Sumitomo Metal Industries, Ltd. (hereinafter “Sumitomo Metals”) today announced that its Board of Directors decided to continue a policy, as a so-called “anti-takeover defense plan to be introduced in advance”, toward (i) a purchase of Sumitomo Metals’ shares and other securities by a group of shareholders with the intent to hold 20% or more of the total voting rights of Sumitomo Metals, or (ii) a purchase of Sumitomo Metals’ shares and other securities resulting in a group of shareholders holding 20% or more of the total voting rights of Sumitomo Metals (the purchases set out in (i) or (ii) above do not include the purchases to which Sumitomo Metals’ Board of Directors has given consent in advance). A purchase of Sumitomo Metals’ shares and other securities set out in (i) or (ii) above shall be hereinafter referred to as a “Large-scale Purchase”. A person or a company that intends to conduct a Large-scale Purchase shall be hereinafter referred to as a “Large-scale Purchaser”.
This policy was originally approved by the shareholders upon the ordinary general shareholders meeting held in June, 2006, and then was approved to be continued with substantially the same content (such policy after continuation shall be hereinafter referred to as the “Policy”) by the shareholders upon the ordinary general shareholders meeting held in June, 2009. This time Sumitomo Metals’ Board of Directors decided to continue the Policy as described below.
This policy was originally approved by the shareholders upon the ordinary general shareholders meeting held in June, 2006, and then was approved to be continued with substantially the same content (such policy after continuation shall be hereinafter referred to as the “Policy”) by the shareholders upon the ordinary general shareholders meeting held in June, 2009. This time Sumitomo Metals’ Board of Directors decided to continue the Policy as described below.
1. Basic Philosophy
Sumitomo Metals’ Board of Directors believes that the company’s shareholders should make the final decisions as to whether or not a Large-scale Purchase is acceptable. The Board of Directors also believes that shareholders (i)should be provided with sufficient and appropriate information, from both of the Board of Directors and the Large-scale Purchaser, including information on the (a) conditions of the Large-scale Purchase, (b) management policies and business plans that the Large-scale Purchaser intends to adopt for Sumitomo Metals and its group companies, (c) influence of the Large-scale Purchase affecting Sumitomo Metals and its group companies and their stakeholders, and (d) any proposals alternative to the Large-scale Purchase, and (ii)should be given an opportunity and time to carefully consider the provided information. Based on such belief, Board of Directors has established rules concerning Large-scale Purchases of Sumitomo Metals shares (hereinafter the “Large-scale Purchase Rules”) and will require any Large-scale Purchaser to comply with the rules.
Based upon the thought that countermeasures should be enforced under objective conditions, the Board of Directors may take such countermeasures only in the cases where the Large-scale Purchaser does not comply with the Large-scale Purchase Rules.
Sumitomo Metals’ Board of Directors believes that the company’s shareholders should make the final decisions as to whether or not a Large-scale Purchase is acceptable. The Board of Directors also believes that shareholders (i)should be provided with sufficient and appropriate information, from both of the Board of Directors and the Large-scale Purchaser, including information on the (a) conditions of the Large-scale Purchase, (b) management policies and business plans that the Large-scale Purchaser intends to adopt for Sumitomo Metals and its group companies, (c) influence of the Large-scale Purchase affecting Sumitomo Metals and its group companies and their stakeholders, and (d) any proposals alternative to the Large-scale Purchase, and (ii)should be given an opportunity and time to carefully consider the provided information. Based on such belief, Board of Directors has established rules concerning Large-scale Purchases of Sumitomo Metals shares (hereinafter the “Large-scale Purchase Rules”) and will require any Large-scale Purchaser to comply with the rules.
Based upon the thought that countermeasures should be enforced under objective conditions, the Board of Directors may take such countermeasures only in the cases where the Large-scale Purchaser does not comply with the Large-scale Purchase Rules.
2. Large-scale Purchase Rules
(1) Submission of Intention Letter
When a Large-scale Purchaser intends to commence a Large-scale Purchase, such Large-scale Purchaser is required to submit to Sumitomo Metals a letter of intention to comply with the Large-scale Purchase Rules (hereinafter the “Intention Letter”).
