Notice regarding transfer of Hamatite business

The Yokohama Rubber Co., Ltd., has decided to transfer the Hamatite business operated by the Company and Yokohama Group companies to Sika Group, a specialty chemicals company headquartered in Switzerland. The transfer involves the Hamatite businesses operated by Yokohama Rubber, its wholly owned consolidated domestic subsidiary Yokohama Industrial Products Japan Co., Ltd., and overseas Yokohama Group companies Yokohama Industries Americas Inc. (YIA), Yokohama Industrial Products – Hangzhou Co., Ltd. (YIPHZ), and Yokohama Rubber (Thailand) Co., Ltd. (YRTC). The transfers are scheduled to be completed on November 1, 2021.

1.Background and purpose of the business transfer

Yokohama Rubber started the Hamatite business in 1958 and has since grown the business with a focus on automotive and construction sealants and adhesives. The Hamatite series of sealing and adhesive materials manufactured and sold by the Yokohama Group has won the support of many customers who highly evaluate the products’ high quality and superior performance. However, the current market environment has become increasingly severe and after thoroughly considering how best to achieve further growth and development of the Hamatite business, the Company decided that a future vision for the business’ growth could be best developed together with a global industry leader. Accordingly, Yokohama Rubber has decided to transfer the Hamatite business to Sika Group. The decision is consistent with Yokohama Rubber’s new medium-term management plan, Yokohama Transformation 2023 (YX2023), which was unveiled in February and includes strategies for each of the Company’s businesses that target the “transformation” of the Yokohama Group into a corporate group and is able to sustain growth into the next generation.

2.Outline of transfer process

(1) Yokohama Rubber will conduct an incorporation-type split of its Hamatite business into a newly established wholly owned subsidiary (company name yet to be determined), referred to hereinafter as Successor Company #1.

(2) Yokohama Rubber will conduct an absorption-type split of the Hamatite business of its consolidated subsidiary Yokohama Industrial Products Japan Co., Ltd., into a newly established wholly owned subsidiary (company name yet to be determined), referred to hereinafter as Successor Company #2. The business and common stock of Successor Company #2 will then be merged into Successor Company #1, when that company is established.

(3) 100% of the common stock of Successor Company #1 will be transferred to Sika Ltd., which is the Japanese subsidiary of the Sika AG.

(4) YIA will transfer the assets and liabilities of its Hamatite business to a special purpose vehicle to be established by Sika Corporation (Sika USA).

(5) YIPHZ will transfer the assets and liabilities of its Hamatite business to a newly established company (company name yet to be determined), referred to hereinafter as Successor Company #3, which will be established as a wholly owned subsidiary of Yokohama Rubber’s wholly owned subsidiary Yokohama Rubber (China) Co., Ltd. (YCH). Thereafter, 100% of the common stock of Successor Company #3 will be transferred to Sika (China) Ltd.

(6) YRTC will transfer the assets and liabilities of its Hamatite business to Sika Thailand.

3.Overview of the successor companies

Successor Company #1

Name: To be determined
Location: To be determined
Title & name of representative: Representative Director & President, Sachio Oshima (current acting head of Hamatite Div. of Yokohama Rubber Co., Ltd.) (planned)
Business description: Manufacture, sale and R&D in Japan and overseas of construction-use sealants, automotive adhesives, and other adhesive materials
Capital: To be determined
Establishment: To be determined

Successor Company #2

Name: To be determined
Location: To be determined
Title & name of representative: Representative Director & President, Shin Murata (Member of the Board and Managing Officer of Yokohama Industrial Products Japan Co., Ltd., Head of Hamatite Sales Div.) (planned)
Business description: Sales in Japan of construction-use sealants, automotive adhesives, and other adhesive materials
Capital: To be determined
Establishment: To be determined

Successor Company #3

Name: To be determined
Location: To be determined
Title & name of representative: Representative Director & President, Tatsuhiko Ando (current General Manager Sales Dept. of Yokohama Industrial Products – Hangzhou Co., Ltd.) (planned)
Business description: Manufacture & sale of automotive adhesives, and other adhesive materials
Capital: To be determined
Establishment: To be determined

4.Profile of transferee’s Japan subsidiary

Name: Sika Ltd.
Location: Shinagawa Intercity Tower B, 10th floor 2-15-2, Konan, Minato-ku, Tokyo
Title & name of representative: Representative Director & President, Kenichi Banba
Business description: Manufacture, sale and R&D of various civil engineering, construction and industrial chemical products
Capital: JPY 490 million
Establishment: August 5, 1955 (Registered as a Japanese corporation)

Profile of transferee’s parent company

Name: Sika AG
Location: Zugerstrasse 50, CH-6341 Baar (ZG), Switzerland
Title & name of representative: CEO, Paul Schuler
Business description: Manufacture, sale and R&D of various automotive, civil engineering, construction and industrial chemical products
Capital: CHF 1.4 million (as of December 31, 2020)
Annual sales: CHF 7.88 billion (2020)
Establishment: 1910

5.Yokohama Rubber Group Hamatite business result (FY2020)

Sales revenue: JPY 19.5 billion
Business profit: JPY 900 million
Adjusted EBITDA*: JPY 1.6 billion
* Adjusted EBITDA refers to EBITDA excluding one-off expenses. It is not an IFRS-based figure.

6.Schedule of business transfer

Board of Directors’ resolution date: March 30, 2021*
Contract date: April 28, 2021
Business transfer date: November 1, 2021 (planned)
*The Board of Directors resolution entrusted President and Chairman of the Board Masataka Yamaishi with the final approval of the business transfer and the transfer contract.

7.Comments from company representatives

Yokohama Rubber President, Chairman of the Board Masataka Yamaishi

“Yokohama Rubber’s Hamatite business has a proud 60-year history, during which it has consistently supplied customers with high-quality, superior-performing products based on our advanced technologies. The Hamatite business has been a highly specialized among our businesses, which is mainly the tire business. I am confident that by collaborating with Sika Group, one of the world’s largest specialty chemical companies, the Hamatite business will achieve further growth and continue to meet the high expectations of all its stakeholders. The Yokohama Rubber’s MB (Multiple Business) segment meanwhile will become stronger by concentrating its resources on its core businesses in line with our new medium-term management plan, Yokohama Transformation 2023 (YX2023), that we announced on earlier this year on February 19.”

Sika AG CEO Paul Schuler

“The acquisition fits perfectly with our Growth Strategy. Hamatite brings leading technology, know-how, and skilled people that will accelerate Sika’s market penetration in the automotive and construction industries. The global manufacturing footprint will increase our ability to serve our automotive customers worldwide – both at a global and a local level. We warmly welcome the successful team from Hamatite into the Sika family and are excited to work together in the future.”

8.Other considerations

As for the business transfer’s impact on Yokohama Rubber’s earnings, management expects to post a gain on the sale of about ¥5 billion (after tax) recorded under profit or loss from a discontinued business separately from continuing business. However, the exact amount is currently being examined and is therefore subject to change.