Fujifilm to Acquire Wako Pure Chemical Industries from Takeda Pharmaceutical by Tender Offer

FUJIFILM Corporation (President & COO: Kenji Sukeno) (“Fujifilm”) is pleased to announce that it approved the acquisition of a leading reagent manufacturer Wako Pure Chemical Industries, Ltd. (President: Shinzo Kobatake) (“Wako”) at today’s Board of Directors Meeting. Fujifilm signed an agreement with Takeda Pharmaceutical Company Limited (President & CEO: Christophe Weber) (“Takeda”) whereby the Takeda group*1 agreed to tender all of the common shares of Wako held by the Takeda group in the tender offer (the “Tender Offer”) on the first day of the Tender Offer period. The Tender Offer is scheduled to commence on February 27, 2017, subject to certain closing conditions, including the completion of anti-trust filing process. The expected total amount for the payment of the Tender Offer is JPY154.7bn.

  • *Takeda and Nihon Pharmaceutical Co., Ltd. together hold 71.2% of Wako shares (as of December 15, 2016).

Through the acquisition of Wako, Fujifilm will continue to expand its business by utilizing, among others, advanced technologies and competitive products, which Fujifilm and Wako possess. Fujifilm will be able to generate significant synergies in our healthcare and highly functional materials businesses, our key business areas, by applying chemical synthesis technology, nano-technology and production technology developed by Fujifilm through its photographic film business. Especially in healthcare, the substantial synergies can be achieved in the area of regenerative medicine with high potential for market growth, in-vitro diagnosis and pharmaceutical CDMO*2. The acquisition of Wako will be a key milestone for Fujifilm’s future business growth.

  • **Abbreviation for Contract Development and Manufacturing Organization

[ Synergies from the Deal ]

