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Kodak Announces Tender Offer for Full Ownership of Chinon
Jan 23, 2004
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Eastman Kodak Company said that it will launch a tender offer, through its Japanese subsidiary, to purchase all the common shares of Chinon Industries, Inc. that Kodak's subsidiary doesn't already own.

According to the digital camera company, the move will help Kodak increase its worldwide design and manufacturing capability for consumer digital cameras and accessories, another advance in the digitally oriented growth strategy that Kodak announced in September. If successful, the company said that total cost to Kodak will be roughly $35 million for Chinon's outstanding equity and associated costs.

Chinon Industries, established in 1948, is engaged in research, development, and manufacturing of digital cameras. Kodak is Chinon's largest customer, accounting for nearly 100 percent of Chinon's revenue for its fiscal year ending March 31, 2003, which was Y29,892 million or about U.S. $280 million at current exchange rates. The tender offer is expected to be followed by a complete privatization of Chinon Industries pursuant to the Industrial Revitalization law under the Japan Commercial Code.

Upon completion of the tender offer and privatization process, which is being conducted through the company's Japanese subsidiary, Kodak will merge its Digital Camera Research and Development center in Yokohama, Japan, with Chinon to form a unified Kodak Digital Product Development Center. The center will allow Kodak to improve its overall operating and manufacturing efficiency related to consumer digital cameras.

"As consumer demand increases for digital cameras, building a nimble, smart organization that can meet market needs makes good business sense and helps drive our growth strategy," said Bernard Masson, president, Digital & Film Imaging Systems, and a senior vice president, Eastman Kodak Company. "The purchase of the remainder of Chinon enables Kodak to develop one organization in Japan that is stronger, more efficient and more effective than what we currently have. In turn, we expect to use this strength to build our presence in the world's second-largest market for consumer digital cameras."

Kodak intends to purchase, through its indirect subsidiary, the remaining 41 percent (9,306,161 shares) of the outstanding common shares of Chinon not currently held by its subsidiary. Kodak said the offer is being made with the full agreement and support of the Chinon board of directors, which passed a resolution of support for the tender.

The tender offer process is scheduled to begin on Jan. 23, 2004 and will continue for a period of 24 working days, closing on Feb. 26, 2004. Kodak will offer to buy all remaining outstanding common shares of Chinon at a price of 350 yen per share. Based on the closing price on Jan. 20, 2004, Kodak said the price represents a 25-percent premium to the average closing price of the previous three months and a 37 percent premium over the average closing price of the last month. Kodak, which through its subsidiary currently owns 59 percent of Chinon, expects to announce the results of the tender offer by the end of February.

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