(1) Submission of Intention Letter
When a Large-scale Purchaser intends to commence a Large-scale Purchase, such Large-scale Purchaser is required to submit to Sumitomo Metals a letter of intention to comply with the Large-scale Purchase Rules (hereinafter the “Intention Letter”).
(2) Provision of Information
The Large-scale Purchaser is required to provide Sumitomo Metals’ Board of Directors with sufficient information (hereinafter the “Large-scale Purchase Information”) so that the company’s shareholders may make decisions and the Board of Directors may form its opinion regarding such Large-scale Purchase. Sumitomo Metals will, within five (5) business days after receipt of the Intention Letter, deliver to the Large-scale Purchaser a list of the Large-scale Purchase Information to be provided by the Large-scale Purchaser. The Large-scale Purchase Information includes the following:
The Large-scale Purchaser is required to provide Sumitomo Metals’ Board of Directors with sufficient information (hereinafter the “Large-scale Purchase Information”) so that the company’s shareholders may make decisions and the Board of Directors may form its opinion regarding such Large-scale Purchase. Sumitomo Metals will, within five (5) business days after receipt of the Intention Letter, deliver to the Large-scale Purchaser a list of the Large-scale Purchase Information to be provided by the Large-scale Purchaser. The Large-scale Purchase Information includes the following:
(i) an outline of the Large-scale Purchaser and its group;
(ii) the purposes and conditions of the Large-scale Purchase;
(iii) the basis for determination of the purchase price and funds for purchase;
(iv) management policies which the Large-scale Purchaser intends to adopt after the completion of the Large-scale Purchase for Sumitomo Metals’ and its group companies’ businesses;
(v) policies to be implemented after the completion of the Large-scale Purchase on interested parties of Sumitomo Metals and its group companies; and
(vi) view on the legality of the Large-scale Purchase in terms of the Antimonopoly Act of Japan and overseas competition laws (in case where the Large-scale Purchaser conducts business of the same kind as Sumitomo Metals’ or its group companies’ business).
The Board of Directors will disclose all or part of the Large-scale Purchase Information submitted to the Board of Directors at the time it deems appropriate, if such disclosure is considered necessary for shareholders to make decisions.
(3) Assessment Period
After the provision of the Large-scale Purchase Information is completed, the Board of Directors should be allowed a period below during which it will assess and examine the Large-scale Purchase and seek any alternative plans (hereinafter “the Assessment Period”):
After the provision of the Large-scale Purchase Information is completed, the Board of Directors should be allowed a period below during which it will assess and examine the Large-scale Purchase and seek any alternative plans (hereinafter “the Assessment Period”):
(i) sixty-business-day period (in case of the purchase of all Sumitomo Metals shares by a tender offer with cash-only (yen) consideration); or
(ii) ninety-business-day period (in case of any other Large-scale Purchase).
The Board of Directors will thoroughly examine and assess the provided Large-scale Purchase Information with advice from outside experts including lawyers, accountants and financial advisors during the Assessment Period, and form and disclose its opinion. The Board of Directors may negotiate with the Large-scale Purchaser in order to improve the terms of the proposed Large-scale Purchase or it may offer the alternative plan to shareholders, if necessary.
3. Countermeasures against Non-compliance with the Large-scale Purchase Rules
If a Large-scale Purchaser does not comply with the Large-scale Purchase Rules such as the case where a Large-scale Purchaser commences the Large-scale Purchase without providing Large-scale Purchase Information, Sumitomo Metals’ Board of Directors may take countermeasures against the Large-scale Purchaser to protect the interests of all of its shareholders as a whole. Countermeasures include the issuance of stock acquisition rights or any other measures that the Board of Directors is permitted to take under the Corporate Code of Japan or other laws and the company’s articles of incorporation. If a Large-scale Purchaser complies with the Large-scale Purchase Rules, the Board of Directors does not intend to prevent the Large-scale Purchase at its own discretion.
If a Large-scale Purchaser does not comply with the Large-scale Purchase Rules such as the case where a Large-scale Purchaser commences the Large-scale Purchase without providing Large-scale Purchase Information, Sumitomo Metals’ Board of Directors may take countermeasures against the Large-scale Purchaser to protect the interests of all of its shareholders as a whole. Countermeasures include the issuance of stock acquisition rights or any other measures that the Board of Directors is permitted to take under the Corporate Code of Japan or other laws and the company’s articles of incorporation. If a Large-scale Purchaser complies with the Large-scale Purchase Rules, the Board of Directors does not intend to prevent the Large-scale Purchase at its own discretion.
