|
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|
The Carlyle
Group
Kyocera Corporation
KDDI Corporation |
| The
Carlyle Group and Kyocera's Acquisition of DDI Pocket
Agreed with KDDI |
The Carlyle
Group (Head office: Washington D.C., the United States;
Representative in Japan: Tamotsu Adachi, hereinafter referred
to as "Carlyle"), Kyocera Corp. (Head office: Fushimi-ku,
Kyoto, Japan; President: Yasuo Nishiguchi; hereinafter
referred to as "Kyocera") and KDDI Corp. (Head office:
Shinjuku-ku, Tokyo, Japan; President: Tadashi Onodera;
hereinafter referred to as "KDDI") reached an agreement
today whereby a consortium of Carlyle and Kyocera would
acquire the business of DDI Pocket, Inc. (Headquarters:
Minato-ku, Tokyo, Japan; President: Takeo Yamashita; hereinafter
referred to as "DDI Pocket"), a subsidiary of KDDI.
Under the agreement, the company that succeeds DDI Pocket's
business (the "NewCo") would be owned 60% by Carlyle,
30% by Kyocera and 10% by KDDI. In order to enhance its
focus in its core business, KDDI, which currently owns
approximately 81% of DDI Pocket, would hold a 10% stake.
Kyocera, which currently owns approximately 13% of DDI
Pocket, would invest in 30% to expand its focus on PHS
related products business. Carlyle would become the controlling
shareholder. This acquisition assumes that, and an agreement
has been reached whereby, the current management of DDI
Pocket will continue its involvement in the [day to day]
management of NewCo. It is also assumed that current DDI
Pocket employees will remain with the business, with no
employment adjustments planned, and it is our basic policy
that current employee's compensation and benefits will
not be worse than they are currently, for the foreseeable
future. Given that the management and employees will continue
in their current roles, we believe that the transaction
will have no [negative] impact on existing customers and
business partners of DDI Pocket.
DDI Pocket's subscribers have been increasing over the
last several years in its core service of flat-rate mobile
data communication services (Air H"), and DDI Pocket has
been growing strongly as the leader in the mobile data
communications market. Carlyle highly regards DDI Pocket's
PHS business, especially DDI Pocket's medium- to long-term
competitive advantage and growth potential in the corporate
mobile data communications market. KDDI had been considering
the best option for DDI Pocket's business. This agreement
is a result of Carlyle forming a consortium with Kyocera
and approaching KDDI regarding a potential investment
in DDI Pocket, and KDDI's decision to accept the proposal
in light of its renewed focus in its core businesses.
Carlyle has a broad range of global investment experience
in the telecommunications sector. Kyocera has not only
been a major vendor to DDI Pocket, but also has been supporting
DDI Pocket's business through technology development and
commercialization for the development of the PHS business
since its earliest stages. Under the powerful support
from these two companies, NewCo will take advantage of
its core strength in PHS, including its 160,000 base station
equipment nationwide and its established position as a
market leader as well as cost competitiveness and other
strengths of PHS. NewCo will aggressively develop the
business, by offering new services, particularly by increasing
communication speeds to provide more advanced, more cost
competitive and more convenient mobile data communication
services at flat rates. Based on these service offerings,
NewCo will seek to grow the business through aggressive
marketing efforts, particularly in the corporate data
communications market, which is expected to expand further
in the future.
Carlyle Group Representative in Japan Tamotsu Adachi made
the following comments regarding the transaction: "Telecommunications
investments are one of Carlyle's areas of strengths and
Carlyle has a track record of success globally. Looking
at operations of DDI Pocket from various angles, we concluded
that DDI Pocket's PHS business is expected to see growth
as the company maintains a strong competitive edge going
forward. We have been particularly impressed by the knowledge
and experience of the current DDI Pocket management in
the PHS business and we look forward to working in an
attempt to enhance the enterprise value of DDI Pocket.