<Healthcare Business> Regenerative Medicine Business Fujifilm group has Cellular Dynamics International, Inc. (“CDI”), a US-based leading company in the area of development and manufacturing of iPS cells, and Japan Tissue Engineering Co., Ltd. (“J-TEC”), the first company that has launched the regenerative medicine products in Japan. Fujifilm possesses technologies and know-how essential for regenerative medicine, including the main patents regarding the production of iPS cells, the know-how for development and manufacturing of cells, the scaffold materials (recombinant peptide) necessary for cell culture, the manufacturing technology in stable condition and the micro-environmental control technology. By adding the cell culture medium developed by Wako through this acquisition, Fujifilm group will have all the main elements necessary for regenerative medicine. Fujifilm will utilize the technology to manufacture a small quantity of diversified products developed by Wako as a reagent manufacturer and will develop the high-functioning customized cell culture medium suitable for cultivation of various cells. Fujifilm will further accelerate the development of regenerative medicine business together with Wako, CDI and J-TEC. In-Vitro Diagnostics Field in Medical System Business Fujifilm has developed in-vitro diagnostic systems such as clinical chemistry analysis system measuring chemical constituents in blood with accuracy and high-precision and immunodiagnostic system detecting influenza virus with high sensitivity. The sales of the systems have increased by more than 10% per year. Fujifilm will expand the product lineup to satisfy the needs of customers from small clinics to large hospitals by adding the product lineup of Wako, such as immunology analyzer and biochemical analysis reagent. In addition, by utilizing Wako’s sales network in Japan that covers most of facilities conducting in-hospital examinations and Fujifilm’s worldwide business network developed through the sales of medical equipment such as image diagnostic devices and medical IT systems, Fujifilm and Wako will further broaden their market for each product. Contract Development and Manufacturing Organization (CDMO) in Pharmaceutical Business FUJIFILM Diosynth Biotechnologies is engaged in CDMO of bio-pharmaceuticals and FUJIFILM Finechemicals Co., Ltd. is engaged in CDMO of small molecule pharmaceuticals. Through this acquisition, Fujifilm will expand the CDMO business of pharmaceuticals by utilizing Wako’s chemical synthesis technology and cell culture medium manufacturing technology as well as Fujifilm’s chemical synthesis technology of small molecule pharmaceuticals and manufacturing technology of bio-pharmaceuticals. <Highly Functional Material Business> Electronic Materials Business Fujifilm has the product lineup of semiconductor materials including photoresist, materials for image sensor, and CMP slurry. Fujifilm has achieved the sales growth of more than 10% per year by providing competitive products in the leading-edge of semiconductor material field. Through this acquisition, Fujifilm will add Wako’s products used in the manufacturing process of semiconductor including detergents, and seeks further growth in electronic materials business. Industrial Products Business Fujifilm will utilize its library of two hundred thousand varieties of chemical compounds developed through photographic film business in the laboratory chemicals business. In addition, by capitalizing on its advanced chemical synthesis technology, Fujifilm will develop new high-functional reagents and the next generation products for highly competitive polymerization initiator to expand the chemical business through its global business network. Since the establishment as an independent company separated from Takeda’s chemicals department in 1922, Wako has developed and manufactured high quality reagents in response to research needs in cutting edge fields. Currently, Wako keeps growing with high profitability by taking advantage of a strong domestic business platform in all of their main business areas of laboratory chemicals, clinical diagnostic reagents and speciality chemicals. Wako’s laboratory chemicals business has expanded with its product development and manufacturing system corresponding to small quantity of diversified products needs and its sales network that covers all of Japan. Wako also provides cell culture medium in the area of regenerative medicines where high market growth is expected. In the clinical diagnostics reagents business, Wako expands the business through the development and sales of competitive equipment and testing agent including chemiluminescent immune system which has the world’s fastest measurement capability. Lastly, Wako develops the speciality chemicals business globally utilizing chemical synthesis technology nurtured in the laboratory chemical manufacturing to develop competitive semiconductor process materials and polymerization initiators for polymer manufacturing. Fujifilm has formed a capital alliance with Wako since 1960 and currently is the second largest shareholder owning 9.7% of Wako’s common shares. For many years, Wako has been the supplier of color producing reagents for manufacturing of photosensitive materials. Recently, Wako performs not only as a supplier for photosensitive materials, but also as a supplier for various products such as highly functional materials including semiconductor materials, and Fujifilm and Wako are strengthening their business relationship. Fujifilm has expanded its businesses to the new areas of cosmetics, supplements, pharmaceutical and regenerative medicine with advanced chemical synthesis technology, nanotechnology, diagnostic imaging technology, engineering technology for highly functional materials including collagen and production technology that allows high level of quality management that have been cultivated through research and development of photographic film business. Out of the six key business areas in the Fujifilm group (healthcare, highly functional materials, documents business, graphic systems, optical devices and digital imaging), Fujifilm has been concentrating its management resources on healthcare, highly functional materials and documents businesses, where high growth is expected. Through synergies to be created with Wako, Fujifilm will expand the growth in healthcare and highly functional materials businesses by providing and offering competitive new products. 1. Overview of Tender Offer

(1) Tender Offeror FUJIFILM Corporation
(2) Target Company Wako Pure Chemical Industries, Ltd.
(3) Class of Shares to Be Acquired Common Stock
(4) Tender Offer Price JPY 8,535 per share
(5) Expected Amount of Funds Necessary for the Tender Offer Approximately JPY 154.7billion
(6) Tender Offer Period from February 27, 2017 to April 3, 2017 (expected)

2. Overview of Wako

(1) Company Name Wako Pure Chemical Industries, Ltd.
(2) Incorporation in 1922
(3) Headquarters Osaka, Japan
(4) Representative President Shinzo Kobatake
(5) Capital JPY 2,340 million
(6) Revenue JPY 79.4 billion (FY2016/3, consolidated)
(7) Employee Number 1,642 employees (as of March 31, 2016, consolidated)
(8) Business Overview Manufacturing and sales of laboratory chemicals, clinical diagnostic reagents and speciality chemicals

3. Impact on FUJIFILM Holdings Consolidated Financial Results In the event of successful completion of the Tender Offer, Wako will be a consolidated subsidiary of Fujifilm Holdings on April 21, 2017. We expect no impact on Fujifilm Holdings’ FY2017/3 consolidated financial results. We will announce the impact for FY2018/3 consolidated financial results once details are confirmed.

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