ºÚÁÏÍø

Listed Company Name:ºÚÁÏÍø., Ltd.
Representative:Haruo Naito
Representative Corporate
Officer and CEO
Securities Code:4523
Stock Exchange Listings:First Section of the Tokyo
Stock Exchange
Inquiries:Sayoko Sasaki
Vice President,
Corporate Affairs
Phone +81-3-3817-5120

Listed Company Name:Ajinomoto Co., Inc.
Representative:Takaaki Nishii
Representative Director,
President and CEO
Securities Code:2802
Stock Exchange Listings:First Section of the Tokyo
Stock Exchange
Inquiries:Yukiko Sawa
General Manager
Business Strategy and
Development Dept.
Phone +81-3-5250-8163

ºÚÁÏÍø., Ltd. (ºÚÁÏÍø) and Ajinomoto Co., Inc. (Ajinomoto Co.) announced that respective meetings of ºÚÁÏÍø's Executive Committee and Ajinomoto Co.'s Board of Directors today resolved to enter an integration agreement concerning the splitting off of a portion of ºÚÁÏÍø's gastrointestinal disease treatment business and its subsequent succession by Ajinomoto Co.'s wholly-owned subsidiary AJINOMOTO PHARMACEUTICALS CO., LTD. (AJINOMOTO PHARMACEUTICALS) via an absorption-type split, and on the same day, a corresponding integration agreement was signed between ºÚÁÏÍø and Ajinomoto Co.

The trade name for the new integrated company will be “EA Pharma Co., Ltd.”. ºÚÁÏÍø will hold 60% of the shares in EA Pharma Co., Ltd., while Ajinomoto Co. will hold the remaining 40%, and the company will be one of ºÚÁÏÍø's consolidated subsidiaries and an affiliated company accounted for by the equity-method for Ajinomoto Co.

3. Calculation of share allotment relating to the absorption-type company split

1) Basis and details of calculation

In order to preserve fairness and integrity in determining the amount of AJINOMOTO PHARMACEUTICALS' ordinary shares to be allotted to ºÚÁÏÍø relating to the absorption-type company split (share allotment), ºÚÁÏÍø and Ajinomoto Co. have each hired a third-party appraiser to perform this calculation. For this purpose, ºÚÁÏÍø has hired Nomura Securities Co., Ltd. (Nomura Securities), and Ajinomoto Co. has hired JPMorgan Securities Japan Co., Ltd. (J.P. Morgan), respectively.

Nomura Securities used the discounted cash flow (DCF) analysis to calculate the share allotment, and ºÚÁÏÍø has received a valuation report regarding the share allotment from Nomura Securities.

The result of the calculation of the share allotment according to the abovementioned method is as follows. Furthermore, the following calculation result assumes that the number of ordinary shares issued by AJINOMOTO PHARMACEUTICALS at the time of execution of the absorption-type company split amounts to 4,000 shares.

Nomura Securities has assumed that the public information, the financial information disclosed by the companies, and all other information when performing the calculation of the share allotment is true and complete, and it did not independently verify the accuracy or completeness thereof. Nomura Securities has not independently evaluated, appraised or assessed the market value or fair value of the assets or liabilities (including financial derivative instruments, off-book assets and liabilities, and other contingent liabilities) of the two companies or their related affiliates, nor has it requested an appraisal or assessment by a third-party agency. The calculation performed by Nomura Securities reflects the information and economic conditions as of October 14, 2015, and Nomura Securities assumes that ºÚÁÏÍø's management has reasonably considered and created the financial predictions for both the business relating to the absorption-type company split and AJINOMOTO PHARMACEUTICALS based on the current, best-available forecasts and judgment.

Please note that the business projections of both the portion of ºÚÁÏÍø's business and AJINOMOTO PHARMACEUTICALS on which the DCF analysis was based contain fiscal years showing significant increases and decrease in profit compared with their respective previous fiscal years. This is mainly due to declining revenue of existing products and increasing revenue from pipeline products.

In calculating the number of the shares to be allocated to ºÚÁÏÍø for the absorption-type company split, J.P. Morgan performed a DCF analysis based on the following: for the valuation of the equity value of AJINOMOTO PHARMACEUTICALS, J.P. Morgan used the projections prepared and furnished by the management of Ajinomoto Co.; and for the valuation of the relevant portion of ºÚÁÏÍø's gastrointestinal disease treatment business (the “Business”), J.P. Morgan used the projections originally prepared by the management of ºÚÁÏÍø, which Ajinomoto Co. made adjustment to and approved for J.P. Morgan's use.