In conclusion, we believe that this transaction provides
the best opportunity for Carlyle to serve for further
development of PHS, a telecommunications technology originated
in Japan."
Kyocera President Yasuo Nishiguchi commented: "The PHS
business run by DDI Pocket has recently been producing
steady results through deployment of competitive flat
rate mobile data communication services. With further
expansion of NewCo's business under the new shareholders
going forward, we believe we can strengthen our domestic
communication system equipment business operating base,
in addition to our business expansion in foreign markets.
We believe that this joint investment with Carlyle, which
has a deep track record in telecommunications investments,
will provide strong support for further development of
NewCo."
Tadashi Onodera, President of KDDI, also made the following
statement: "With its unique position, DDI Pocket has had
a strong operation, but we have been discussing what will
be the best for us, from the viewpoint of focusing on
our core business, as well as for DDI Pocket's customers.
We approached multiple parties and concluded that this
proposal is a very attractive scheme for us as well as
for DDI Pocket's business, and we reached agreement today."
DDI Pocket President Takeo Yamashita said as follows.
"With the support of new shareholders, we are confident
that we can realize the business potential of PHS more
than before. Combining Carlyle's global investment experience
in telecommunications, collaboration with Kyocera, our
partner since inception, and continued collaboration with
KDDI, our senior management and employees will work together
to create new added value." |
| The entire operations of
DDI Pocket will be separated and merged into a special
purpose company held by the Consortium, in which Carlyle,
Kyocera and KDDI invest, in exchange for which the Consortium
will pay ¥220.0 billion in cash. Any cash remaining
after repayment of net interest-bearing debt of DDI Pocket
outstanding at closing will be paid to existing DDI Pocket
shareholders, after which DDI Pocket will be liquidated. |
| The estimated timetable
for the transaction is as follows: |
| June
21, 2004 |
|
Signing of
agreement |
| Around
August 10, 2004 |
Corporate
division of DDI Pocket approved at its general shareholders
meeting |
| October
1, 2004 |
Corporate
division and merger of the entire DDI Pocket business
(Begin business as NewCo) |
| Around
October 15, 2004 |
Complete corporate
division registration
Trigger escrow agreement |
| During
Fiscal Year 2005/3 |
Liquidation
of DDI Pocket |
The transaction will take
the form of a leveraged buyout, raising acquisition funds
from non-recourse loans through a syndicate of domestic
and foreign financial institutions, and equity capital
from new shareholders including the Consortium. Subject
to approval for corporate division by the general meeting
of DDI Pocket shareholders and other requirements, the
transaction is expected to close by October 1, 2004. Subsequently,
DDI Pocket will be liquidated.
This scheme has been chosen after careful consideration
of various risks and transaction costs involved in this
Transaction which constitutes not only a change in control
but also the refinancing of all the debt.
