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Conclusion of Agreement for merger Between Universal Shipbuilding Corporation and IHI Marine United

JFE Holdings, Inc. ("JFE Holdings") and IHI Corporation ("IHI") announced that they concluded a final agreement yesterday for the Management Integration (merger) of their respective subsidiaries Universal Shipbuilding Corporation ("Universal Shipbuilding") and IHI Marine United Inc. ("IHI Marine United"). The Management Integration, which will be executed on October 1, 2012, follows the conclusion of a basic agreement on January 30, 2012 and joint discussions by a preparatory committee. The Management Integration is subject to approval at the required shareholders meetings, followed by notification to relevant authorities, including those overseas, and then obtaining official approval and licensing.
Also, the companies will announce their candidates for the executive officers of the new company, Japan Marine United Corporation ("Japan Marine United"), which will be established by this Management Integration.
1. Purpose of Management Integration
Japan Marine United will aim to achieve enhanced design and development capabilities by combining the respective engineering resources of Universal Shipbuilding and IHI Marine United, and to optimize the operation of its production facilities in line with the respective characteristics of the two original companies' shipyards. Among the various synergies that it will expect to realize rapidly, the product lineup will be expanded, productivity at each shipyard will be improved by consolidating ship types, and product development will be accelerated by bringing together energy- saving and eco-friendly technologies. In addition, capabilities for responding to large-lot orders and procuring equipment and materials under more competitive terms will be realized through expanded scale, and efficiencies will be improved through the integration of administrative functions. Through such efforts, the company will attempt to win contracts amid intense market competition and to establish the top position in the industry in terms of collective strengths, despite harsh business conditions, including worldwide supply-demand gaps and the record-strong yen trading frequently at below 80 yen to the dollar.
After the Management Integration, with the interests of their shareholders in mind, JFE Holdings and IHI will support the initiatives of Japan Marine United. They will respond to the expectations of their shareholders by working to improve the new company's business performance and supporting its new synergies with their respective steel plates, marine diesel engines and plant engineering capabilities.
2. Outline of Management Integration
(1) Schedule
August 27, 2012 Conclusion of Merger Agreement
September 27, 2012 (planned) General shareholders meetings of Universal Shipbuilding and IHI Marine United to approve Merger Agreement
October 1, 2012 (planned) Effective date of Merger
(2) Method
Management integration through merger whereby Universal Shipbuilding will become the surviving entity
(3) New share allotment
At the time of the merger, Universal Shipbuilding will issue 637 new shares of common stock and allot all of them to IHI, a shareholder of IHI Marine United. To ensure fairness and appropriateness for the shareholders of the companies involved, the value of the shares was determined in negotiations between the companies based upon their respective finances, assets and financial outlooks, as well as the opinions of commissioned third-party organizations regarding the appropriate merger ratio.
3. Outline of New Company
Source: IHI Corp.