Vivoorde May 2021 — On April 30 2021 Komatsu Limited (hereafter named “Komatsu”) announced that their Board of Directors, at its meeting held on April 30, 2021, resolved to transfer a portion of Komatsu’s rights, obligations, etc. relating to its Smart Construction business to LANDLOG Ltd. (hereafter “LANDLOG”), by way of a company split (absorption-type company split) with an effective date of July 1, 2021 (scheduled) (hereafter the “Company Split”) (The absorption-type company split agreement pertaining to the Company Split shall be referred to as the “Company Split Agreement.”). As the Company Split is going to take place in the form of a simplified absorption-type company split in which Komatsu’s wholly-owned subsidiary will be the successor company, certain matters and descriptions are omitted from the disclosure below.
I. Background, Purposes, Etc. of the Company Split
In February 2015, Komatsu launched “SMARTCONSTRUCTION”, a solution service that solves the serious labor shortage issue in the Japanese construction industry. As of the end of March 2021, Komatsu has introduced this service to more than 13,000 domestic sites. Komatsu established LANDLOG in October 2017. Then LANDLOG established the open platform “LANDLOG” that is available as the basis for SMARTCONSTRUCTION services for the many service providers who, like as Komatsu, are working to solve issues in the construction industry, aiming for accelerating the solution of the construction industry and achieving a safe, productive and future construction worksite as soon as possible.
Subsequently, Komatsu began introducing “DX SMARTCONSTRUCTION” in Japan, North America, Europe and Australia, successively from April 2020, which may, by utilizing digital technology throughout the entire construction process, bring about significant change from the previous solution services with partial digitization in the construction process and achieve dramatic improvements in safety, productivity and environmental performance. DX SMARTCONSTRUCTION consists of (i) LANDLOG, the open platform, (ii) four devices, including “SMARTCONSTRUCTION Retrofit”, which can be connected to LANDLOG and allows worksites to be digitized inexpensively, highly precisely, quickly and easily, and (iii) eight apps that optimize operations in the construction process.
After the Company Split, LANDLOG will change its corporate name to “EARTHBRAIN Ltd.” It will expand its business domains and renew its management structure to accelerate the further evolution of “DX SMARTCONSTRUCTION” which has been developed by Komatsu, and will create new value through digital transformation at construction sites around the world, aiming to realize “safe, productive, smart and clean sites” as early as possible, even just a day sooner. “EARTHBRAIN Ltd.” will issue its new shares through a third-party allocation to NTT DOCOMO, INC., Sony Semiconductor Solutions Corporation and Nomura Research Institute, Ltd., and its business will be operated as a joint venture business by Komatsu and these three companies.
II. Information Regarding the Company Split
1. Outline of the Company Split
(1) Schedule of the Company Split
Date of resolution of the Board of Directors (by Komatsu): April 30, 2021
Date of resolution of the Board of Directors (by LANDLOG): April 30, 2021
Date of execution of the Company Split Agreement: May 11, 2021 (scheduled)
Date of resolution at the general meeting of shareholders (by LANDLOG): June 4, 2021 (scheduled)
Effective date of the Company Split: July 1, 2021 (scheduled)
The Company Split falls under “simplified absorption-type company split” as provided under Article 784, Paragraph 2 of the Companies Act. Accordingly, Komatsu will not hold a general meeting of shareholders concerning the approval of the Company Split Agreement.
(2) Form of the Company Split
The Company Split is an absorption-type company split (a simplified absorption-type company split) in which Komatsu is the splitting company and LANDLOG is the successor company.
(3) Details of allocation related to the Company Split
Upon the Company Split, LANDLOG will issue 26,460 common stocks, all of which will be allocated to Komatsu.
(4) Treatment of the stock acquisition rights and the bonds with stock acquisition rights upon the Company Split
There will be no change in the treatment of the stock acquisition rights issued by Komatsu. There is no existing bond with stock acquisition rights issued by Komatsu.
(5) Increase or decrease in stated capital as a result of the Company Split
There will be no change in the stated capital of Komatsu as a result of the Company Split.
(6) Rights and obligations to be transferred to the successor company
Among the rights, obligations, etc. held by Komatsu in relation to its Smart Construction business, those stipulated in the Company Split
Agreement will be transferred to LANDLOG.
(7) Prospects for performance of liabilities
Komatsu has determined that the liabilities to be borne by LANDLOG after the Company Split are expected to be performed by LANDLOG with no problems.
2. Overview of the companies involved in the Company Split
“(Note 1) “Komatsu Ltd. shareholders’ equity per share” on Komatsu’s consolidated financial statements is presented in this table instead of “Net assets per share” for Komatsu.
(Note 2) Komatsu’s consolidated financial statements have been prepared and presented in accordance with generally accepted accounting principles in the United States of America. Therefore, “Income before income taxes and equity in earnings of affiliated companies” on Komatsu’s consolidated financial statements is presented in this table instead of “Ordinary income” for Komatsu.
3. Overview of the business to be split off
(1) Business of the division to be split off
A portion of Komatsu’s rights, obligations, etc. relating to its Smart Construction business.
(2) Operating results pertaining to the division to be split off
The division to be split off is a portion of Komatsu’s rights, obligations, etc. relating to its Smart Construction business and the division is still at the stage of its development. Therefore, there are no operating results pertaining to the division.
(3) Items and amounts of assets and obligations to be split off
The above items and book values have been estimated based on the amounts as of March 31, 2021, and the actual amounts to be split off are different from the above.
4. Status of the splitting company after the Company Split
There will be no change due to the Company Split in the name, location, job title and name of representative, scope of business, capital stock and fiscal year of Komatsu as the splitting company.
5. Status of the successor company after the Company Split
There will be no change due to the Company Split in the name, location, job title and name of representative, scope of business, capital stock and fiscal year of LANDLOG as the successor company; however, please note that LANDLOG will change its corporate name to “EARTHBRAIN Ltd.” on July 1, 2021 (scheduled).
6. Future outlook The effect of the Company Split on Komatsu’s consolidated operating results is expected to be minor since the parties of the Company Split are Komatsu and its wholly-owned subsidiary.
About Komatsu
Komatsu is an industry-leading manufacturer and supplier of equipment, technologies and services for the construction, forklift, mining, industrial and forestry markets. For nearly a century, Komatsu equipment and services have been used by companies worldwide to develop modern infrastructure, extract fundamental minerals, maintain forests and create technology and consumer products. The company’s global service and distributor networks support customer operations, tapping into the power of data and technology to enhance safety and productivity while optimizing performance.
