Mitsui & Co., Ltd. ("Mitsui"; Head Office: Tokyo; President and CEO: Tatsuo Yasunaga) has entered into a memorandum of understanding with NIPPON STEEL & SUMIKIN BUSSAN CORPORATION ("NSSB"; Head Office: Tokyo; President: Kenji Hiwatari), pursuant to which both parties will commence discussions (the "Discussions") regarding transferring a part of the iron and steel products business of the Mitsui & Co. group to NSSB (the "Business Transfer"), with the target date of the Business Transfer being April 2018, and regarding Mitsui's additional acquisition of shares in NSSB for the purpose of strengthening the capital relationship (the "Share Acquisition"; the "Transaction" together with the Business Transfer).

I. Background of the Discussions

Changes in the domestic and overseas business environment surrounding the steel industry have been accelerating, and it is expected that competition will be increasingly severe. In such situation, the intention of Mitsui, which has been considering strengthening its earnings base through reorganization of its business toward further growth of steel business, matched the steel products business policy of NSSB. NSSB, as the core trading company in the NIPPON STEEL & SUMITOMO METAL CORPORATION group, aims at further growth and development of its steel business. Mitsui and NSSB have agreed to commence the Discussions regarding transferring a part of the iron and steel products business of the Mitsui & Co. group to NSSB, as well as Mitsui's additional acquisition of shares in NSSB to raise the ratio of its voting rights and to strengthen the capital relationship of both companies and deepen their collaborative relationship. Both companies will pursue enhancement of corporate value through consummating the Transaction with the aim of expanding their respective business bases, strengthening their sales forces, and enhancing business efficiency by effective use of management resources.

II. Purpose of the transaction

Mitsui aims to realize the following respective items by deepening its collaborative relationship with NSSB through the Transaction.

1. Strengthening earnings base in steel business

Mitsui and NSSB will pursue constructing a firm earnings base by combining the sales network, manufacturing and processing bases, sales force, and customer base of both companies, as well as the products and services that each has strength in, and maximizing synergistic effects through mutual complementarity, thus enhancing business competitiveness.

2. New business development by exercising comprehensive business engineering capabilities

Mitsui and NSSB will pursue the creation and realization of new business opportunities by making the best use of the business assets and comprehensive business engineering capabilities of Mitsui, combining their respective proprietary sales force and business competitiveness, and providing a total solution satisfying the needs of various customers around the world.

3. Further enhancement of customer satisfaction

Mitsui and NSSB will pursue providing customers with better services by mutually utilizing the knowledge, comprehensive strength, and value chain in steel business developed over many years by both companies.

III. Method of the Transaction and related matters

1. The Business Transfer

Although the Mitsui & Co. group intends to transfer a part of its iron and steel products business to NSSB, the details of the scope, the method of the transfer, the conditions, including considerations, and related matters will be discussed between both companies going forward.

2. The Share Acquisition

Mitsui will pursue making NSSB an equity-method associated company by additionally acquiring shares in NSSB and raising the ratio of its voting rights up to 20%. In regard to the method of the Share Acquisition, a combination of a third-party allotment and acquisitions from existing shareholders via counterparty transactions outside of the stock market and transactions in the stock market is contemplated. Both companies plan to discuss the detailed conditions, including the method, the schedule, and the relevant consideration.
Both companies, however, plan to proceed with the Discussions on the premise that the number of shares to be allocated to Mitsui by third-party allotment is up to 2.5 million in consideration of matters, including the need for funding, the scale of dilution, the shareholder composition of NSSB, and other related matters.

3. Schedule

Mitsui will immediately commence the Discussions with NSSB and, once an agreement is reached, will conclude a definitive agreement, with the target date being September 2017. Pursuant to the definitive agreement, both companies plan to consummate the Business Transfer, with the target date being April 2018, after obtaining clearance and approvals from relevant domestic and overseas competition authorities and taking other required procedures.

(1) March 22, 2017 (today)       Execution of the memorandum of understanding regarding the Discussions
(2) September, 2017 (target)   Execution of a definitive agreement
(3) April, 2018 (target)               Effective date of the Business Transfer

Although the execution of third-party allotment of the Share Acquisition is envisaged for April, 2018, both companies plan to discuss the detailed schedule, together with the detailed method of the Share Acquisition.

IV. Prospects

Both companies intend to discuss pending matters and will make a separate announcement once an agreement is reached.
There will be no adverse effect on Mitsui's financial performance for the current fiscal year. The effect on financial performance for subsequent fiscal years is unknown.

(Reference Material) Overview of NSSB

Please scroll horizontally to look at table below.

(As of the end of March, 2016, except for special notes)

1. NSSB implemented a reverse share split by making every 10 shares into 1 share, with the effective date of October 1, 2016.
As such, the number of outstanding shares as of today is 30,957 thousand.

Notice:
This announcement contains forward-looking statements. These forward-looking statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently possessed by it and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, financial position or cash flows to be materially different from any future results, financial position or cash flows expressed or implied by these forward-looking statements. These risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest Annual Securities Report and Quarterly Securities Report, and Mitsui undertakes no obligation to publicly update or revise any forward-looking statements.
This announcement is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.