The external environment is rapidly changing in the respective business fields of the Companies including the businesses of steel, textiles, foodstuffs, raw materials and fuels, machinery, infrastructure, etc., and most significantly in the steel business field.
Competition in these fields is expected to become increasingly intense in the future.

Under such conditions, the Companies have individually been searching for paths to further their growth and development, and have agreed that the Companies should aim toward achieving, through the Integration, continual growth as a trading company which develops and manages the above core business fields by combining the business resources that each company has developed, and, based on the Companies’ backgrounds as members of the Nippon Steel & Sumitomo Metal Corporation Group.The new integrated company (the “Integrated Company”) will join together to embrace a customer-oriented perspective, improve business efficiency through effective use of business resources, accelerate a global strategy that is in tune with customer and market needs, reinforce its sales power, and expand its customer and market base.

The Integrated Company will seek to achieve the following goals, with a particular focus on achieving synergistic benefits from the Integration primarily in the steel-related business which is the common business field of the Companies, as well as balanced growth in all other business fields.

Through the above measures, the Integrated Company will make every effort to deliver results from the Integration as quickly as possible, and to maximize its corporate value by focusing on further improving earning power and constructing a strong financial base, in order to gain higher valuations from our shareholders and from the capital market.

The Integrated Company will aim to achieve the targeted annual ordinary income of 30 billion yen in the next fiscal year (fiscal year ending in March, 2015) by achieving the synergistic benefits of the Integration, such as increases in profits from the existing business, making use of a network between different business divisions, and making strategic and efficient use of processing sites and sales bases in the steel business field.

The Companies will implement the Integration by absorption-type merger (the “Merger”). Taking into account various factors so that the Merger serves the interests of shareholders, with respect to the Merger procedures, Nippon Steel Trading will be the company surviving the absorption-type merger, and Sumikin Bussan will be the company absorbed in the absorption-type merger.

(Note 1)
The number of shares of Nippon Steel Trading to be delivered under the Merger: 174,789,476 common shares (planned)(The number of shares of Nippon Steel Trading to be delivered under the Merger could be modified because of the change of the number of treasury shares of Sumikin Bussan, etc.)

(Note 2)
Nippon Steel Trading shares will be delivered by allotment in the ratio of 1.08 Nippon Steel Trading shares to one Sumikin Bussan share. However, no shares will be allotted as a result of the Merger with respect to 2,691,986 treasury shares (as of March 31, 2013) held by Sumikin Bussan.

(Note 3)
Handling of shares which constitute less than one share unit As a result of the Merger, those shareholders of Sumikin Bussan who are to hold shares which constitute less than one share unit (shares which constitute less than 1,000) may demand the following related to common shares of Nippon Steel Trading. Shareholders will not be able to sell shares which constitute less than one share unit at a securities exchange.

(Note 4)
To those shareholders of Sumikin Bussan who are to receive, as a result of the Merger, an allotment of a fraction of less than one share of Nippon Steel Trading, the amount equivalent to the value of such fraction will be paid in cash, pursuant to the provisions of Article 234 of the Companies Act and other applicable laws and regulations.

Sumikin Bussan has not issued any share options or bonds with share options.

In order to support their respective efforts to ensure the fairness and appropriateness of the merger ratio used in the Merger (“Merger Ratio”), Sumikin Bussan and Nippon Steel Trading respectively and separately requested third-party calculation agents independent of both companies to calculate the merger ratio and received merger ratio calculation papers. Sumikin Bussan appointed SMBC Nikko Securities Inc. (“SMBC Nikko Securities”) as its third-party calculation agent, and Nippon Steel Trading appointed Nomura Securities Co., Ltd. (“Nomura Securities”) as its third-party calculation agent.
SMBC Nikko Securities performed a Market Price Analysis, since there is a market share price for the common shares of each of the Companies, as well as a Discounted Cash Flow Analysis (“DCF Analysis”) for the shares of the Companies. The ranges of the merger ratio mentioned below are the calculated ranges of the number of the common shares of Nippon Steel Trading allocated to one common share of Sumikin Bussan.