Based on the result of the analysis, J.P. Morgan delivered to the Board of Directors of Ajinomoto Co. a valuation report regarding the number of the shares to be allocated to ºÚÁÏÍø in the absorption-type company split (the “JPM Valuation Report”) dated October 15, 2015. The JPM Valuation Report was provided solely for the benefit of the Board of Directors of Ajinomoto Co. in connection with their evaluation of the absorption-type company split and for the purposes of reference in performing such evaluation.

The calculated range of the number of the shares to be allocated to ºÚÁÏÍø in the absorption-type company split mentioned in the JPM Valuation Report is as indicated below. The calculated range of the number of the shares to be allocated to ºÚÁÏÍø below shows the range of the number of the AJINOMOTO PHARMACEUTICALS' ordinary shares to be allocated to ºÚÁÏÍø as consideration for the Business. The JPM Valuation Report is based on the premise that the total number of issued ordinary shares of AJINOMOTO PHARMACEUTICALS will be 4,000 on the closing date of the absorption-type company split, and does not take into consideration the limitation of the total number of issuable shares of AJINOMOTO PHARMACEUTICALS as set forth in the articles of incorporation of AJINOMOTO PHARMACEUTICALS as of October 15, 2015.

In addition, the business forecasts of AJINOMOTO PHARMACEUTICALS and the Business used by J.P. Morgan (except for the tax consequences) in its DCF analysis include fiscal years in which significant increases or decreases in profits are expected. Such decreases and increases in profits that are included in the projections of AJINOMOTO PHARMACEUTICALS and the Business are expected due mainly to the decline in sales of long-listed drugs as a result of several reasons including the price revisions by the National Health Insurance, and the expected sales growth of newly marketed drugs during the projection period, respectively.

In conducting its analyses with respect to the number of the shares to be allocated to ºÚÁÏÍø, which was included in the JPM Valuation Report, J.P. Morgan has relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by Ajinomoto Co., AJINOMOTO PHARMACEUTICALS and ºÚÁÏÍø or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan has not independently verified (nor has it assumed responsibility or liability for independently verifying) any such information or its accuracy or completeness. J.P. Morgan has not conducted or been provided with any appraisal of any assets or liabilities, nor has it evaluated the solvency of Ajinomoto Co., AJINOMOTO PHARMACEUTICALS or ºÚÁÏÍø under any laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and projections provided to J.P. Morgan or derived therefrom, J.P. Morgan has assumed that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of AJINOMOTO PHARMACEUTICALS and the Business to which such analyses or projections relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan has also assumed that the transactions contemplated by the absorption-type company split agreement and related agreements (together, the “Agreements”) will qualify as a tax-free reorganization under the corporate tax law of Japan, have the tax consequences described in discussions with, and materials furnished to J.P. Morgan by, representatives of Ajinomoto Co., and will be consummated as described in the Agreements, and that the definitive Agreement will not differ in any material respects from the draft thereof furnished to J.P. Morgan. J.P. Morgan has also assumed that the representations and warranties made by Ajinomoto Co. and ºÚÁÏÍø in the Agreements are and will be true and correct in all ways material to J.P. Morgan's analysis. J.P. Morgan is not a legal, regulatory, tax or accounting expert and relied on the assessments made by advisors to Ajinomoto Co. with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the absorption-type company split would be obtained without any adverse effect on Ajinomoto Co., AJINOMOTO PHARMACEUTICALS or ºÚÁÏÍø or on the contemplated benefits of the absorption-type company split.

The analyses with respect to the number of the shares to be allocated to ºÚÁÏÍø, which was included in the JPM Valuation Report, were necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of October 9, 2015. It should be understood that subsequent developments may affect the calculation and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such analyses.

The projections of AJINOMOTO PHARMACEUTICALS prepared and furnished to J.P. Morgan by the managements of Ajinomoto Co. and the projections of the Business originally prepared by the managements of ºÚÁÏÍø, which Ajinomoto Co. made adjustment to and approved for J.P. Morgan's use, will not be disclosed to the public and were not prepared with a view toward public disclosure. These projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such projections.

The foregoing summary of the analysis with respect to the number of the shares to be allocated to ºÚÁÏÍø and the valuation method thereof does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of the JPM Valuation Report is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses.

In reference to the results of the calculations by Nomura Securities and J.P. Morgan, ºÚÁÏÍø and Ajinomoto Co. have comprehensively considered the relevant factors such as the respective states of finances and assets as well as forecasts, and after a series of careful negotiations on the share allotment, have ultimately agreed upon the abovementioned share allotment.

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