Contacts at Each Company Regarding this Transaction
The Carlyle Group: Weber Shandwick Worldwide Inc. TEL:
03-5208-4350
Kyocera Corporation: Head office corporate public relations
TEL: 075-604-3727; Tokyo corporate public relations TEL:
03-3274-1577
KDDI Corporation: Public relations department TEL: 03-6678-0690 |
| Apart from statements
of historical fact, this press release may contain statements
of future projections. These future projections include
known and unknown information, uncertain factors and other
factors. Please note that, because of these factors, forward
looking statements, business activity, deployment or financial
states, whether explicitly stated or included in, statements
of future projections could differ materially from actual
results. |
|
| The Carlyle Group is one
of the world's largest private equity company and has
under management 18.3 billion US dollar (approximately
2 trillion yen), and since establishment in 1987 317 investment
track record. There are 545 staffs in 14 countries worldwide
involved in investment activities of buyouts, venture,
real estate, high-yield bonds, turn-around manufacturing,
consumer goods, energy, healthcare, telecom/media, transportation
and other industries. In Japan, there are 15 investment
professionals who are mainly Japanese, and based on a
pro-management principle, conduct investment activities
oriented towards management buyouts by current management
of operating division of large corporations or middle-sized
companies. |
| Kyocera group comprises
of over 170 around the world, has approximately 58,000
employees, and had consolidated sales of 1,140 billion
yen in March 2004. Currently, the company has a wide range
of businesses including fine ceramics and other electronic
parts, solar powered batteries, mobile phone terminals,
and PHS phone terminals and cell stations. In recent years,
Kyocera has been focusing on three industrial fields of
"communication information", "environment conservation",
and "lifestyle" as target markets for the 21 century,
and concentration of group's management resources in these
fields is proving Kyocera's comprehensive strengths. Communication
information industry market is an important field in supporting
a ubiquitous network which evolves rich communication,
and Kyocera comprehensively provides various tools including
parts, equipments, services, and network. Kyocera aims
to contribute to the ever expanding global network society. |
| (1) |
Corporate
Name: |
Kyocera Corp. |
| (2) |
Representative: |
Yasuo Nishiguchi |
| (3) |
Head
Office: |
6 Takeda Tobadono-cho,
Fushimi-ku, Kyoto |
| (4) |
Established: |
April 1, 1959 |
| (5) |
Business
Description: |
Fine Ceramic,
Electronic Device, Equipments, Other Businesses |
| (6) |
Capital: |
115,703 million
yen |
| (7) |
Shares
Outstanding: |
191,309,290
shares |
| (8) |
Financial
Year End: |
March |
| (9) |
Number
of Employees: |
13,604 (as
of March end 2004) |
| KDDI is a diversified telecommunication
operator formed by the merger of DDI, KDD and IDO in 2000,
and is the only domestic company that provides both mobile
communication service and broadband service. The number
of subscribers to the mobile phone services under the
au and TuKa brands is over 21 million, and fixed-line
subscribers (MyLine) is approximately 9 million. The 73
KDDI group companies had approximately 13,000 staffs and
sales in FY2004/3 was 2,846.1 billion yen. At KDDI, aggressive
improvement of communication environment in preparation
for the coming ubiquitous network society is underway
and KDDI is aiming to become a "ubiquitous solution company"
which provides high value-added solutions. |
| (1) |
Corporate
Name: |
KDDI Corp. |
| (2) |
Representative: |
Tadashi Onodera |
| (3) |
Head
Office: |
2-3-2, Nishishinjuku,
Shinjuku-ku, Tokyo, Japan |
| (4) |
Established: |
June 1, 1984 |
| (5) |
Business
Description: |
Telecommunication
Business |
| (6) |
Capital: |
141,851 million
yen |
| (7) |
Shares
Outstanding: |
4,240,880
shares |
| (8) |
Financial
Year End: |
March |
| (9) |
Number
of Employees: |
8,985 (as
of March end 2004) |
| DDI Pocket is Japan's largest
PHS operator, established in 1994. Consumer and business
users combined, 3 million customers use DDI Pocket's voice
and data communication services. Centered on the first
wireless nationwide flat rate AirH" service, DDI Pocket
will provide further developed PHS services going forward,
as the leading company in PHS. |
| (1) |
Corporate
Name: |
DDI Pocket,
Inc. |
| (2) |
Representative: |
Takeo Yamashita |
| (3) |
Head
Office: |
3-4-7, Toranomon,
Minato-ku, Tokyo, Japan |
| (4) |
Established: |
July 1, 1994 |
| (5) |
Business
Description: |
Fine Ceramic,
Electronic Device, Equipments, Other Businesses |
| (6) |
Capital: |
75,251 million
yen |
| (7) |
Shares
Outstanding: |
250,420 shares |
| (8) |
Financial
Year End: |
March |
| (9) |
Number
of Employees: |
818 (as of
March end 2004) |
| DDI Pocket Transfer
Scheme |
| Step
1: October 1 |
 |
Step
2: Mid-October |
 |
Step
3: During the fiscal year |
 |
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