[ Back ]   [ More News ]   [ Home ]
OMRON Announces Plan to Spin Off Automotive Electronic Components Business

TOKYO — (BUSINESS WIRE) — July 30, 2009 Following a resolution at a board of directors meeting held today, OMRON Corporation (TOKYO:6645)(ADR: OMRNY) announced its intention to spin off its automotive electronic components business into a new company, to be established in April 2010, through a corporate split. Details will be announced following approval at the board of directors meeting scheduled for the second half of January 2010.

Because OMRON is establishing the new spin-off company independently, some disclosure items and other information have been omitted below.

1. Background and Purpose

OMRON has designated the period from February 2009 through March 2011 as a “revival stage” in which sweeping profit structure reform will be implemented throughout the entire Group. As part of this profit structure reform, OMRON will reorganize its business domains over the medium-term, focusing on its three control-based businesses (industrial automation, electronic components and automotive electronic components). The spin off of the automotive electronic components business is intended to improve profitability by allowing independent management of this unique business.

OMRON entered the automotive electronic components business in 1983. In 2003, after Omron instituted an internal company system, this division was reorganized as the Automotive Electronic Components (AEC) Company. OMRON worked to strengthen the burgeoning business, and sales increased rapidly on a global basis alongside the expansion of the automobile market.

The automobile industry is now feeling the effects of the global recession that began in the United States last year. With little hope of recovery in the short term and the future remaining unclear, alliances between automakers have accelerated, creating a spillover effect on suppliers of automotive systems and components. AEC sees the changes currently taking place within the global automobile industry as an opportunity to transform itself into a company that can respond quickly and boldly to change.

In recent years, there has been a shift in what consumers require from their vehicles, resulting in the increasing adoption of automotive electronics. As an independent company, AEC will build on OMRON’s core competence, sensing and control technology, and further strengthen the electronics technology and auto know-how and technology that it has cultivated to date. AEC will focus these strengths on electronic control systems used in automotive bodies and work to respond to increasingly sophisticated and complex customer needs. At the same time, it will take a proactive and agile approach in considering partnerships and collaboration with other companies in order to respond to customer needs as quickly as possible.

In consideration of the above, OMRON determined that independent management capable of understanding and responding to movements in the automobile industry was needed to further strengthen AEC.

2. Outline of Split

 
1) Timeline
 
Schedule finalized Second half of January 2010 (planned)
Plans approved at BOD meeting Second half of January 2010 (planned)
Split date (effective date) April 1, 2010 (planned)

OMRON has not yet determined which assets will be transferred to the new company or their value; however, as they are not expected to exceed one-fifth of OMRON’s total assets, OMRON will not seek shareholder approval for the split in accordance with Article 805 of the Corporate Law of Japan.

2) Method

This is a simple corporate split in which OMRON is the transferring company and the new company is the assuming company.

3) Share allocation

Upon the corporate split, the new company will issue shares of common stock and allocate all of those shares to OMRON, making it a wholly owned subsidiary of OMRON.

4) Other

OMRON plans to announce information regarding the treatment of new stock acquisition rights and corporate bonds issued as a result of the corporate split, the increase or decrease of capital as a result of the split, rights and obligations to be assumed by the new company, and outlook for the fulfillment of obligations after plans for the split are approved at the board of directors meeting scheduled for the second half of January 2010.

3. Overview of Companies Involved in the Spin Off

                 
        Transferring company

As of March 31, 2009

      New company

April 1, 2010 (planned)

1) Name       OMRON Corporation       Undecided
2) Business      

Manufacture and sales of

electronic devices

     

Manufacture and sales of

automotive electronic

components

3) Established       May 10, 1933       April 1, 2010 (planned)
4) Head office       Kyoto city, Kyoto prefecture       Undecided
5) Representative       Hisao Sakuta,

President & CEO

      Undecided
6) Capital       JPY 64,100 million       Undecided
7) Shares outstanding       239,121,372 shares       Undecided
8) Net assets      

JPY 298,411 million

(consolidated)

      Undecided
9) Total assets      

JPY 538,280 million

(consolidated)

      Undecided
10) Fiscal year end       March 31       March 31

11) Principal shareholders

and their holdings (%)

     

State Street Bank and Trust

Company 505223 5.89%

Japan Trustee Services Bank,

Ltd. (Trust Account 4G) 4.53%

      OMRON Corporation 100%
           

4. Overview of Business Division to be Spun Off

1) Business

Manufacture and sales of automotive electronic components.

2) Operating results

Fiscal 2008 consolidated sales: JPY 82,109 million

3) Assets and liabilities to be transferred and their values

Undecided.

5. Status of OMRON Corporation after Spin Off

There will be no changes to OMRON’s name, business, head office location, representative, capital or reporting period (fiscal year end) as a result of the spin off.

6. Outlook

The spin off will have no impact on OMRON’s fiscal 2009 consolidated operating results.



Contact:

OMRON Corporation
Hideo Higuchi, +81-75-344-7175
Senior General Manager
Corporate Strategic Planning Headquarters