4. Influence on Shareholders and Investors, etc.
The purpose of the Large-scale Purchase Rules is (i) to provide an opportunity for Sumitomo Metals shareholders to receive information necessary to determine whether or not the Large-scale Purchase is acceptable, (ii) to secure the period of time necessary for the provision of such information and (iii) to consider any alternative plans. Accordingly, the Board of Directors believes that the establishment of the Large-scale Purchase Rules is for the benefit of Sumitomo Metals shareholders and investors.
If a Large-scale Purchaser does not comply with the Large-scale Purchase Rules, Sumitomo Metals’ Board of Directors may take countermeasures to protect the interests of all its shareholders as a whole. However, the Board of Directors is not assuming that such countermeasure taken will cause any specific damage or loss to Sumitomo Metals shareholders (excluding a Large-scale Purchaser who does not comply with the Large-scale Purchase Rules). Provided, however, that if Sumitomo Metals once decides to take the countermeasure of issuing stock acquisition rights through the method of gratuitous allotment to shareholders and thereafter Sumitomo Metals cancels such countermeasure, then damage may be incurred by Sumitomo Metals’ shareholders and investors who have sold Sumitomo Metals shares with assumption that such countermeasure shall be made, due to fluctuations in the value of shares.
The purpose of the Large-scale Purchase Rules is (i) to provide an opportunity for Sumitomo Metals shareholders to receive information necessary to determine whether or not the Large-scale Purchase is acceptable, (ii) to secure the period of time necessary for the provision of such information and (iii) to consider any alternative plans. Accordingly, the Board of Directors believes that the establishment of the Large-scale Purchase Rules is for the benefit of Sumitomo Metals shareholders and investors.
If a Large-scale Purchaser does not comply with the Large-scale Purchase Rules, Sumitomo Metals’ Board of Directors may take countermeasures to protect the interests of all its shareholders as a whole. However, the Board of Directors is not assuming that such countermeasure taken will cause any specific damage or loss to Sumitomo Metals shareholders (excluding a Large-scale Purchaser who does not comply with the Large-scale Purchase Rules). Provided, however, that if Sumitomo Metals once decides to take the countermeasure of issuing stock acquisition rights through the method of gratuitous allotment to shareholders and thereafter Sumitomo Metals cancels such countermeasure, then damage may be incurred by Sumitomo Metals’ shareholders and investors who have sold Sumitomo Metals shares with assumption that such countermeasure shall be made, due to fluctuations in the value of shares.
5. Effective Date and Effective Term of the Policy
The Policy took effect as of today and will remain effective until the first meeting of the Board of Directors to be held after the ordinary general shareholders meeting in 2015 (three-year sunset). The Board of Directors plans to propose the outline of the Policy at the ordinary general shareholders meeting to be held in June this year (hereinafter the “SH meeting”) as an agendum for affirmative votes. In case not more than a half of Sumitomo Metals shareholders present or represented at the SH meeting vote for the affirmative, then the Policy will be abolished immediately.
Sumitomo Metals plans to merge with Nippon Steel Corporation (hereinafter referred to as“Nippon Steel”) , with Nippon Steel being the surviving company, on the effective date of October 1, 2012. In case such merger takes effect, then the Policy will cease to be effective.
The Policy took effect as of today and will remain effective until the first meeting of the Board of Directors to be held after the ordinary general shareholders meeting in 2015 (three-year sunset). The Board of Directors plans to propose the outline of the Policy at the ordinary general shareholders meeting to be held in June this year (hereinafter the “SH meeting”) as an agendum for affirmative votes. In case not more than a half of Sumitomo Metals shareholders present or represented at the SH meeting vote for the affirmative, then the Policy will be abolished immediately.
Sumitomo Metals plans to merge with Nippon Steel Corporation (hereinafter referred to as“Nippon Steel”) , with Nippon Steel being the surviving company, on the effective date of October 1, 2012. In case such merger takes effect, then the Policy will cease to be effective.
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