a result, NSK has decided today to enter into the Joint Venture Agreement with JIS regarding NS&C.
JIS has extensive experience and expertise in investing and providing managerial support in a wide range of industries, including the automotive industry, and possesses knowledge and network of information based on its track record and experience. NSK has come to a conclusion that inviting JIS as the partner to the steering business is important amid an increasingly uncertain business environment, with an aim to further progress with measures to improve the steering business as quickly as possible. Specifically, NSK will work with JIS to consider a variety of measures, including the following.
- Further structural reforms to improve profitability
- Promote independent operation (review governance structure and processes)
- Explore opportunities for alliances with strategic partners
- Strengthen monitoring system
2. Outline of the Joint Venture Agreement
NS&C will issue 10,041 class shares by way of third-party allotment, all of which will be subscribed by JIS for 20 billion yen. Prior to the Third-Party Allotment, NS&C plans to distribute special dividend to NSK. As a result of the Transaction, the ownership structure of voting rights NS&C will be as follows. NSK currently plans to implement the aforementioned structure, however, in an event that the structure of the Transaction has a significant impact on NSK's financial results due to material changes in external environment, NSK may choose to take the alternative scheme where NSK will subscribe the class shares issued by NS&C and transfer all of which to JIS, after obtaining the consent from JIS. (The shareholder composition and shareholding ratios will remain unchanged in the event of a change in scheme)
NSK
100.0%
NS&C
100.0%
NSS
NSK | JIS |
49.9% 50.1%
NS&C
100.0%
NSS
As a result of this transaction, NS&C will become an affiliate of NSK accounted by equity method. NSK will continue to support NS&C's sustainable growth and enhancement of corporate value as a shareholder. In addition, NSK may acquire the class shares subscribed by JIS in case certain conditions are fulfilled.
3. Outline of the relevant Subsidiary/Specified Subsidiary (Sub-subsidiary)
(1) Outline of the relevant Subsidiary
(1) | Company name | NSK Steering & Control, Inc. | |
(2) | Head office | 1-6-3 Osaki, Shinagawa-ku, Tokyo | |
(3) | Representative | Narihito Otake | |
Representative Director and President | |||
(4) | Description of business | Sales, research, and development of automotive steering products. | |
Manufacturing, sales, research, and development of automotive | |||
electronic components and software. | |||
(5) | Capital | 200 million yen | |
(As of May 12, 2023) | |||
(6) | Date established | September 30, 2010 | |
(7) | Major shareholders | NSK Ltd. 100% | |
and ownership | |||
(as of May 12, 2023) | |||
(8) | Relationship between | Capital | NSK owns 100% of the outstanding shares of this |
NSK and the | relationship | subsidiary. | |
subsidiary | |||
Personal | NSK's executive officers serve as directors of the | ||
relationship | subsidiary. | ||
Business | The subsidiary manufactures and sells products to | ||
relations | NSK and NSK supplies parts and services to the | ||
subsidiary. | |||
Related | The subsidiary is a consolidated subsidiary of NSK | ||
Party Status | and falls under the category of a related party. | ||
(9) | Actual results of the | Net sales | 4,100 million yen* |
subsidiary for the fiscal | |||
year ended March 31, | |||
2022 |
*The figures are the financial position and operating results before NS&C took over the steering business from NSK on April 1, 2023.
(2) Outline of the relevant Specified Subsidiary (Sub-subsidiary)
(1) | Company name | NSK Steering Systems Co. | |
(2) | Head office | 1-6-3 Osaki, Shinagawa-ku, Tokyo | |
(3) | Representative | Katsumi Kobayashi | |
Representative Director and President | |||
(4) | Description of business | Manufacturing of automotive components | |
(5) | Capital | 7,500 million yen (As of May 12, 2023) | |
(6) | Date established | February 21, 2001 | |
(7) | Major shareholders | NSK Steering & Control, Inc. 100%.(As of May 12, 2023) | |
and ownership | |||
(8) | Relationship between | Capital | NSK indirectly owns 100% of the outstanding |
NSK and the | relationship | shares of this subsidiary. | |
subsidiary | |||
Personal | NSK's executive officers serve as directors of the | ||
relationship | subsidiary. | ||
Business | NSK sells the products manufactured by the | ||
relations | subsidiary and provides services to the subsidiary. | ||
Related | The subsidiary is a consolidated subsidiary of NSK | ||
Party Status | and falls under the category of a related party. | ||
- Financial position and operating results of the subsidiary for the past three years (million JPY)
Fiscal year end | March 31, 2021 | March 31, 2022 | March 31, 2023 |
Net assets | 16,549 | 15,431 | 14,087 |
Total assets | 30,458 | 31,028 | 29,021 |
Net assets per share | 110,329.32 yen | 102,878.67 yen | 93,915.98 yen |
Net sales | 48,792 | 42,031 | 47,106 |
Operating income | 695 | -881 | -1,290 |
Ordinary income | 639 | -940 | -1,331 |
Net income Attributable to | 434 | -682 | -1,344 |
Owners of the Parent | |||
Net income per share | 2,899.21 yen | -4,550.65 yen | -8,962.69 yen |
Dividend per share | 2,900.00 yen | - | - |
4. Overview of the Underwriters of the Class Shares
(1) | Company name | Japan Industrial Solutions III Investment Limited Partnership | |
(2) | Head office | 2-2-2 Marunouchi, Chiyoda-ku, Tokyo | |
(3) | Grounds, etc. for | Limited Partnership Act for Investment | |
incorporation | |||
(4) | Purpose of formation | Acquisition, etc. of securities | |
(5) | Partnership | September 30, 2021 | |
formation date | |||
(6) | Overview of limited | Development Bank of Japan Inc. | |
liability partners | Mizuho Bank, Ltd. | ||
Sumitomo Mitsui Banking Corporation | |||
MUFG Bank, Ltd. | |||
(7) | Outline of operating | Name | Japan Industrial Solutions, Inc. |
partner (Unlimited | |||
Location | 2-2-2 Marunouchi, Chiyoda-ku, Tokyo | ||
liability partner) | |||
(General Partner) | Name and title | Yuichi Hiromoto | |
of | President & CEO | ||
representative | |||
Description of | Investment business etc. | ||
business | |||
Capital stock | 100 million yen | ||
(8) | Relationship of NSK | Relationship | There is no capital, personal, or transactional |
with the said fund | between NSK | relationships between NSK and the said fund | |
and the operating | and the said | ||
partner | fund | ||
Relationship | There is no capital, personal, or transactional | ||
between NSK | relationships between NSK and the operating | ||
and the | partner | ||
operating | |||
partner | |||
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Disclaimer
NSK Ltd. published this content on 12 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 May 2023 09:12:05 UTC.