With respect to the Market Price Analysis, the reference date is set on April 25, 2013 (the “SMBC Nikko Reference Date”), and SMBC Nikko Securities reviewed the average closing market price during the one-month period prior to the SMBC Nikko Reference Date and the average closing market price during the three-month period prior to the SMBC Nikko Reference Date, as a basis for the analysis.
In addition, as described in (5) “Measures to ensure fairness” below, pursuant to a request from the board of directors of Sumikin Bussan, SMBC Nikko Securities submitted to Sumikin Bussan an opinion (a fairness opinion) dated April 26, 2013, to the effect that the Merger Ratio is reasonable for the shareholders of Sumikin Bussan from a financial viewpoint under the below-mentioned assumptions and disclaimers.
In delivering its fairness opinion, as well as calculating the Merger Ratio as the basis for such opinion, SMBC Nikko Securities did not conduct or assume any obligation to conduct any independent verification of the accuracy or completeness of the information of Sumikin Bussan and Nippon Steel Trading (irrespective of whether the information has been disclosed to the public and is available or furnished by Sumikin Bussan and Nippon Steel Trading), including financial information and financial forecasts reviewed by SMBC Nikko Securities; therefore, SMBC Nikko Securities assumed and relied on the accuracy and completeness of all such information in delivering its opinion and calculating the Merger Ratio as the basis for such opinion.

SMBC Nikko Securities assumed that all material information of Sumikin Bussan and Nippon Steel Trading has been disclosed to the public in an appropriate manner, and that the market share prices of Sumikin Bussan and Nippon Steel Trading appropriately reflect all material information of these companies, and that there is no undisclosed information that may have a negative impact on the market share prices of Sumikin Bussan and Nippon Steel Trading, and that no change has occurred that has had a significant influence on the assets, financial conditions, operation, or future prospects of Sumikin Bussan, Nippon Steel Trading, or their affiliated companies on or after the preparation date of the latest financial statements and business plan provided to SMBC Nikko Securities.

Further, SMBC Nikko Securities did not conduct any independent evaluation or assessment of the assets or liabilities of Sumikin Bussan and Nippon Steel Trading. Moreover, based upon Sumikin Bussan’s consent, SMBC Nikko Securities assumed that the financial forecasts (including analysis and forecasts of financial effect of the Merger on Sumikin Bussan and Nippon Steel Trading) which were provided by Sumikin Bussan and Nippon Steel Trading to and analyzed by SMBC Nikko Securities were prepared based upon reasonable grounds and reflected the forecasts and judgment available to Sumikin Bussan or Nippon Steel Trading. SMBC Nikko Securities’ opinions and calculation are not intended to encourage shareholders of Sumikin Bussan to exercise their shareholders’ rights or take other related actions with respect to the Merger, nor are they intended to solicit or encourage shareholders of Sumikin Bussan or other persons to assign or receive assignment of Sumikin Bussan shares or take other actions related thereto. SMBC Nikko Securities’ opinion was prepared in light of economic, market and other conditions as of its submission date and was based upon information obtained by SMBC Nikko Securities before such date.

Meanwhile, Nomura Securities performed a Market Share Price Analysis, since there is a market share price for the common shares of each of the Companies, as well as a Comparable Companies Analysis and a DCF Analysis for the shares of the Companies. The ranges of the Merger Ratio mentioned below are the calculated ranges of the number of the common shares of Sumikin Bussan allocated to one common share of Nippon Steel Trading.

With respect to the Market Share Price Analysis, the reference date is set on April 25, 2013 (the “Nomura Reference Date (i)”), and Nomura Securities reviewed the closing share price on the Nomura Reference Date (i); the average closing market price during the one-week period prior to the Nomura Reference Date (i); the average closing market price during the one-month period prior to the Nomura Reference Date (i); the average closing market price during the three-month period prior to the Nomura Reference Date (i); and the average closing market price during the six-month period prior to the Nomura Reference Date (i), as a basis for the analysis.

