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Formal Decision Taken on Absorption-type Split of MHI's Aero Engine Business to Consolidated Subsidiary
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Tokyo, December 15, 2016 - As announced on August 4, 2016, Mitsubishi Heavy Industries, Ltd. (MHI) is planning to transfer its business operations in defense aero engines to Mitsubishi Heavy Industries Aero Engines, Ltd. (MHIAEL), a Group company, through an absorption-type company split arrangement. Today, a formal decision was taken on concluding the absorption-type split agreement with MHIAEL as described below. Because the split involves a business transfer to a consolidated subsidiary, some disclosure details and contents have been omitted.
1. Aims of the Company Split
The decision to transfer MHI's defense aero engine business operations to MHIAEL was taken in a quest to achieve greater flexibility and agility in related business management and to put in place a structure conducive to swift decision-making by consolidating commercial aero engine business and the defense aero engine business. By integrating these two strongly related businesses at MHIAEL, the objectives are to achieve further expansion in related business scale and to strengthen initiatives into new areas and new technologies by way of response to the globalization trend underway today in the aero engine industry.
2. Overview of the Company Split
(1) Schedule
| Contract signing | December 15, 2016 |
|---|---|
| Effective date | April 1, 2017 (subject to change) |
* As the company split will be a simple absorption-type split pursuant to Article 784, Paragraph 2 of the Companies Act of Japan, approval at a general shareholders meeting as stipulated in Article 783, Paragraph 1 of that Act is not required.
(2) Company Split Method
This will be a simple absorption-type split, with MHI as the splitting company and MHIAEL as the successor company.
(3) Allocation Relating to Company Split
Coinciding with the company split, MHIAEL will issue 10 shares of common stock to be allocated in full to MHI.
(4) Handling of Stock Acquisition Rights and Bonds with Stock Acquisition Rights Accompanying the Company Split
Obligations based on the stock acquisition rights of MHI, the splitting company, will neither be transferred to nor succeeded to by MHIAEL, the successor company. MHI has not issued any bonds with stock acquisition rights.
(5) Changes in Capital Amount Accompanying the Company Split
The company split will result in no decrease either in MHI's capital or in its capital reserve.
(6) Rights and Obligations Transferred to the Successor Company
- 1)The successor company will succeed to the intellectual properties and related assets, rights and obligations pertaining to the aero engine business of the splitting company (with the exception of anything stipulated as exempt in the split agreement).
- 2)Any and all liabilities or other obligations of the splitting company which the successor company succeeds to shall be succeeded cumulatively.
(7) Outlook on Performance of Obligations
Any obligations which the splitting company and the successor company should bear as a result of the company split will be duly met.
3. Outline of the Companies Involved in the Company Split
| Splitting Company (as of March 31, 2016) | Successor Company (as of March 31, 2016) | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (1) Name | Mitsubishi Heavy Industries, Ltd. (MHI) | Mitsubishi Heavy Industries Aero Engines, Ltd. (MHIAEL) | ||||||||||||||||
| (2) Head Office | 16-5, Konan 2-chome, Minato-ku, Tokyo | 1200 Higashi-tanaka, Komaki City, Aichi Prefecture (located within the Nagoya Guidance & Propulsion Systems Works Main Plant) | ||||||||||||||||
| (3) Representative | Shunichi Miyanaga President and CEO | Katsuyuki Shimauchi President and CEO | ||||||||||||||||
| (4) Business | Manufacture, etc. of ships, marine engines, power systems, machinery, steel structures, aircraft, aerospace systems, industrial machinery, special vehicles, etc. | * Design, manufacture, repair and marketing of aero engines, their parts and components, and ancillary equipment * Design, manufacture, repair and marketing of gas turbine engines for power generation or mechanical drives, parts and components, and ancillary equipment * All business ancillary to the foregoing | ||||||||||||||||
| (5) Capital | 265,608 million yen | 6,000 million yen | ||||||||||||||||
| (6) Establishment | January 11, 1950 | October 1, 2014 | ||||||||||||||||
| (7) Number of issued shares | 3,373,647,813 | 1,400 | ||||||||||||||||
| (8) Fiscal year end | March 31 | March 31 | ||||||||||||||||
| (9) Major shareholders and shareholdings |
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| (10) Fiscal Status and Earnings Results during the Most Recently Completed Fiscal Year | ||||||||||||||||||
| Splitting company (consolidated) | Successor company (non-consolidated) | |||||||||||||||||
| Net assets | 1,998,078 million yen | 61,923 million yen | ||||||||||||||||
| Total assets | 5,491,799 million yen | 126,444 million yen | ||||||||||||||||
| Net assets per share | 500.30 yen | 51,941,319.18 yen | ||||||||||||||||
| Net assets per share | 500.30 yen | 51,941,319.18 yen | ||||||||||||||||
| Revenues | 4,046,810 million yen | 44,050 million yen | ||||||||||||||||
| Operating income | 309,506 million yen | 1,156 million yen | ||||||||||||||||
| Ordinary income | 272,500 million yen | 580 million yen | ||||||||||||||||
| Net income | 63,834 million yen | 444 million yen | ||||||||||||||||
| Net income per share | 19.02 yen | 448,991.50 yen | ||||||||||||||||
(11) Description of Business being Split or Succeeded to
Design, manufacture, quality assurance, marketing and after-sale servicing of defense aero engines and related parts (including ancillary businesses)
(12) Earnings of Business being Split or Succeeded to
| Business being split (a) | MHI total (consolidated) in FY ended March 2016 (b) | Percentage (a/b) | |
|---|---|---|---|
| Revenues | 12,499 million yen | 4,046,810 million yen | 0.3% |
(13) Assets and Liabilities of Business being Split or Succeeded to
| Assets | 6,900 million yen |
|---|---|
| Liabilities | 5,900 million yen |
4. Status of Splitting Company after Split
| (1) Name | Mitsubishi Heavy Industries, Ltd. |
|---|---|
| (2) Head Office | 16-5, Konan 2-chome, Minato-ku, Tokyo |
| (3) Representative | Shunichi Miyanaga, President and CEO |
| (4) Business | Manufacture, etc. of ships, marine engines, power systems, machinery, steel structures, aircraft, aerospace systems, industrial machinery, special vehicles, etc. |
| (5) Capital | 265,608 million yen |
| (6) Fiscal year end | March 31 |
5. Status of Successor Company after Split
| (1) Name | Mitsubishi Heavy Industries Aero Engines, Ltd. |
|---|---|
| (2) Head Office | 1200 Higashi-tanaka, Komaki City, Aichi Prefecture (located within the Nagoya Guidance & Propulsion Systems Works Main Plant) |
| (3) Representative | Katsuyuki Shimauchi, President and CEO |
| (4) Business | * Design, manufacture, repair and marketing of aero engines, their parts and components, and ancillary equipment * Design, manufacture, repair and marketing of gas turbine engines for power generation or mechanical drives, parts and components, and ancillary equipment * All business ancillary to the foregoing |
| (5) Capital | 6,000 million yen |
| (6) Fiscal year end | March 31 |
6. Outlook
Impact from the company split on MHI's earnings will be minimal, on both a consolidated and non-consolidated basis.
About MHI Group
Mitsubishi Heavy Industries (MHI) Group is one of the world’s leading industrial groups, spanning energy, smart infrastructure, industrial machinery, aerospace and defense. MHI Group combines cutting-edge technology with deep experience to deliver innovative, integrated solutions that help to realize a carbon neutral world, improve the quality of life and ensure a safer world. For more information, please visit www.mhi.com or follow our insights and stories on spectra.mhi.com.