Nissha Co., Ltd. (hereinafter, “Nissha”), Nissha Printing Communications, Inc. (hereinafter, “Nissha Printing Communications”), Nissha’s subsidiary in charge of Information and Communication business, and Kyodo Printing Co., Ltd. (hereinafter, “Kyodo Printing”) concluded a share purchase agreement on September 4, 2018, for the transfer of Nissha Printing Communications’ business in Tokyo area (market and business foundation, with exceptions, in the Tokyo area; hereinafter, the “Business”) to Kyodo Printing.

Background to Transfer
The Japanese general printing market has been shrinking against a backdrop of stagnating demand and other factors triggered by the diversification of information media. In the light of this market environment, Nissha Printing Communications and Kyodo Printing concluded the business alliance contract and the production consignment contract in March 2016, and have since worked toward constructing a collaborative relationship for the outsourcing of production from Nissha Printing Communications to Kyodo Printing, reorganizing their production system, establishing a quality control system, and streamlining and optimizing procurement activities and distribution operations.
The two companies moved to implement the transfer of the Business based on their collaborative partnership and relationship of trust built from 2016 to the present. As a basic policy, Nissha Printing Communications will reduce its business in the Tokyo area and consolidate its business foundation in the Kansai area as a central field where it can maximize its strength in high-accuracy color reproduction, with Kyodo Printing strengthening the revenue base of its Information Communication business segment. The transfer seeks to appropriately allocate management resources to markets and business domains in which both companies may leverage their assets, and thereby improve business revenues.

Outline of Transfer

• Nissha Printing Communications will execute an absorption-type split (summary form) of the business into a newly established subsidiary, and as of January 7, 2019, transfer 90% of the issued shares of such subisidiary to Kyodo Printing. Nissha Printing Communications will retain the remaining 10% of the issued shares.
• The market area covered by the transfer is at present worth about 7 billion yen and about 80% of net sales in the Tokyo area. Nissha Printing Communications will continue to operate in the remaining 20% of its market area.
• The business foundation covered by the transfer includes Nissha Printing Communications employees (approx. 30) and tangible and intangible assets.

Future Projection
With the conclusion of the share purchase agreement, Nissha Printing Communications will undertake business reorganization with a focus on consolidating its business foundation in the Kansai area. Sales are expected to decline starting in the next fiscal year; however, the company will aim to improve business revenues through measures such as streamlining with the contraction of business in the Tokyo area, integration and closure of factories operated by the subsidiary, and optimization of business in the Kansai area.
The new subsidiary is scheduled to commence operations on January 7, 2019.

Impact on Business Results
The impact of the transfer on Nissha’s consolidated business results in the current fiscal year is expected to be minor.