Another reference date is set on February 7, 2013 (the “Nomura Reference Date (ii)”), on which the “Concerning the Start of Consideration Regarding a Business Integration between Sumikin Bussan Corporation and Nippon Steel Trading Co., Ltd.” was announced, and Nomura Securities reviewed the closing share price on the Nomura Reference Date (ii); the average closing market price during the one-week period prior to the Nomura Reference Date (ii); the average closing market price during the one-month period prior to the Nomura Reference Date (ii); the average closing market price during the three-month period prior to the Nomura Reference Date (ii); and the average closing market price during the six-month period prior to the Nomura Reference Date (ii) as a basis for the analysis.

In calculating the Merger Ratio, Nomura Securities in principle relied on the provided information and publicly available information, assuming that all such information was accurate and complete without independent verification of the accuracy or completeness of such information. With respect to assets and liabilities (including contingent liabilities) of the Companies and their affiliated companies, Nomura Securities neither conducted an independent evaluation, appraisal or assessment, including any analysis or evaluation of each asset or liability, nor requested that a third-party institution conduct an appraisal or assessment. The calculation results of the Merger Ratio provided by Nomura Securities reflect the information and economic conditions that were available as of April 25, 2013, and it is presumed that the information on financial forecasts of the Companies has been reasonably prepared or reviewed by the management of Nippon Steel Trading based on the best currently available forecasts and judgment.

In addition, as described in “(5) Measures to ensure fairness” below, pursuant to a request from the board of directors of Nippon Steel Trading, Nomura Securities submitted to Nippon Steel Trading an opinion (a fairness opinion) dated April 26, 2013, to the effect that the Merger Ratio is reasonable for Nippon Steel Trading from a financial viewpoint under the aforementioned assumptions and certain other assumptions.

It is noted that the future profit plans, which were provided by Nippon Steel Trading to each of the third-party calculation agents as the basis of calculations in connection with the DCF Analysis, include fiscal years with significant increases in profit compared with the fiscal year immediately preceding such fiscal years. These increases reflect mainly about 10% increases in sales volumes and increases in sales prices of steel products, etc., due to improvements in external circumstances such as a weak yen, a rise in reconstruction needs and so forth.
The future profit plans of Sumikin Bussan do not include fiscal years with significant increases in profit compared with the fiscal year immediately preceding such fiscal years.

Sumikin Bussan and Nippon Steel Trading carefully negotiated and discussed with each other the merger ratio, taking into account such factors as the financial position, assets and future business and performance prospects of each company, with Sumikin Bussan referring to the merger ratio calculation papers received from SMBC Nikko Securities, and Nippon Steel Trading referring to the merger ratio calculation papers received from Nomura Securities.
As a result of the negotiations and discussions, today Sumikin Bussan and Nippon Steel Trading decided that the merger ratio described in 2.(3) above is appropriate and agreed to it.

SMBC Nikko Securities, which is acting as the financial advisor of Sumikin Bussan, and Nomura Securities, which is acting as the financial advisor of Nippon Steel Trading, do not constitute related parties of Sumikin Bussan and Nippon Steel Trading, respectively, and do not have any material interest to be noted in connection with the Merger.

Due to the Merger, in accordance with the delisting standards of the relevant financial instruments exchanges, common share of Sumikin Bussan are expected to be delisted as of around September 26, 2013, from these exchanges. Common shares of Nippon Steel Trading to be delivered to shareholders of Sumikin Bussan under the Merger are listed on the first section of Tokyo Stock Exchange.

In addition to receiving the merger ratio calculation paper, Sumikin Bussan received written opinions (“fairness opinions”) dated April 26, 2013, from SMBC Nikko Securities, that based upon and subject to certain conditions (including the assumptions described in (1) above), the agreed-upon merger ratio is appropriate or fair to shareholders of Sumikin Bussan from a financial viewpoint. On the other hand, in addition to receiving the merger ratio calculation paper, Nippon Steel Trading received written opinions (“fairness opinions”) dated April 26, 2013, from Nomura Securities, that based upon and subject to certain conditions (including the assumptions described in (1) above), the agreed-upon merger ratio is appropriate or fair from a financial viewpoint to Nippon Steel Trading.

In connection with the Merger, Sumikin Bussan and Nippon Steel Trading have not taken special measures to avoid conflicts of interest because there is no conflict of interest between Sumikin Bussan and Nippon Steel Trading.