AR2017

78/90

20. Business Combinations1. Business combination by acquisition(1)Outline of business combination1Name of the acquired company Name of the acquired company: VDI, LLC (“VDI”) Business description: Manufacture and sales of functional films2Major reasons for the business combination: VDI maintains a manufacturing base in Kentucky, the United States. VDI is producing functional films, such as metalized films and sputtering films, and selling them to customers in the United States and other countries. The Company is convinced that VDI’s products can be expected to produce synergies with window films and other functional films manufactured by the Group and to contribute significantly to the expansion of the Group’s business and the improvement of its operating results in the future. The Company is planning to link VDI’s acquisition to business development in new fields, utilizing VDI’s outstanding metalizing technologies that had not existed in the Group previously.3Effective date of the business combination: October 31, 20164Legal form of the business combination: Acquisition of membership interests5Name of the acquired company after the combination: VDI, LLC6Ratio of acquired voting rights: 100% (Ratio of membership interests 100%)7Major reasons for the determination of acquiring the company: The determination was made because the Company acquired all of the membership interests of VDI through LINTEC USA HOLDING, INC., a wholly owned holding company in the United States, by the acquisition of membership interests in exchange for cash.(2)Period for which the operating results of the acquired company are included in the consolidated financial statementsFrom November 1, 2016 to December 31, 2016(3)Acquisition cost of the acquired company and breakdown of consideration for the acquisition by typeConsideration for the acquisitionCash:U.S. $26 million (¥2,701 million)Acquisition cost:U.S. $26 million (¥2,701 million)Note: The yen amounts are conversions based on the exchange rate as of October 31, 2016.(4)Content and amount of major acquisition-related costsAdvisory expenses and others: ¥52 million (U.S. $468 thousands)(5)Amount of goodwill arising from the business combination, cause of the goodwill, and amortization method and period1Amount of goodwill arising from the business combination ¥1,839 million (U.S. $16,398 thousands)2Cause of the goodwill The goodwill arose due to VDI’s future additional earnings power that is expected from future business development.3Amortization method and period By straight-line method over 10 years(6)Amounts of assets received and liabilities assumed on the date of business combination, and their major componentsMillions of yen Thousands ofU.S. dollars2017Current assets¥  473$ 4,223Non-current assets1,71315,272Total assets¥2,187$19,496Current liabilities¥  222$ 1,987Non-current liabilities1,1029,830Total liabilities¥1,325$11,8182. Business combination by acquisition(1)Outline of business combination1Name of the acquired company Name of the acquired company: MACtac Americas, LLC (“MACtac”) Business description: Manufacture and sales of label materials for printing, VIP label materials, graphic sheets, industrial and medical tapes, etc.2Major reasons for the business combination: MACtac maintains a manufacturing base in the United States and Mexico and develops printing pressure sensitive labels and adhesive films for the printing industry, mainly in North America. It has built a solid position in the U.S. market by developing products using its unique excellent adhesion formula and high-speed coating technology. MACtac also deals with graphic sheets and various kinds of industrial and medical tapes. The Company is convinced that the full-scale entry in the North American market for printing pressure sensitive labels and adhesive films and the proactive development of its original products using its own technological development capabilities through MACtac will contribute significantly to the acceleration of the global development of Printing and Variable Information Products Operations, the core business of the Group. The Company is also planning to link MACtac’s acquisition to business enhance-ment and expansion in not only the North American market, but also Japan and other regions, by utilizing MACtac’s unique technical capabilities and brand equity and maximizing synergy effect with the Company’s technologies.3Effective date of the business combination: December 1, 20164Legal form of the business combination: Acquisition of membership interests5Name of the acquired company after the combination: MACtac Americas, LLC6Ratio of acquired voting rights: 100% (Ratio of membership interests 100%)7Major reasons for the determination of acquiring the company: The determination was made because the Company acquired all of the membership interests of MACtac through LINTEC USA HOLDING, INC., a wholly owned holding company in the United States, by the acquisition of membership interests in exchange for cash.(2)Period for which the operating results of the acquired company are included in the consolidated financial statementsFrom December 1, 2016 to December 31, 2016(3)Acquisition cost of the acquired company and breakdown of consideration for the acquisition by typeLINTEC ANNUAL REPORT 201776FINANCIAL SECTION